Great Depression Unit US History Paul Dunn Instructor – Spring ‘05

Great Depression Unit US History

Paul Dunn

Instructor – Spring ‘05

Economic Troubles

• Excessive use of Credit– Consumers abused the

idea of “buying on time”

• Playing the market– Speculation – buy low and

sell high. Speculators did not look at things like profit and loss when purchasing stocks

– Purchasing stocks on credit (margin buying)

Economic Troubles

• High inventories for business• Decreased demand for goods as

consumers reached credit limits• High Tariffs

– Smoot/Hawley Tariff• Tried to protect American Industry• European Nations imposed retaliatory tariffs and

stopped importing our goods.• Everyone loses in this scenario• All goods became more expensive

Economic Troubles

• Income Gap– Vast differences between incomes of the

wealthy and incomes of the poor

• Business Cycle– Cyclical nature of business activity causes

natural declines in profit and income

• The timing of all of these events set the country up for a big problem

Stock Market Crash

• Black Tuesday– Panic selling

• Market loses – 30 billion in one day – 16 million shares were

sold

The Depression Begins

Hoover’s Slow Response to Crisis

• President Hoover thought that the economy would fix itself

• Focused government response to the crisis on aiding business – Reconstruction Finance Corporation – loaned

money to troubled banks, corporations etc.• Was highly ineffective and layoffs and plant

closings continued

Hoover’s Slow Response to Crisis

• Opposed direct relief to citizens– Encouraged volunteerism

and charity for the poor and unemployed

– Started modest public works projects like the Hoover Dam in Colorado

• Widely criticized for lack of compassion for the masses

Effects of the Great Depression on Society

• Unemployment– 1929 1.5 million– 1933 15 million

Photo


• Income– Incomes fell as more

and more workers competed for few jobs

– $.10/hr was a common wage

• Dramatically decreased purchasing power of families


• Bank Failures– Bank runs

• Customers would hear rumors that a bank was out of money

• All would then go and try to withdraw money

• Banks would then run out of cash and fail

– Lack of Confidence– No Deposits– Default on Loans– No “safety net” Photo


• Homelessness– Foreclosure

• Default of home or farm mortgages caused families to leave homes

• Lack of affordable housing and low or non-existent incomes forced families to live on the street

Photo


• Shanty towns– People used any

means available to create living space – often using discarded lumber or steel to create makeshift housing



• Bread lines– Charitable

organizations tried to assist the public by supplying food

– As the depression wore on, the government also helped provide food to the homeless


• Family Life– Marriage rate declined

dramatically– Birth rate declined– Divorce rate

skyrocketed


• Family Life– School attendance

declined– Literacy rates dropped– Childhood disease

rates increased– Malnutrition health

problems increased dramatically

• Osteoporosis• Starvation

• Ricketts


• Psychological affects– Depression– Suicide rate increase– Abuse – Divorce rate– Sense of helplessness


• http://www.polleverywhere.com/my/polls#!/my/polls

http://www.polleverywhere.com/my/polls#!/my/polls




• Farm Life– Poor farming practices

made land vulnerable to erosion

– Drought and the Dust Bowl


Farm Life (cont.)- Low Prices- Difficulty getting

product to market due to problems in other industries

- Foreclosure- Mass migration to

cities

Election of 1932

• Franklin Delano Roosevelt wins election in a landslide

• Offers his New Deal as an alternative to current governmental policy

The New Deal

• Series of programs that were aimed at restoring confidence

• Used greatly expanded executive power to accomplish goals

• Some programs later found to be illegal

The New Deal• Bank Holidays – Closed

every bank in the nation for a few days– Purpose was to stop

massive bank withdrawals and to stop the panic that was gripping the nation.

– Tried to explain that bank holidays were put in place to protect money….. Communicated through fireside chats

The New Deal

• Federal Deposit Insurance Corporation– Insured each deposit to $2500. (Today – each

deposit is insured to $250,000.)

• Home Owners Loan Corporation– Created to assist home owners who were

unable to meet mortgage payments– Saved over 1 million family homes buy

granting low interest, long term mortgages.

The New Deal

• Direct Relief– Aid or monies that went directly to the 13

million unemployed workers

• Federal Emergency Relief Administration– $500 million was funneled to state and local

agencies that then passed this on to the unemployed

– By 1935 $3 billion in direct aid had been distributed.

The New Deal

• The Civilian Conservation Corps – Employed 250,000

young men ages 18-25 in 1933

– Worked in National Parks and Forests

• Plant trees• Fight Fires• Cleared underbrush• Built trails • Cleared beaches, etc.

The New Deal

• CCC (cont.)– Workers earned $1 a

day for their labor – and were provided with room and board

– 2.5 million people were employed during the 10 year existence of the program

The New Deal

• Industry– National Industrial Recovery Act

• Tried to stimulate the economy through government spending and federal loans

– Public Works Administration

» Built roads, public buildings, other public works projects like dams, bridges etc.

– National Recovery Administration

» Encouraged business to draw up “codes of fair competition”

» Set wages, prices, production levels, hours

» Suspended anti-trust laws and allowed workers to organize in unions

The New Deal

• Agricultural Adjustment Administration– Paid farmers to limit

output of corn, cotton, dairy products, hogs, rice, tobacco, wheat and other commodities

– Money came from taxes on food processors

The New Deal

• Tennessee Valley Authority– Tried to revitalize

Tennessee River Valley

– Flooding, Deforestation, Poverty, Illiteracy etc.

• Built a series of dams to provide power and provide jobs

• Improve schools and provide health care

FDR’s Second Term

• Even though there were many critics of the FDR’s policies – he was elected to a second term in 1936

• The Democrats won a series of seats in the congressional elections in 1934 that solidified FDR’s power.

2nd New Deal

• Second wave of programs that tried to “jump-start” the economy– Responded to

criticisms of the New Deal

– Tried to reach more people faster

2nd New Deal

• Works Progress Administration– $5 billion in job creation programs– Employed 8.5 million people– Focused on national infrastructure

• Built or rebuilt 350 airports• 100,000 public buildings• 78,000 bridges – Old Cass Ave. Bridge• 500,000 miles of roads• Research projects• Teaching Jobs

2nd New Deal

• National Youth Administration– Provided high school

and college-aged kids with part-time work that allowed them to stay in school

• Employed 500,000 people

• Was a secondary branch of the WPA

2nd New Deal

• Social Security Act– 3 parts

• 1. Provided unemployment insurance to workers who lost their jobs

– $ for this came from a payroll tax on businesses

• 2. Provided pensions to retired workers over the age of 65

– $ come from payroll tax on employers and a tax on employee wages

2nd New Deal

• Social Security (cont)• 3. Provide payments to

people with disabilities, the elderly, and the wives and children of male workers who have died

– This program really aided the folks hit hardest by the depression

– Is still a program that is controversial and very expensive today

2nd New Deal

• Rural Electrification Administration– Attempted to bring electricity to rural America

• Allowed Gov’t to regulate the price of electricity to keep costs low.

• In 1930 10% of rural residences had electricity• In 1940 50%+ had electricity

• Agriculture Adjustment Act (II)– Continued process started by the 1st AAA

• Linked soil conservation program to it to prevent problems in the Supreme Court

Roosevelt and the Supreme Court

• Roosevelt became disgusted with the court as it kept declaring his programs unconstitutional– Attempted to “pad” the

court by adding 1 justice for every justice over the age of 70.

– Congress failed to pass the measure and Roosevelt was forced to pass “constitution friendly” programs.

Life in the New Deal Era

• Hardship• Rise of Radical

Movements• Destitution• Anger• The Search for Hope

People

• Crime was on the rise– Kidnapping– Robbery– Murder

• Laws were relaxed to give cops more freedom to track down criminals

• Public outcry over crime

Sports and Games

• Card Games• Puzzles• Gambling

– Bingo– Slot Machines– Horse Racing

• Movies• Pinball Machines• Baseball – Sat. Day off• Olympics – 1936 Berlin

Science and Technology

• Transportation– Commercial Air Travel– Trains– Autos

• Aided by road construction projects

• Skyscrapers– Empire State Building– Mega Structures –

Tunnels/Bridges

• Dams– Colorado River/ Tennessee

River Valley

Entertainment

• Radio– Amos and Andy– 1 in 3 owned a radio

• Reading– Corner news stand– Cheap magazines– Comics

• Movies– Larger than life movie stars– “Feel Good” Shows

Depression Ends

• The economy and the country did not fully recover throughout the 1930s.– The only thing that truly erases the effects of the

Great Depression is WWII.• Massive production requirements from America's factories

during the war was the only thing that could put America back to work and fully restore confidence in the economy.

– The Great Depressions legacy continues with us today in the form of many continuing government programs that provide a “safety net for citizens, “just in case.”

Documents

Great Depression Unit US History Paul Dunn Instructor – Spring ‘05