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The Beginning of the Great Depression in America

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The Beginning of the Great Depression in America ... Tues. Oct. 29th, 1929 - NYC Stock market crashed, causing a depression that would last until 1942 ... – PowerPoint PPT presentation

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Title: The Beginning of the Great Depression in America


1
  • The Beginning of the Great Depression in America
  • 1920's had been a period of good economic times
  • Tues. Oct. 29th, 1929 - NYC Stock market crashed,
    causing a depression that would last until 1942

2
Industries in Trouble
  • Some industries (textiles, steel, railroads)
    barely made a profit due to foreign competition
    and new types of transportation
  • WW I wartime needs were no longer in demand
  • Boom industries of the 20s (autos, construction,
    consumer goods) began to weaken
  • The housing industry began to decline which
    affected other industries such as building
    materials, appliances, new furnishing, etc.
  • Mechanization of Industry machines doing jobs
    of workers more goods less jobs

3
PRODUCTIVITY AND UNEMPLOYMENT
  • in 1920's U.S. Economy was based on the
    productivity purchasing power - employment
    cycle
  • for many goods to be produced , purchasing demand
    had to be there this resulted in high
    employment and a healthy economy
  • between 1924-27, U.S. productive capacity doubled
    but it was due to technological innovation
  • ? electricity and mechanical advances made for
    better production, but no new jobs were added to
    the economy
  • so more consumer goods were available, but there
    weren't enough people to buy them
    (OVERPRODUCTION)

4
Farmers
  • During WW I farmers planted more crops took out
    loans to buy land equipment
  • After WW I agriculture suffered in the 1920s
    since there was now a lack of international
    demand for food crops and prices dropped by 50.
  • To compensate, farmers boosted production which
    cause the prices to further drop
  • Farmers who went into debt lost their farms and
    had their property seized.
  • Many rural banks, who had loaned to farmers,
    began to fail
  • Although Congress twice passed a bill which would
    called for federal price support, President
    Coolidge vetoed it commenting, Farmers have
    never made money. I dont believe we can do much
    about it.

5
Consumers living on credit
  • By the late 1920s Americans were buying less due
    to rising prices, stagnant wages, uneven
    distribution of income and too much credit
  • Production of goods expanded much faster than
    wages
  • People began living beyond their means, often
    buying goods on credit
  • Businesses encouraged consumers to pile up debt
    which people found difficult to pay off
  • Faced with debt, people began to buy less

6
Uneven Distribution of Income
  • 1929, the wealthiest 5 of American families took
    in nearly a third of the nations income
  • The poorest 40 of the population earned just
    over a tenth of the national income
  • this middle class depended on their salaries and
    when productivity declined they lost their jobs
  • and because of low savings, they had to cut back
    on their purchases
  • this decline in consumption among the middle
    class ruined the whole country

7
  • The stock market
  • the public invests in cos. by purchasing stocks
    in return for this they expect a profit
  • because of the 1920s booming economy, money was
    plentiful, so banks were quick to make loans to
    investors
  • investors only had to pay for 10 of the stock's
    actual value at time of purchase
  • this was known as BUYING ON MARGIN, and the
    balance was paid at a later date

8
  • this encouraged STOCK SPECULATION - people would
    buy and sell stocks quickly to make a quick buck
  • Due to this buying selling, stock value
    increased (Ex G.E stock 130 ? 396/share)
  • this quick turnover didn't aid companies. ? they
    needed long term investments so they could pay
    bills (stock value was like an illusion)
  • unscrupulous traders would buy and sell shares
    intentionally to inflate a given co.'s stock
    value
  • all of this gave a false sense of
    security/confidence in the American market

9
Black Tuesday (10/29/1929)
  • beginning in Oct. 1929, investors confidence
    dropped, leading to a
  • market collapse
  • all tried to sell at once and the bottom fell out
    of market panic selling (many bankruptcies as
    banks called in loans)
  • only a tiny minority of people traded on the
    stock exchange, but they possessed vast wealth,
    and the crash had a ripple effect on the economy

10
Financial Collapse Run on Banks
  • Panic!! People rushed to withdraw their money
    from banks
  • Banks could not cover the withdrawals since banks
    had also invested and lost money in the stock
    market
  • 1929 659 banks closed
  • 1933 around 6,000 banks, ¼ of the nations banks
    had failed
  • The federal govt did not protect or insure bank
    accounts at this time

11
Businesses fail- people suffer 1929 - 1932
  • 85,000 businesses went bankrupt
  • Workers lost jobs
  • Unemployment went from 3 in 1929 to 25 by 1933
  • One out of every 4 workers did not have a job
  • Those who had jobs often had to accept pay cuts
    and reduced hours

12
One of the lucky ones
  • In the months before the crash, shrewd stock
    market speculators began to unload their stocks
    and take profits
  • Joseph P. Kennedy, father of John F. Kennedy,
    sold early and did very well.
  • It is said that he knew it was time to get out of
    the market when he received stock tips from a
    shoe-shine boy.

13
Worldwide shock waves
  • Europe also suffered during this period
  • European countries faced high debt payments from
    the war to the US
  • Germany had to pay war reparation after being
    defeated
  • Trade between Europe and the US suffered
  • To encourage European nations to buy US goods,
    Hoover proposed a MORATORIUM - a temporary
    postponement of debt and war reparation payments
  • Before this happened Euro. countries went off the
    gold standard which decreased the value of the
    payments they did make to the US
  • European banks defaulted on payments to US banks

14
  • TARIFF WARS
  • In 1930 Congress passed a high tariff (SMOOT
    HAWLEY) to protect U.S. industry (hoped to
    stimulate purchasing of U.S. goods)
  • this turned out to be a fatal error...
  • Congress did not understand that the world had
    become a GLOBAL ECONOMY
  • in retaliation other countries passed high
    tariffs and no foreign markets purchased American
    goods, so U.S. productivity decreased again

15
Herbert HooverPresident 1928 1932 Republican
  • Know as the Great Engineer
  • Never held an elected office
  • Born poor succeeded with brains and hard work
  • Great humanitarian
  • Rugged Individualism - belief that individuals
    and private agencies should care for the nations
    poor, sick, etc.
  • Feared government handouts would weaken peoples
    self respect
  • Unprepared to deal with the depression
  • Blamed by many for the depression
  • business is on a sound and prosperous basis
    10-25-1929
  • Any lack of confidence in the economic futureis
    foolish 11-29 Hoover

16
Hoover unable to deal with the depression
  • Tried to restore confidence
  • Made it easier to borrow money
  • Began a public works program
  • Did not believe in providing direct relief
  • Banks closed and people lost their money
  • Unemployment skyrocketed
  • Homeless people called newspapers Hoover
    blankets and a turn out empty pocket a Hoover
    flag
  • As people lost their jobs and homes they lived in
    shacks which they called Hoovervilles
  • Cardboard shack

17
Farmers retaliate
  • Overproduction during WW I caused farm prices to
    dropped
  • Farmers dumped milk and burned crops in an
    attempt to raise farm prices
  • Used force to try to stop foreclosures
  • If you refused to leave your farm, it could be
    tractored - torn down
  • On the left, Mrs. Wilsons grandfather, an
    Illinois farmer dumping milk. 1932

18
Hoovervilles
19
Hoover takes action - finally
  • He gradually softened his position on govt
    intervention
  • By 1930 he directed federal funds into projects
    such as the construction of Boulder Dam to
    jump-start the economy and add jobs
  • Federal Farm Board was designed to help raise
    crop prices
  • Glass-Steagall Banking Act increased bank
    reserves and made bank loans easier to get
  • Federal Home Loan Bank Act lower mortgage rates
    and allowed refinancing to avoid foreclosure
  • Reconstruction Finance Corporation provided
    emergency financing to banks, life insurance
    companies, railroads and other large businesses

20
Too little too late
  • Hoover believed the money would trickle down to
    the average citizen through job growth and higher
    wages
  • Critics believed it only helped corporations
  • The poor still needed direct relief
  • Hungry people could not wait for money to trickle
    down to their tables

21
Hoover and the Bonus Army
  • World War I veterans had been promised a cash
    bonus payable in 1945, since 1931, they had been
    allowed to borrow money on the payment
  • They came to Washington D.C. in 1932 to support a
    bill that would pay them the bonus now
  • The bill did not pass and when the Bonus Army and
    their families refused to leave the shantytown
    they were living in, Hoover took drastic measures
  • The army, led by Douglas MacArthur and his aide,
    Dwight Eisenhower, gassed and drove the veterans
    from Washington D.C.
  • Americans were stunned outraged at the govts
    treatment of veterans
  • Big trouble when the govt attacks its own
    citizens

An 11 month old baby died An 8 yr. old was blinded
22
  • 1932 ELECTION
  • 1 out of 4 was unemployed
  • nat'l income was 50 of what it had been in 1929
  • Republicans nominated Hoover ? no hope
  • winner by a landslide FRANKLIN DELANO ROOSEVELT
    (Dem - N.Y. governor)

23
Franklin D. RooseveltPresident 1932 1944
Democrat
  • Married Eleanor Roosevelt, niece of Teddy
    Roosevelt
  • Stricken with polio in 1921 paralyzed the rest
    of his life
  • Many believed his political career was over
  • 1928 elected governor of New York
  • Elected president in 1932
  • Promised the American people a New Deal
  • First Act declaring a bank holiday
  • Used the fireside chat to keep the public
    informed
  • Government engaged in massive spending projects
    to improve the economy
  • Elected for 4 terms as president
  • We have nothing to fear but fear itself FDR

24
Eleanor and FranklinShe will become his legs
often traveling and speaking on his behalf


25
Hardship Suffering
Shantytowns sprung up when people lost
their homes. Later they will be called
Hoovervilles.
26
The Unemployed in cities marching, hanging
around, waiting in a soup kitchen line
27
African and Latino Americans
  • Unemployment rates were even higher and wages
    lower
  • Racial violence occurred
  • 24 African Americans were lynched in 1933
  • Latinos in the southwest were also targets
  • Unemployed whites demanded that Latinos be
    deported
  • Thousands returned to Mexico

28
Mexican woman and Black farm family
29
Rural Areas - Losing your property
One advantage food, that is until you lose your
farm. Farmers who lost their farms became tenant
farmers barely managed. Many left and moved
west.
30
The Dust Bowl drought and over production
of the land
31
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32
Oakies - Looking for a better life in California
Followed Route 66 to California
33
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34
The automobile was very important
35
Men in the streets looking for work
36
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37
Riding the rails
2 million men left their families and wandered
the country
38
The federal govt did not provide Direct
Relief to the poor
  • Some cities and charities did provide some relief
  • In New York, the weekly payment was 2.39 per
    family
  • Well below what a family needed

39
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40
Women children
41
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42
Social and Psychological effects
  • People were demoralized
  • Suicide rate went up by 30
  • More people were admitted to mental hospitals
  • People stopped going to the doctor dentist
  • Dreams of college, marriage, raising families
    were put on hold
  • Families helped each other showed kindness to
    strangers
  • People developed habits of saving and thriftiness

43
The Ugly Facts
  • 85,000 businesses failed
  • 6,000 banks closed
  • 400,000 farms were lost because payments could
    not be made
  • 12,000,000 people were out of work
  • 13 of working women were the only source of
    income for the family
  • By 1932, between 1 and 2 million Americans were
    homeless
  • At least 25,000 families were nomadic, looking
    for work
  • Malnutrition cases rose from 18 to 60 by 1931
  • 5,000 schools closed due to lack of funds
  • 12.00 the monthly Red Cross relief payment
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