The Great Depression

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The Great Depression

• http//www.youtube.com/watch?vJDcR-ZS5fyw

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Historians disagree as to the causes of the Great
Depression. Most scholars would include
STOCK MARKET CRASH AND FINANCIAL PANIC
MONETARY POLICY
INDUSTRY
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• Lack of Diversification
• Prosperity of 1920s had been based largely upon
  certain industries (automobiles and construction)
  that were starting to decline
• Construction fell from 11 billion to 9 billion
  from 1926 to 1929
• Newer emerging industries (petroleum, chemicals,
  plastics, consumer) had not developed enough to
  combat decline of others

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• Misdistribution of Wealth
• Vast majority of wealth and increase in income in
  upper 1
• Half of families lived at or below minimum
  subsistence level

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Chart showing wages of unskilled workers. Notice
how little the wages changed during the supposed
prosperity of the 1920s.
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• Overproduction of goods and food products and
  decline in purchasing power
• Extra manufactured goods mean cause layoffs,
  which make the recession more severe
• Newer technology helped caused massive increases
  in farm production, causing vast decreases in
  prices of crops

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Table shows the sharp decline in the prices of
various products from American farms
Agricultural product 1912-1913 1932-1933
Corn (per bushel) 0.56 0.20
Wheat (per bushel) 0.88 0.41
Oats (per bushel) 0.34 0.17
Butter (per lb) 0.21 0.13
Butterfat (per lb) 0.25 0.16
Wool (per lb) 0.24 0.10
Hogs (per cwt) 7.50 3.80
Milk (per cwt) 1.79 0.90
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• Consumer debt and the credit culture
• Buying on credit throughout 1920s caused great
  expansion of debt
• Farmers were deeply in debt from farm crisis in
  the 1920s

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• International trade and debt structure
• Debt structure from World War I disrupted world
  economy
• Allies struggled to pay back United States since
  Germany/Austria also unable to pay
• US made new loans to Allies to pay older debts,
  furthering debt cycle
• Fordney-McCumber Act in 1922 put high tariffs on
  industrial goods
• Other countries used retaliatory tariffs
• Decrease in foreign demand for US goods

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• Stock Market Crash
• Sept. 1929 stock prices had peaked, rising over
  40 since May 1928
• On Oct. 21 and 23, 1929 thousands of stocks were
  sold, which caused stock prices to fall
• Black Tuesday Oct. 29, 1929 the bottom drops
  out of the market
• Stocks lost 10-15 billion dollars that day
• The crash brought an end to the prosperous 1920s

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• Speculation and the margin
• Speculation-buying stocks at great risks hoping
  for prices to rise
• Many banks invested unwisely in the stock market
• Margin-investors purchase stocks by only making
  small initial payment and taking out loans for
  the rest
• Margin call-banks could call in loans at anytime
  forcing quick sales of stocks and often inability
  to pay
• http//www.youtube.com/watch?vDXFAf-V9Qpksafety_
  modetruepersist_safety_mode1

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• Stock Market Crash
• Many of causes already in existence, but acts as
  catalyst for further chain of events

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• Poor banking practices and policies
• Over 9000 banks go bankrupt or close their doors
  to avoid bankruptcy between 1930 and 1933
• Money in the bank was not guaranteed and many
  experience runs on the bank that help force
  closures
• Banks unable to loan more money due to losses
  from loans to speculators
• Federal Reserve
• Federal Reserve before Depression keeps interest
  rates very low which encourages more speculation
• After Depression starts, Federal Reserve raises
  interest rates making it harder to pay

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• Collapse of American economy
• Gross national product declines from 104 billion
  in 1929 to 76.4 billion in 1932
• Capital investment decreased from 16.2 billion
  in 1929 to around 350 million in 1933
• Consumer price index declined 25
• Gross farm income dropped from 12 to 5 billion

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Vast unemployment

• Unemployment statistics
• Roughly 25 of workforce was unemployed
• 1/3 of workers experienced cuts in wages or hours
• Unemployment averages 20 for 1930s

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• Conditions for unemployed
• Unemployment viewed as personal failure, shame,
  and challenge to masculinity
• State and local relief agencies unable to serve
  vast numbers
• Charities attempt to support, but struggle
• Nearly 2 million take to the roads and rails

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Conditions for minorities and women

• Often excluded from relief programs
• Racist hiring practices in the South lead to 50
  African-American unemployment
• Many blacks move north, but economic conditions
  little better
• Hispanics in west displaced from jobs, many
  deported and given little access to relief or
  services in the Southwest
• Chinese and Japanese in West are displaced and
  attempt assimilation efforts
• Many women discouraged from working if married,
  but female employment actually increases by 20
• Jobs held by women were less effected and men
  often less interested in the positions

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Farming Crisis and the Dust Bowl

• Farmers already struggling and 1/3 lost land
• Drought known as the Dust Bowl began in the
  Great Plains in 1930 from Texas to the Dakotas
• Sweeping winds carried soil away or buried
  beneath dust
• Grasshoppers destroyed many remaining crops
• Many abandoned farming to move to California in
  search of jobs (the Okies)
• Okies portrayed in Grapes of Wrath
• Malnutrition and hunger become increasing
  problems due to financial and farm crises
• http//www.history.com/shows/america-the-story-of-
  us/videos/the-hoover-damamerica-black-blizzard

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States Affected by Dust
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Politics of Hoover

• Hoover was elected in 1928 after overseeing
  growth of economy as Secretary of Commerce
• Believed US economy was strong and could recover,
  initially without much government aid

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• Hoover opposed deficit spending, fearing it would
  make the economy recover more slowly
• Hoover also opposed direct relief (money) going
  from the federal government to the impoverished
• http//www.history.com/shows/america-the-story-of-
  us/videos/the-hoover-damthe-hoover-dam

"I do not believe that the power and duty of the
General Government ought to be extended to the
relief of individual suffering. . . . The lesson
should be constantly enforced that though the
people support the Government the Government
should not support the people." (1930)
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Policies of Hoover to end the Depression

• Initially tried to downplay public fear
• Volunteerism Got industries to pledge to keep
  factories open and not cut wages, but ultimately
  fails
• Initially able to use business connections
• Promises were broken by 1931 due to economic
  collapse

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• Use and rejection of public works projects
• Encouraged state and local governments to use
  public works projects to create jobs
• Initially proposed 423 million increase in
  federal spending on public works
• Abandons when economy worsens in order to keep
  the budget balanced
• Proposes tax increase in 1932 to help government
  avoid debt

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• Agricultural Marketing Act
• Created federally sponsored Farm Board to make
  loans to marketing cooperatives or corporations
  to buy surpluses
• Hawley-Smoot Tariff of 1930 increased tariffs on
  75 farm products to attempt to protect farmers

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• Reconstruction Finance Corporation, established
  in 1932
• Made to provide federal loans to troubled banks,
  railroads, and other businesses
• Loans generally only given to those with large
  collateral
• Budgeted 1.5 billion for public works
• Did not spend much of budgeted amounts and only
  really invested in projects that would eventually
  pay for themselves (toll bridges, public housing)

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Backlash Against Hoover

• Decline in popularity
• Democrats gain control of House in 1930
• Shanty towns established outside cities become
  known as Hoovervilles
• Hoover only passes larger measures after economy
  experiences large drop in 1931
• http//www.youtube.com/watch?vsfylLnHjcu0

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Family
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US Hooverville
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• Well, Everything Helps (1930 or 1931)
• Herb Block, Chicago Daily News
• Library of Congress
• As the Depression tightened its hold on American
  life, avid angler President Herbert Hoover cast
  about for ways to improve the economy. He
  sometimes took working vacations at his fishing
  camp on the Rapidan River (now in Shenandoah
  National Park) with members of Congress and his
  administration.

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• Hunger Marches
• Organized by American Communist Party to demand
  increased taxation of rich to feed poor
• Revolts by farmers
• Farmers had large mortgages to pay for land and
  equipment and had farms foreclosed
• Farmers destroy crops in attempt to raise prices

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Bonus Marchers

• US government in 1924 had promised WWI veterans a
  bonus to be paid in 1945
• Bill was in Congress to allow early payment due
  to the depression
• More than 20,000 veterans march on Washington
  forming the Bonus Army, vowing to stay in
  Hooverville camps in Washington until the law was
  passed

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• Senate votes down the bill and many return home
• Hoover ordered the camps to be cleared by police
  and two veterans die after resisting
• Sends in US Army to clear out camps, with tanks
  sent down Pennsylvania Avenue and the tent city
  burnt to the ground
• Acts as perhaps final blow to Hoovers public
  image
• http//www.youtube.com/watch?vdWvCCxOUsM8safety_
  modetruepersist_safety_mode1

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Election of 1932

• Hoover ran for reelection from the Republican
  Party
• Franklin Delano Roosevelt, governor of New York,
  runs for the Democrats
• FDR popular for use of government funds in NY to
  help people and for struggle against polio
• Emphasizes economic issues in the campaign
• Promises a New Deal for the American people,
  but gives few specifics for plan

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Hoover in 1928
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• Roosevelt wins in a landslide (472-59)
• Democrats won majorities in both houses of
  Congress

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The Interregnum or Lame Duck period

• FDR had to wait until March 4, 1933 to take
  office
• Hoover attempts to get FDR to promise traditional
  economic practices, FDR refuses
• Banking collapse worsens in February 1933
• Hoover asks FDR to make promises against
  adjusting currency, heavy borrowing, or increase
  in debt, FDR refuses
• FDR survives assassination attempt in Miami on
  February 15, 1933 by Giuseppe Zangara, who
  accidentally kills the mayor of Chicago during
  the shooting

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(No Transcript)
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• FDR inaugurated on March 4, 1933
• 20th Amendment Ratified on January 23, 1933
• Newly elected presidents take office on January
  20 instead of March 4
• Congress starts their terms on January 3

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"Brother, Can You Spare a Dime," Lyrics by Yip
Harburg, music by Jay Gorney (1931) They used
to tell me I was building a dream, and so I
followed the mob, When there was earth to plow,
or guns to bear, I was always there right on the
job. They used to tell me I was building a
dream, with peace and glory ahead, Why should I
be standing in line, just waiting for bread?
Once I built a railroad, I made it run, made it
race against time. Once I built a railroad now
it's done. Brother, can you spare a dime? Once I
built a tower, up to the sun, brick, and rivet,
and lime Once I built a tower, now it's done.
Brother, can you spare a dime? Once in khaki
suits, gee we looked swell, Full of that Yankee
Doodly Dum, Half a million boots went slogging
through Hell, And I was the kid with the
drum! Say, don't you remember, they called me Al
it was Al all the time. Why don't you remember,
I'm your pal? Buddy, can you spare a dime? Once
in khaki suits, gee we looked swell, Full of
that Yankee Doodly Dum, Half a million boots
went slogging through Hell, And I was the kid
with the drum! Say, don't you remember, they
called me Al it was Al all the time. Say, don't
you remember, I'm your pal? Buddy, can you spare
a dime?