CICERO © 2008 THE GREAT DEPRESSION IN THE UNITED STATES

History Beyond The Textbook

CICEROHistory Beyond The Textbook

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THE GREAT DEPRESSIONIN THE UNITED STATES



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CAUSES OF THE GREAT DEPRESSION

The Stock Market Crash of 1929

The Dust Bowl

Debt in the United States

The Smoot-Hawley Tariff Act

United States Federal Reserve and Money Supply

United States Business

United States President

Herbert Hoover

Tenants were replaced from the land during the

Depression



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THE STOCK MARKET CRASHThe Great Depression started in the United States with the Stock Market Crash. The crash took place on October 24, 1929, a date that was called “Black Thursday.” That day 12.9 million shares of stock were traded after the stock market had been surging since September with a record high mark of 381.17. Many economic leaders thought a stock market panic could potentially occur. Richard Whitney, the vice president of the stock market, hoped to quell the solution by buying stock in many businesses for more than the normal price. This temporarily caused a halt in trading, but this did not last long.

A large crowd gathers outside of the New York Stock Exchange



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THE STOCK MARKET CRASHBefore long, national newspapers began covering the activity with the stock market. This prompted many people to begin pulling out of the market on Monday, October 28. The market was down 13 percent by the end of the day. The next day, known as “Black Tuesday,” 16.9 million shares of stock were traded, resulting in a loss of $14 million on that one day. In total, $30 million was lost during the five-day period.

The trading room of the New York Stock Exchange after the crash of 1929



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THE DUST BOWLThe Dust Bowl was a weather-related occurrence that happened in the United States from 1930 to 1936. It consisted of dust storms that would cause much damage to the American lands. There were severe droughts, a normal occurrence in these areas, made worse by unwise farming practices. When deep plowing of the land occurred, the grass was destroyed. This caused the soil to dry up. When a wind would come, the dried-up soil would turn into dust and blow to the east and the south. Some dark dust clouds reached as far away as Washington, D.C., and New York City. The states most affected by the Dust Bowl were Kansas, New Mexico, Oklahoma, Texas, and Colorado.

This picture depicts a farmer and two of his sons during one of the Dust Bowl

storms in Oklahoma.



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DEBT IN AMERICAThe United States found itself in a significant amount of debt at this time. Americans had grown dependent on cheap credit. In the short term, it seem liked a good idea. But over time, both consumer and commercial debt began to mount. Those who were already in debt when the prices for products decreased risked going into default. A significant number of layoffs occurred, resulting in an unemployment rate of 25 percent. Those who worried about their money began to withdraw the majority of their money from the bank. Banks were now in a panic, and there was nothing that the Federal Reserve could do to correct the situation.

Industrial production in the United States, from 1928 to 1939



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DEBT IN AMERICAThe debt continued to grow in the United States. This was due to the price of products and the average income of a United States citizen falling close to 20 to 50 percent. All of the debts, however, remained at the same dollar amount. In the aftermath of the panic of 1929 and for the majority of 1930, approximately 744 U.S. banks failed. In total, about 9,000 banks failed during the 1930s. Those who had deposited money lost about $140 billion in deposits. Banks were now forced to build up their reserves and give out fewer loans to people.

The effect of the Stock Market Crash on the Dow Jones Industrial Average in 1929



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SMOOT-HAWLEY TARIFFThe Smoot-Hawley Tariff Act has been blamed by many as one of the reasons why the Great Depression was made worse in the United States. The tariff reduced international trade and caused retaliatory tariffs to occur in other countries. This tariff act caused American exports to fall from $5.2 billion in 1929 to $1.7 billion in 1933. Many products were hit hard by this decline, such as cotton, wheat, tobacco, and lumber. Historians have stated that the decline in prices of farm exports had caused many farmers in the United States to default on their loans.

Representative W.C. Hawley (left) and Senator Reed Smoot shake hands on their

Smoot-Hawley Tariff Act.



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U.S. FEDERAL RESERVE& MONEY SUPPLY

Monetarists have accused the United States Federal Reserve System of making poor choices that allowed for problems in banking in the United States to continue. The Federal Reserve allowed the money supply in the United States to shrink by one-third from 1929 to 1933. Originally, the downward turn of the economy, thanks to the Stock Market Crash, would have caused just another recession. But thanks to large banks such as the Bank of the United States failing, people began to panic.

The Seal of the United States Federal Reserve System



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U.S. FEDERAL RESERVE& MONEY SUPPLY

Businessmen were not able to get new loans, nor could they renew their old ones because there was little money available. The amount of credit that the Federal Reserve could give out was limited, however, because there must be a little bit of gold that backed the credit being issued. By the time the Depression began, the Federal Reserve had reached the limit.

The United States Federal Reserve Building in Washington, D.C.



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UNITED STATES BUSINESSWhen Franklin Delano Roosevelt was elected United States president in 1932, he blamed the big businesses that were prevalent in the United States. Roosevelt, along with the majority of Democrats, felt that business had too much unregulated power. During his many terms in office, Roosevelt would try to fix the problems of the Great Depression by implementing many new programs and policies under the New Deal.

United States President Franklin D. Roosevelt



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LIFE DURING THE DEPRESSION

The Great Depression was physically and psychologically devastating to people. People were losing their homes, in addition to not having enough food and clothing to meet their needs. Starvation became a problem during this time. It was very common to see people digging through dumpsters for food. While starvation was fairly common, few people died from it. Many people began to blame themselves for not achieving success during the Depression. They felt success only went to those who deserved it. Men walking around in search of jobs

during the Great Depression



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LIFE DURING THE DEPRESSION

Children were greatly affected by the Great Depression. They now had to accept responsibilities at a younger age than normal. In a few instances, teenagers were able to find jobs before their parents could, and in a sense, became the “breadwinners” of the family. In these instances, the children would have to help comfort their parents who were suffering from the effects of the Great Depression. Minorities were hurt as well. Half of all black workers in 1932 were unemployed.

Older children had to take care of younger siblings.



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HOOVERVILLES

Hoovervilles were names given to small, rundown towns in the United States during the Great Depression. Hundreds of tiny shacks and tents populated the Hoovervilles, which were comprised of people who had lost most of their possessions. Named after former United States President Herbert Hoover, people who dwelled in the Hoovervilles would sleep anywhere. Even though the lands were on private property most of the time, the authorities would allow the people to stay there, mostly because they had nowhere else to go. Many different terms came out of the Hoovervilles, such as the “Hoover wagon,” which was a car with horses tied to it.

A Hooverville near Portland, Oregon



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FDR AND THE NEW DEALPresident Franklin D. Roosevelt began to argue that the United States economy must be restructured in order to help prevent another depression. Roosevelt then instituted the New Deal, which was a policy that created a series of programs to help employ people in America, in addition to giving them relief and reform. One program, the National Recovery Administration, provided work to Americans through government spending. Minimum prices and wages were set in all lines of work. Labor codes and standards for the work place were also set up.

President Roosevelt signs the Tennessee Valley Authority, part of the New First Deal,

in action



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FIRST NEW DEAL PROGRAMS

(FDIC) Federal Deposit Insurance Corporation

(CCC) Civilian Conservation Corps

(FERA) Federal Emergency Relief Administration

(CWA) Civil Works Administration

(AAA) Agricultural Adjustment Administration

(TVA) Tennessee Valley Authority

(NRA) National Recovery Administration

(PWA) Public Works Administration

Members of the CCC (Civilian Conservation

Corps) doing road construction in Ohio



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THE SECOND NEW DEALMany people were still demanding that steps be taken to improve the economy. The Second New Deal, passed in 1935, focused more on pro-labor movements and not being in favor of businesses. The National Labor Relations Act (Wagner Act) helped protect collective bargaining. This caused growth in labor unions in the American Federation of Labor. The Works Progress Administration (WPA) created many blue-collar jobs for men in the United States. The National Youth Administration (NYA), under the direction of future United States President Lyndon B. Johnson, provided the same benefits for children and young adults.

The symbol of the Works Progress Administration (WPA)



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THE SOCIAL SECURITY ACTCongress passed the Social Security Act in 1935. This created a pension that would be given to someone when they retired. It also created a plan where those who were temporarily out of employment would still be able to get a paycheck. Money was also made available to those who had physical problems. This plan had a significant lasting effect on the American culture. Those who were suffering in society would be granted aid and helped. This act also made people think differently about retirement.President Roosevelt signs the Social Security

Act into effect on August 14, 1935



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THE RECESSION OF 1937In 1936, the majority of the economy had regained its positions to the time before the Stock Market Crash. Unemployment, however, was still at a high rate. The American economy fell again in 1937 and lasted through 1938. Unemployment rose from 14.3 percent in 1937 to 19 percent in 1938. Roosevelt, citing his and the Democrats’ dislike of big business, fought against the various monopolies, which they believed were the cause of the Great Depression. This maneuver was short lived. World War II soon began and the government focused its efforts there.

The total employment in the United States from 1920 to 1940. This graph does not

include farms and the WPA.



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THE RECESSION OF 1937When World War II broke out, employment in the manufacturing segment jumped from 11 million in 1940 to 18 million in 1943. At this time, President Roosevelt changed his balancing plans. He instituted a $5 billion program in order to increase purchasing power. There were many who feared that when World War II ended, the United States would return to a depression. This never occurred as there was a significant amount of growing consumer demand in the aftermath of both the Great Depression and World War II.The graph depicts the amount of

manufacturing employment in the United States from 1920 to 1940.



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THE AFTERMATH OF THE GREAT DEPRESSION

Thanks to an exorbitant amount of government military spending in the United States, due to World War II, the Gross National Product (GNP) doubled. It hid the effects of the Great Depression. However, the national debt in the United States continued to grow. This prompted the implementation of new taxes to pay down the debt. Wartime demand caused people to work extra hours in order to earn more money. Costs for wartime supplies were also reduced due to increased volume, ensuring that the businesses made higher profits. Businesses also hired as many people as possible, causing U.S. unemployment to fall below 2 percent. Roosevelt’s reforms helped

allow him to be elected for four terms as president.

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CICERO © 2008 THE GREAT DEPRESSION IN THE UNITED STATES