A1chapter 12

Chapter 12

Causes of the Depression

 Election of 1928

 _{Republicans ran Herbert Hoover}

 Democrats ran Alfred E. Smith (first Catholic)

 Campaign issues

 _{Dry vs Wet: prohibition}

 _{Religion: Protestant vs Catholic}

 _{Economy: Hoover ran on the promise “Two cars in every garage”}

Problems with agriculture

 Farmers made up ¼ of the workforce

 During WWI they had increased their production which led some to

increased debt

 After the war the demand for crops fell

 _{Farmers were not able to sell enough crops to pay their debts}

Roots of the Great Depression



Uneven distribution of income: Overproduction

 _{Output per person-hour rose 32% while worker’s wages}

only rose 8%

 _{About 60% of families earned less than $2000 a year}

with very little money for “extras”.

 _{People bought on “installment plan” low down payment}

and then monthly payments

 _{People buying less led manufacturers to cut production}

Uneven distribution of wealth

 Industrial workers were making a low wage, but the price

of goods was going up.

 Corporate profits went up 65% - the rich became richer,

the worker grew poorer.

 The wealthiest 1% of the population earned the same

amount of money as the bottom 42% of the population.

 24,000 Americans had incomes of $100,000.

they bought 50% more cars

The Long Bull Market

 Stock Market: Established as a system for buying and

selling shares of companies

 Bull Market: long period of rising stock prices. By 1929

about 3 million Americans owned stocks

 Margin: buying stock with only a minimal amount down

($1,000 down could buy $10,000 in stock) the rest came from a stockbroker who loaned you the money

 Margin Call: as prices started to fall the stockbrokers

demanded investors to pay their balances

 Speculation: buying stock in a company without regards to

The Great Crash



Stages:

 _{October 21, stockbrokers start calling in their margins}

 _{October 24 Black Thursday stocks continued to fall at record}

number

 _{October 29 – Black Tuesday stocks lost $10 - $15 Billion in}

value

 _{By November the market had lost $30 Billion.}



While the Stock Market crash was not the major cause

Banks in a Tailspin

 _{They had lent money to stock speculators}

 _{They had invested depositors’ money in the market hoping for higher}

returns

 When stocks collapsed the banks cut back on the amount of

loans available

 With fewer loans, this put the economy into a recession.



Many banks were forced to close.



No government insurance so when the bank

closed you lost all your money.



Bank runs: people were so afraid that their bank

was going to close they rushed in and demanded

all of their money NOW.



During the first 2 years of the Depression more

Business and the cra

sh

 Businesses started cutting production, laying off workers,

eventually closing plants and going out of business.

 Henry Ford’s Detroit plants laid off 75,000 workers.

 Cycle:

_{Business cut employees because people are not buying}

the product

Government involvement



Hawley-Smoot Tariff



Raising the average tariff rate to the highest level

in American history



Goal was to protect American goods abroad but

it backfired



As we raise the tariff so did foreign countries



By 1932 fewer American products were being

 Federal Reserve Board’s failure to raise interest rates helped

cause the Depression in two ways:

_{By keeping interest rates low it encouraged banks to make}

risky loans

_{Low interest rates led business leaders to think the economy}

was still good

_{Once the Depression hit the Fed raised interest rates, which}

made credit harder to get.

_{European countries like Germany also went into an economic}

What caused the Great Depression

 Milton Friedman- contraction in money supply: stock market crash

and run on banks,

 John Maynard Keynes – lack of government response to the crisis.

 Best Guesses:

 _{Economic hardships in Europe}  _{Uneven distribution of wealth}  _{Over speculation}

 _{Stock market crash}

Americans face hard

times

The Depression Worsens



Banks and Employment

 Unemployment from 1921-29 was at 3.7%.

 After the crash unemployment rose to 24.9%

 _{By 1933 more than 12 million workers were unemployed –}

¼ of the workforce.

 _{Those that did find work were paid up to 30% less than}

what they were making pre-depression.

 _{Average family wages went from $2300 a year to $1600 a}

Lining up at Soup Kitchens

 Bread Lines: to receive a free handout of food

 Soup Kitchens: private charities set up soup kitchens to help

give the poor a meal

 Makeshift villages

 _{If you could not pay mortgage or rent you were homeless}

 _{Those that would not move were forced out by bailiffs}

 People put up shacks on public lands forming communities called Shantytowns or Hoovervilles (referring to the president for their problems)

Pictures of the Depression

Breadlines

Poverty Devastates Rural America

 Crop prices fell to lowest levels.

 _{Great Plains area was suffering from a drought.}

 1919 a bushel of wheat sold for $2.16 but in 1932 it sold for 38 cents

 _{Milk farmers – when they could not get a good price for milk –}

dumped 1,000 gallons of milk on the road.

The Dust Bowl

 When crop prices dropped farmers left many fields uncultivated.

 _{In 1932 drought struck the Great Plains}

 _{Soil dried to dust}

 _{Winds blew blackening the sky for hundreds of miles}

 _{Buried crops and livestock like snow}

 Dust covered everything in the houses

 _{Most farmers had to abandon their farms and head west to California}

Dust storms increased to 72 a year by 1937

There was no way the ground could hold water.

Depression and Family life

 Men felt they had betrayed their families.  Men that had jobs felt guilty.

 Women and children were put to work to help the

family.

 African Americans were the last hired and the first

fired. They were double the unemployment level of whites.

 Mexican Americans were encouraged to return to

Escaping the Depression Hollywood Style

 _{People would save a little money and go to the movies to escape.}

 _{60-90 million weekly viewers walked into fantasy or thrills}

 _{Famous stars:}

 _{Groucho Marx – wise-cracking group with his brothers. Famous} movie “Animal crackers”

 _{Marlene Dietrich and Greta Garbo: helpless beauties}

 _{Walt Disney: first full length animated movie = “Snow White and the}

Seven Dwarfs”

 _{Jimmy Steward: Mr. Smith Goes to Washington}

Marlene Dietrich Greta

Garbo

The Marx Brothers

Radio Shows



The Lone Ranger

 Fought injustice in the Old West  “Faithful Indian companion” Tonto



First Soap Opera: The Guiding Light

 Called soap operas because they were sponsored by

laundry soaps.

 Focused on the trial and tribulations of middle-class

Depression Art and Literature



Thomas Hart Benton and Grant Wood

artists



Novelist John Steinbeck



Grapes of Wrath



Novelist William Faulkner



The Sound and the Fury



Thomas Wolfe

Grant Wood

American Gothic:

Thomas Hart Benton

Photojournalist Margaret Bourke-White

 _{The title is You Have Seen Their Faces,"}

said Skinny. "How do you like it?"

 _{The name implied just what I had been}

searching for as I worked.

Faces that would express what we wanted to tell. Not just the

unusual or striking face, but the face that would

Speak out the message from the printed page

Section 3

Promoting Recovery

 Joseph Heffernan: “Why not tell the people the truth? ”

 _{Black Thursday October 25 Hoover tells Americans that the nation}

and industry was “on a sound and prosperous basis”

 March 1930 he tells the public that the worst of the crash will be

over in 60 days.

 _{He organized conferences with business leaders, bankers etc. to}

help find solutions

 Midterm Elections:

 _{People blamed the republicans for their problems}

Hoover’s Public Works programs

 Public works building projects

 These jobs only spur the economy a little

 He knew that in order to create enough jobs he would

have to increase government spending which he refused to do.

 How to pay for public works jobs

Hoover Dam



Built in 1931

 Everything had to be brought in including labor

 Unemployed workers flocked to the Grand Canyon  Entire towns were built to house the workers

 Took 5 years

 Created Lake Mead – 115 mile long reservoir  Supplies water for irrigation and hydroelectric

Pumping money into the economy

 Rescue the Banks

 Hoover asks the Fed reserve to put more currency into

circulation – they refuse

 October 1931 Hoover creates the National Credit

Corporation -

money to enabled troubled banks to

_{Creation of the Reconstruction Finance Corporation}

 Congress started making loans to banks, railroads

and agriculture

 By 1932 the gov. had spent $238 million

 Were not able to send enough and the economy

continued to decline

 Direct help for Citizens

_{Emergency Relief and Construction Act}

Called for 1.5 billion for public works and $300 million in

Country in an Angry Mood

 Hunger Marches

 _{December 5}, 1932 1200 hunger marchers assembled and chanted “Feed the hungry, tax the rich”

 _{The police rounded them up and would not give them}

food, water or medical treatment until Congress stepped in.

 Farmers Revolt

 _{Between 1930 – 1934 banks foreclosed on nearly one}

million farms taking possessions and evicting families

Hunger Marches

Bonus Marchers

 In 1924 Congress enacted a $1,000 bonus for each veteran of WWI

to be given to them in 1945.

 _{1931 Texas Representative introduces a bill to give them the money}

now.

 _{May 1932 hundreds of veterans from Portland Oregon start}

marching to Washington D.C.

 _{Once in Washington they camped in Hoovervilles}

 Within weeks they numbered 15,000

 _{Senate does not pass the legislation}

Bonus Marchers

Bonus marchers in D.C

Rally at the Capital for Bonus pay

Forced Eviction by the

Hoover’s Response to Veterans

empty buildings around D.C.

 Hoover ordered the building cleared

 Army Chief of Staff Douglas MacArthur sent in the Calvary,

infantry, tanks and gas to clear the veterans

 _{They chased out 700 veterans with bayonets and gas}

 _{The News media printed pictures and stories of how the military was} attacking veterans

 The lingering Depression, images of the routed Bonus