Ch. 9.Ch. 9. The Great The Great DepressionDepression

(1929-1932).(1929-1932).The depression had devastating effects in boththe industrialized countries and those which exported raw materials. International tradedeclined sharply, as did personal incomes,tax revenues, prices and profits. Cities all around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming and rural areas sufferedas crop prices fell by 40 to 60 percent. Mining& logging areas had perhaps the most striking blow because the demand fell sharply and therewere few employment alternatives. Liberal democracy was weakened and on the defensive, as dictators such as Adolf Hitler, Joseph Stalin & Benito Mussolini made major gains, which set the stage for WWII in 1939.

Dorothea Lange's Dorothea Lange's Migrant MotherMigrant Motherdepicts destitute pea pickers in depicts destitute pea pickers in California, centering on Florence California, centering on Florence Owens Thompson, a mother of 7Owens Thompson, a mother of 7children, age 32, in Nipomo, CA,children, age 32, in Nipomo, CA,

March 1936. March 1936.

Sec.Sec. I.I. Causes. Causes.

A.A. Election of 1928 – Decided by Election of 1928 – Decided by religious religious prejudice & Prohibition prejudice & Prohibition (Hoover won).(Hoover won).

Republican Herbert Hoover was a Quaker, a “dry” & supported Prohibition. Democrat Alfred Smith was a Catholic and a “wet.” Many Protestants were willing to believe that if Smith won, the Catholic

Church would run the US gov’t. Republicans took full credit for economic prosperity. Hoover slogan “two cars in every garage.”

Hooverwas

from CA.

Alfred E. Smith endured a smear campaign inthe 1928 election because he was Catholic.

B.B. Bull Market – Long period of rising Bull Market – Long period of rising stock stock prices led many to risky prices led many to risky investments investments (buy stocks).(buy stocks).

1.1. Stock Market – System of Stock Market – System of buying & buying & selling shares in selling shares in companies.companies.

Margin – buy stocks with small down payment (10%), the stockbrokerloaned the rest; safe as long as the market rises.

Margin Call – Broker demands that the investor repay the loan at once. Speculation – Instead of investing in company’s future, they took risks

and bet the market would continue to rise & make money quickly.

The opposite of aBull Market (confident)

is the Bear Market(pessimistic).

StockExchangeMarketsare in

several major

cities (NYC).

C.C. The Great Crash – The October The Great Crash – The October 29, 29, 1929, stock market crash led to 1929, stock market crash led to bank bank failures across nation.failures across nation.

1.1. Black Tuesday – Black Tuesday –

stocks lost $10-stocks lost $10-

15 billion in value.15 billion in value.

When the market began declining on Oct 21st, frightened customersbegan selling their stocks, lowering their value.

The Stock Market Crash was not the major cause of the Great Depression, but it undermined the economy’s ability to hold outagainst its other weaknesses.

Groucho looked around and spotted his broker:“He was sitting in front of the now-still ticker tape machine, with his head buried in his hands. Ticker tape was strewn around him on the floor and the place…looked as if it hadn’t been swept out in a week. Groucho tapped [him] on the shoulder and said, ‘Aren’t you the fellow who said nothing could go wrong?’ ‘I guess I made a mistake,’ the broker wearily replied. ‘No, I’m the one who made a mistake,’ snapped Groucho. ‘I listened to you.’”

-- Quoted in 1929: The Year of the Great Crash

Groucho Marx, comic star of stage and screen, was bankrupt.Groucho Marx, comic star of stage and screen, was bankrupt.

A ticker tape machineA ticker tape machineprints the current prints the current

stock prices.stock prices.

D.D. Banks in a Tailspin: Banks in a Tailspin:

1.1. Lost $ to investors; Lost $ to investors;

2.2. Lost $ in market crash; Lost $ in market crash;

3.3. Made fewer loans, making less $ Made fewer loans, making less $ available, causing a recession.available, causing a recession.

4.4. Not govNot gov’’t insured (customers lost t insured (customers lost $ & $ & confidence in banks).confidence in banks).

5.5. Runs on banks (many Runs on banks (many

bankrupt).bankrupt). During first two years of Depression, over

3,000 banks (10% of national total)closed.

The banks had

invested deposited

$ in the Stock Market

a)a) Bank Holidays – Closed Bank Holidays – Closed banks banks by many Governors by many Governors to prevent to prevent bank runs.bank runs.

E.E. Uneven Distribution of Income – Uneven Distribution of Income – Overproduction caused Overproduction caused

depression.depression.

Many Americans used Installment Plans to purchase goods. 1929, top 5% of U.S. households earned 30% of the nation’s income;

In contrast, 2/3 of Americans earned less than $2,500 a year, leaving little expendable income.

2007

Most economists agree that overproductionwas a key cause of the Great Depression.

F.F. Loss of Export Sales – The Loss of Export Sales – The ‘‘Hawley-Smoot Hawley-Smoot

TariffTariff’’ raised tariffs to all time high. raised tariffs to all time high.

Higher tariffs damaged sales abroad and made products more Higher tariffs damaged sales abroad and made products more expensive for Americans.expensive for Americans.

U.S. banks made fewer loans to foreign companies making them U.S. banks made fewer loans to foreign companies making them less likely to buy American products.less likely to buy American products.

Representative W.C. Hawley, and Representative W.C. Hawley, and Senator Reed Smoot shake hands in Senator Reed Smoot shake hands in agreement on new Republican tariff agreement on new Republican tariff

bill.bill.

G.G. Mistakes by the Federal Reserve Mistakes by the Federal Reserve – Kept – Kept interest rates low.interest rates low.

With low interest rates, it encouraged banks to make risky loans; Led business leaders to think the economy was still expanding and they borrowed money to expand production leading to overproduction when sales were falling.

The The Federal Reserve SystemFederal Reserve System (informally (informally The FedThe Fed) is the) is thecentral banking system of thecentral banking system of theU.S. Created in 1913 by the U.S. Created in 1913 by the Federal Reserve Act, it is a Federal Reserve Act, it is a quasi-public (part private, partquasi-public (part private, partgovgov’’t) banking system.t) banking system.

12 regional 12 regional Federal Reserve Federal Reserve BanksBanks located in major cities located in major cities throughout the nation.throughout the nation.

The slowdown in retail led to layoffs – Lower radio sales led to fewer orders for copper wire, wood cabinets, and glass radio tubes; Led to layoffs in Montana copper mines, Minn lumberjacks, and Ohioglassworkers; Layoffs led to even fewer purchases.

II.II. Life During the Depression.Life During the Depression.

As banks continued to fail and people lost their jobs and homes, soup kitchens and shantytowns sprang up throughout the U.S.

Droughts during the 1930’s made the Depression worse for farmers.

One of the Hoovervilles.

4,004 Banks closed.25% unemployment.31% loss of nation’s production.Hoover → local responsibility.

A.A. The Depression Worsens.The Depression Worsens.

1. Soup Kitchens – Charities set-up to 1. Soup Kitchens – Charities set-up to give poor people a meal.give poor people a meal.

2. Shantytowns – Homeless people put 2. Shantytowns – Homeless people put up shacks on unused or public up shacks on unused or public lands, forming communities.lands, forming communities.

3. Hoovervilles – Blaming President 3. Hoovervilles – Blaming President Hoover; name for shantytowns.Hoover; name for shantytowns.

4. Hobos – many homeless & 4. Hobos – many homeless & unemployed unemployed ““rode the rails.rode the rails.””

Hobos walked, hitchhiked, or wandered around the U.S.Hobos walked, hitchhiked, or wandered around the U.S.

ChildrenChildrenin frontin frontof signs of signs criticizingcriticizingHoover's Hoover's policies.policies.

A Hooverville

Soup line and

Soup kitchen

5.5. Dust Bowl – The Great Plains Dust Bowl – The Great Plains pastures pastures & wheat fields became & wheat fields became vast dust bowl.vast dust bowl.

a)a) Nearly penniless, many left Nearly penniless, many left and and headed West.headed West.

Crop prices began to drop in the late 1920Crop prices began to drop in the late 1920’’s; The wild grasses that helds; The wild grasses that heldthe moisture was gone; A drought began in 1932; Dust covered the moisture was gone; A drought began in 1932; Dust covered everything; More severe storms.everything; More severe storms.

Many came to CA, but met with hostility due to competing for jobs; Many came to CA, but met with hostility due to competing for jobs; most remained homeless and impoverished.most remained homeless and impoverished.

Those from OK became known as Those from OK became known as ““Oakies.Oakies.””

Route 66Route 66

“(Get Your Kicks) Route 66” by Nat King Cole.

B.B. Escaping the Depression – Movies Escaping the Depression – Movies & & radio shows allowed people to radio shows allowed people to forget the forget the miseries of Depression.miseries of Depression.

1.1. Hollywood Fantasy Factory – Hollywood Fantasy Factory – 60-90 60-90 million weekly viewers.million weekly viewers.

a) Walt Disney – 1a) Walt Disney – 1stst feature- feature-length length animated film animated film Snow Snow WhiteWhite, 1937., 1937.

Snow WhiteSnow White’’ss box office hit led to box office hit led to The Wizard of OzThe Wizard of Oz (1939, MGM). (1939, MGM). Gone With the WindGone With the Wind..

Groucho Marx – comedy of Groucho Marx – comedy of Animal CrackersAnimal Crackers.. European artists, producers, and directors moved to Hollywood for European artists, producers, and directors moved to Hollywood for

work and escape dictatorships.work and escape dictatorships. GermanyGermany’’s Marlene Dietrich – movies s Marlene Dietrich – movies MoroccoMorocco & & Shanghai ExpressShanghai Express.. SwedenSweden’’s Greta Garbo – Highest paid female actress during 1930s Greta Garbo – Highest paid female actress during 1930 ’’s.s.

Dietrich Garbo

2.2. Radio – Families listened Radio – Families listened every day.every day.

a) Soap Operas – Daytime a) Soap Operas – Daytime dramas.dramas.

Jack Benny, George Burns and Gracie Allen, or the Green Hornet. The shows sponsors were often makers of laundry soap, hence the name.

BurnsandAllen

3.3. Art – Captured experiences of Art – Captured experiences of people.people.

a)a) John Steinbeck – John Steinbeck – The Grapes The Grapes of of WrathWrath (1939); OK family (1939); OK family escaping escaping the Dust Bowl for the Dust Bowl for CA.CA.

Describes people in flight along “Route 66.”

JohnSteinbeck

Many Californians felt thatthe arrival of Dust Bowl refugees represented

more unwanted people who were unemployed.

b.b. William Faulkner – William Faulkner – The The Sound and Sound and the Furythe Fury..

Stream of Conscious technique, shows what the characters are thinkingStream of Conscious technique, shows what the characters are thinkingbefore they speak; Exposed hidden attitudes of southern whites before they speak; Exposed hidden attitudes of southern whites

and African Americans in a fictional MS town.and African Americans in a fictional MS town. Grant Wood (painter) – Grant Wood (painter) – American GothicAmerican Gothic, led the regionalist school , led the regionalist school

emphasizing traditional values, especially in the Midwest and South.emphasizing traditional values, especially in the Midwest and South.

The Sound and the Fury is a Southern

Gothic novel writtenby American author

William Faulkner, whichmakes use of the

stream of consciousnessnarrative technique

pioneered by Europeanauthors such as James Joyce & Virginia Woolf.

American Gothic, Grant Wood (1930)

III.III. Pres. Hoover Responds.Pres. Hoover Responds.

Hoover’s cautious efforts did not help the economy; many RepublicanCongressmembers lost their seats in mid-year elections (49 Congress seats and their majority; only held Senate by 1 seat).

In March 1930, Hoover said “the worst effects of the crash…will have passed during the next 60 days.”

Drk Blue = 6+ Democratic gain Med Blue = 3-5 Democratic gainLgt Blue = 1-2 Democratic gainGray = no net change

Hoover was a successful engineer and formerhead of the Food Administration during WWI.

A.A. Public Works – GovPublic Works – Gov’’t financed t financed building building projects (Hoover Dam).projects (Hoover Dam).

New construction made up only a fraction of the lost jobs. Hoover refused to massively increase gov’t spending.

The Hoover Dam generatesover 4 million kilowatt-

hoursof electricity per year

(servingover a million people).

Construction began in 1931 and was completed in 1935.It was designated a NationalHistoric Landmark in 1985

B.B. Banks.Banks.

1.1. Reconstruction Finance Reconstruction Finance Corporation Corporation (RFC) to make loans (RFC) to make loans to banks, to banks, railroads, railroads, agricultural agricultural

institutions.institutions.

Failed to meet needs; economy continued to decline.

The agency gave $2 billion in aid to state and local governments and made

loans to banks, railroads, farm mortgageassociations, and other businesses.

It was continued by the New Deal and played a major role in handling the

Great Depression in the U.S. and settingup the relief programs that were taken

over by the New Deal in 1933.

C.C. Help for Citizens.Help for Citizens.

1.1. Relief – $ that went directly Relief – $ that went directly to to needy families.needy families.

Hoover did not believe the federal govHoover did not believe the federal gov ’’t should participate in relief.t should participate in relief. Reluctantly, Hoover signed the Emergency Relief and Construction Reluctantly, Hoover signed the Emergency Relief and Construction

Act (1932) with $1.5 billion for public works and $300 million Act (1932) with $1.5 billion for public works and $300 million in loans to states for direct relief; Could not reverse the collapse.in loans to states for direct relief; Could not reverse the collapse.

The Empire State Building is a 102-story Art Deco skyscraperin New York City, NY at the intersection of 5th Ave & West 34th St.Its name is derived from the nickname for the state of NY.It stood as the world's tallest building for more than forty years,from its completion in 1931 until construction of the World TradeCenter's North Tower was completed in 1972.

Empire StateEmpire StateBldg.Bldg.

Lunch break during construction Lunch break during construction of the Empire State Bldg., 1930.of the Empire State Bldg., 1930.

The Chrysler Building is an Art Deco skyscraper in NYC,standing at 1,047 ft high, it was briefly the world's tallest building (now 3rd in NYC) before it was surpassed by the Empire State Bldg in 1931. However, the Chrysler Buildingremains the world's tallest brick building.

ChryslerChryslerBldg.Bldg.

D.D. Angry Mood.Angry Mood.

1.1. Hunger Marches held by the Hunger Marches held by the Communist Party.Communist Party.

Dec 5, 1932, freezing cold, about 1,200 hunger marchers gathered &chanted “Feed the hungry, tax the rich.”

Police herded them to a blocked-off area where they had to spend thenight, deprived them of water, food, and medical attention, untilCongress allowed them their right to petition their gov’t.

The march was organized by Communists,but non-Communists joined the protest

against Ford as well. The Dearborn police,who functioned almost as a branch of

Ford's own company police, confronted the marchers and four strikers were killedin the conflict. 15,000 people joined the

Hunger March funeral in Detroit.

2.2. Farmers destroyed their crops Farmers destroyed their crops to to raise prices.raise prices.

Low crop prices since WWI; Between 1930-1934, creditors foreclosed on almost 1 million farms.

3.3. Bonus Army – WWI veterans Bonus Army – WWI veterans marched to Washington marched to Washington

D.C. to D.C. to lobby Congress to lobby Congress to approve their approve their bonuses.bonuses.

Congress approved $1,000 bonus per veteran in 1924, but delayed due to Depression.

Also called the “Bonus Marchers.”

In the summer of 1932, at the height of the

Depression, some 45,000veterans of the Great Wardescended on Washington,D.C. from all over the U.S.to demand the bonus thathad been promised them 8 years earlier for their

wartime service. They livedin shantytowns, white & black together, and for 2

months they protested andrallied for their cause.

Sometimes c

alled

the Bonus Marchers

Shacks, put up by the Bonus Shacks, put up by the Bonus Army on the Anacostia flats,Army on the Anacostia flats,

Washington, DC, burning Washington, DC, burning after the battle with the after the battle with the

military, 1932. military, 1932.

After the After the Senate voted down the billSenate voted down the bill, most went home, but many , most went home, but many stayedstayed

and moved into unoccupied buildings downtown; Hoover and moved into unoccupied buildings downtown; Hoover ordered ordered

the buildings cleared and the police used brutal force (fired the buildings cleared and the police used brutal force (fired into into

crowd killing two veterans) and the Army under Douglas crowd killing two veterans) and the Army under Douglas MacArthurMacArthur

(used bayonets, tear gas, and killed a baby boy).(used bayonets, tear gas, and killed a baby boy).

DouglasDouglasMacArthurMacArthur

a) General MacArthur dispersed the marchers.

Hoover failed to resolve the Depression, but did expand the economicrole of the federal gov’t more than any other; The Reconstruction

Finance Corp was first time the federal gov’t established an agency tostimulate the economy during peacetime; Hoover will be remembered

for routing the Bonus Marchers and lingering Depression.

African-Americans, in African-Americans, in front of a pre-1929 front of a pre-1929 billboard, stand in abillboard, stand in asoup line during the soup line during the

Great Depression.Great Depression.

ActivityActivityCause EffectEffect

1. 1. The Stock The Stock Market CrashMarket Crash

 

2. 2.  

3. 3.  

4.4.

5. 5.  

6. 6.  

In groups of two, list the Causes and Effects of issuesduring the Great Depression.