The Great Depression Overview

Crop Prices and Farm Loans

• Crop prices rose during WWI due to high international demand.
• Farmers increased planting and borrowed for land/equipment.
• Post-war demand fell, and crop prices plummeted by 40%.
• This made it difficult for farmers to repay their loans.

Buying on Credit

• Buying on credit allowed consumers to purchase items immediately, paying later.

American Business Encouragement

• Businesses encouraged high consumer debt by making credit easily accessible.

Presidency During the Crash

• President Hoover was president during the stock market crash.

Dow Jones Industrial Average

• The Dow Jones is a stock market index representing 30 large companies.

Speculation and Buying on Margin

• Speculation is risky investment based on quick profit potential, ignoring risks.
• Buying on margin involves a small down payment on stock, borrowing the rest.

Black Tuesday

• On October 29, 1929, the stock market crashed.

The Great Depression

• The Great Depression was the period from 1929-1940, marked by economic decline and high unemployment.
• By 1933: 11,000 banks failed, 90,000 businesses went bankrupt, and the gross national product halved. Unemployment increased from 3% in 1929 to 25% in 1933.

Hawley-Smoot Tariff Act

• This act imposed the highest protective tariff in US history, aiming to protect farmers and manufacturers.

Four Major Causes of the Great Depression

• Tariffs and war debt policies reduced foreign markets.
• Farm sector crisis.
• Easy credit.
• Unequal income distribution.

Shantytowns

• Little towns of shacks built by the poor and homeless during the Depression were known as shantytowns.

Ways the Poor and Homeless Were Fed

• Soup kitchens and bread lines provided food to those in need.

Difficulties for Minorities

• African Americans and Latinos experienced higher unemployment and lower wages.
• Increased racial violence occurred with unemployed white workers competing for jobs.

The Dust Bowl

• Reduced rainfall in the 1930s affected the Great Plains.
• Overproduction of crops and overgrazing made the grasslands unsuitable for farming.

States Affected Most by the Dust Bowl

• Kansas, Oklahoma, Texas, New Mexico, and Colorado were significantly affected.

Direct Relief

• Government payments or food provided to the poor.
• New York provided a weekly payment of $2.93 per family.

Government Response to the Depression — Hoover's Approach

• The Hoover administration believed the economy would self-correct without government intervention.

Major Program to Create Jobs

• Federal Emergency Relief Administration (FERA)

Federal Home Loan Bank Act

• This act aimed to help Americans keep their homes through home loan refinancing.

Reconstruction Finance Corporation (RFC)

• The RFC provided $2 billion in emergency funding for banks, insurance companies, railroads and large businesses.
• Its intended benefit was to stimulate economic recovery “trickling down” to ordinary citizens.

The Bonus Army

• 10,000 to 20,000 WWI veterans marched on Washington to support the Patman bill.

Patman Bill

• Provided bonus payments to WWI veterans.

Hoover's Response to the Bonus Army

• Hoover initially asked the veterans to leave and then deployed the army to disperse those who had not.

1932 Presidential Election Winner

• Franklin D. Roosevelt won the presidential election.

Roosevelt's New Deal Program

• Roosevelt's program aimed at relief, economic recovery, and financial reform.

Fireside Chats

• Roosevelt's radio addresses aimed to inform and reassure the public about New Deal initiatives.

Federal Deposit Insurance Corporation (FDIC)

• The FDIC insured bank accounts up to $5,000.

Federal Securities Act

• This act required detailed information on stock offerings.

Civilian Conservation Corps (CCC)

• This act aimed to control crop production for price stabilization.

Work Relief Programs

• Public Works Administration, National Industrial Recovery Act (NIRA).

Deficit Spending

• Deficit spending is when government spending exceeds revenue.

Reasons for a Second New Deal

• Economic gains from the first New Deal were insufficient, with persistently high unemployment and low production.

Eleanor Roosevelt

• FDR's wife who was a social reformer, advocating for the less fortunate.

Work Progress Administration (WPA) and National Youth Administration (NYA)

• WPA focused on creating jobs quickly. NYA provided jobs, education, counseling and recreation for young people.

Social Security Act

• The Social Security Act included old-age insurance, unemployment compensation, and aid to families with dependent children/disabled.