The Great Depression Day 1 AUDIO (ej) 2022 PDF

Roots of the Great Depressio n You should know… Stock Market Bull Market Speculate Buying on Margin Black Tuesday/Black Thursday Causes of the Great Depression (5) Hoover Bonus Army Patman Bill 1 Past Presidents… Woodrow Wilson - 1913-1921 (WWI) Warren G. Harding...

Roots of the Great Depressio n You should know… Stock Market Bull Market Speculate Buying on Margin Black Tuesday/Black Thursday Causes of the Great Depression (5) Hoover Bonus Army Patman Bill 1 Past Presidents… Woodrow Wilson - 1913-1921 (WWI) Warren G. Harding -1921-1923 – “Return to Normalcy”; (Scandals) Calvin Coolidge 1923-1929 “Silent Cal” –The Business of the American people is business” Now…. Herbert Hoover – 1929-1933 “Rugged Individualism.” would keep the economy moving, gov’t should not step in to help individuals. The Rise of By the late 1920s, Herbert Hoover was very popular Herbert Hoover was Hoover Hoover was became a hero Secretary of during World War Commerce under I for his both Warren G. leadership Harding and guiding the Food Calvin Coolidge Administration during the ‘20s “Given the chance to go forward with the policies of the last eight years, we shall soon with the help of God, be in sight of the day when poverty will be banished from this nation.” – Herbert Hoover, 1928  President 2 Hoover defeats Democratic nominee Alfred E. Smith in the Election of 1928 Prohibition and Religion big factors Hoover was for Prohibition and was a Protestant; Smith was against Prohibition and was a Catholic Republicans keep control 3 Hoover was the third Republican president in a row Followed fellow Republicans Harding and Calvin Coolidge Continued “laissez faire” economic philosophy Felt government should not interfere with the economy Hoover called his policy “rugged individualism” People encouraged to invest in the stock market to help business Warren G. Calvin Herbert  The Mellon Andrew Mellon was the U.S. Secretary of the Treasury who was important in developingPlan the U.S. economic policy during the 1920s 1) He reduced government spending and cut the federal budget 2) He refinanced the national debt at a lower interest rate to greatly reduce the U.S. debt 3) He persuaded the Federal Reserve to lower the interest rate for the general public 4) He worked to reduce taxes with the belief that it would allow businesses and consumers to spend and invest their extra money People believed Hoover and Mellon when they said that the economy was healthy!!!!!  The Dow Industrial Average was up 30 pts.  People rushed to buy stocks.  Warning signs There were numerous warning signs in the late 1920s that the economy was beginning a downward turn: There was an uneven distribution of wealth. Large companies dominated economy.  Too many Americans were buying on credit.  Overproduction of goods.  People gambling on the stock market  The Stock Market Rises Then Falls 4 The Stock Market, is a system for buying and selling stocks. Bull Market, a long period of rising stock prices, caused many people began to invest in stocks. Because the stock market was doing well, many people began to Speculate, betting that the market would continue to climb enabling them to sell stock and make money quickly. Many bought stock on Margin, making a small cash down payment then borrowing the rest from a broker which backed banks. If the stock does well, everyone wins; if not everyone loses including the bank = closures. 5 How did the Stock Market Crash ? A) Margin Buying - when banks/corporations buy stock by making a “small” down payment and borrowing the rest o Bull market ends in 1929 –rising stocks o The market begins to fall and stocks bought on margin can not be paid back. o Everyone sells stocks o The Spark of the Depression: Prices decline : o The market plummets!  Black Thursday - 10/24/1929  Black Tuesday - 10/29/1929 B) Banks lose Billions → banks start closing as people take out all their $$$ (Dont want to be last!!) → 1 in 4 banks closed by 1932. The Stock Market The stock market is a system for buying and selling shares of stock in a company, thus owning a small piece of the company. Many people in the 1920s bought stock ‘on margin’, meaning they paid for a small percentage of the stock, with the agreement they would pay it off later Video clips… 1929 Wall Street Stock Market Crash (10:05) https://www.youtube.com/watch?v=RJpLMvgUXe8 Stock Market Crash Of 2008 (3:12) https://www.youtube.com/watch?v=bluUxKIB4pA  THE GREAT DEPRESSION BEGINS Photos by photographer Dorothea 7 The Great The Great Depression Depression was a severe economic depression that Begins dominated the 1930s. The Great Depression was the longest, most widespread, and deepest depression in United States History.  The Great Depression The Great Depression started in about 1929 and lasted until the Begins beginning of World War II. Personal income, profits, prices, as well as trade dropped dramatically. Unemployment in the U.S. rose to 25%. Causes of the Great Depression Overproduction of goods  Cause & Spark of the Depression A. Causes of the Depression 8 1. Overproduction, too much stuff (Factories and Farms) a. Factory Workers begin to get laid-off - Workers cannot buy goods, even more goods are overproduced b. Farmers Can’t Survive -low prices (can’t pay loans / make a living) c. Supply & Demand- Prices Drop 2. Bank Failures a. Banks close and lose $$$ b. People default on loans (Can’t pay Back) c. Banks cannot cover their deposits, because it lent out $$$’s to bad creditors **5,000 banks close between 1929-1932** d. People loose entire LIFE SAVINGS Too Many People Buying on Credit Uneven distribution of wealth  3. Uneven Distribution of Income a. Top 5% of American households earned 30% of the 8a nation's income. b. Farmers in debt from buying land/equipment during the WWI; when prices fell they went bankrupt & lost their farms c. Unemployment; people were no longer buying the goods that kept factories open = cutbacks and layoffs 4. The Loss of Export Sales a. Hawley-Smoot Tariff Act- raised the tariff rate (on imports) to the highest level in American History 1. Purpose = to protect American industry from foreign competition 2. Failure because foreign countries raised their tariffs as well = now no American goods were sold overseas; again hurt farmer & factory workers Long Periods of High Unemployment  4. Loss of Export Sales b. U.S. banks made loans to speculators rather than 8 loans to foreign companies. b 1. Loans to European nations helped them pay back reparations; (Germany, France, GB = Dawes Plan) 2. U.S. loans also helped secure foreign mrkts for U.S. imports 3. w/out these loans foreign companies purchased fewer American products = again result unemployment 5. Mistakes by the Federal Reserve a. The U.S Kept interest rates low 1. encouraged banks to make risky loans 2. making business leaders believe the economy was still strong leading them to continue to expand then lay off b. Then to correct the problem..Raised interest rates; thus tightening credit; no borrowing in the U.S. or abroad. Crash of the Stock Market in 1929 Banks Begin to Fail Banks were the first thing hit by the stock market crash as numerous banks closed their doors People who had deposits in When the stock prices these banks lost all their fell, many banks lost savings. Others took their money on their deposits out as quickly as investments. possible, creating runs. Numerous Bank Failures 9 A Bank Run A bank run occurred when people, fearing the bank would go bankrupt, rushed to the bank to take out their money A bank run led to the closing of a bank because all of the banks money would be gone What Caused The Economy To Collapse? 1 0 Low Interest Rates/Monetary Policies Federal Reserve kept interest rates low; companies borrowed money and expanded more than necessary Overproduction Companies made more goods than could be sold Uneven Distribution of Wealth Not everyone that wanted consumer goods could afford them. High Tariffs/Hawley-Smoot Tariff Tariffs restricted foreign demand for American Goods Falling Demand With too many goods unsold, production was cut back and employees were laid off Stock Market Speculation Low interest rates encouraged borrowing money to speculate, endangering bank solvency.  Unit 6, PowerPoint #2 HOOVER AND The Depressi on  HOOVER’S PHILOSOPHY Hoover was not quick to react to the depression He believed in “Rugged Individualism” – the idea that people succeed through their own efforts He said people should “pull themselves up by their bootstraps” Hoover believed it was the individual's job Did NOT believe in gov’t to take care of themselves, not the governments relief, giving $’s directly to impoverished families!  How does Hoover respond to the Great Depression? 1 1  Hoover met w/bankers, businessmen,& labor leaders.  He asked employers not to fire workers or lower their pay  He asked labor leaders not to ask for higher pay or to strike.  Reconstruction 11 a The Finance Reconstruction Corps Finance Corporation was the government agency that gave $2 billion in aid to state and local governments and made loans to banks, railroads, farm mortgage associations, The main purpose of the RFC and other businesses. was to create jobs for Americans who wanted to work  The Hoover Dam 11 b Hoover used the Boulder Dam project as a model of how federal government could encourage cooperation btwn private groups  The Hoover Dam One of Hoover’s Public Works Projects. Any dam II. Effects of the Depression A. Jobless / Homeless 1 2 1. 1930-1932 – Jobless goes from 4 to 12 million 2. Houses are lost, people become homeless 3. People are Desperate!!!! B. Hatred for President Hoover 1. Hoover said it’s NOT Government’s job to fix the Poor 2. People name Poor Places after Hoover a.*Hooverville- Shanty towns / Hoovermobile- cars pulled by mules b. Hobos-(train kids) looking for jobs* c. Hooverblankets- newspapers used as blankets while traveling the rails by homeless.  Hoover Hoover believed that charities (churches) or state and provideFederalism local governments - not the federal government – should 1 food & shelter to people who were poor or out of 3 work. Relief line waiting for commodities, San Antonio, Texas. PROBLEM: Poor People to poor to help churches so churches can’t Hooverville's  Hoovervilles Many homeless people were forced to live in shacks or “shanties” during the Depression Because many felt that President Hoover was to blame, some people called these places Hoovervilles  Farmers burned crops & dumped milk rather than sell it for less than it cost them to 1 produce it. 4 An effort to raise the prices of their products. Low supply = High demand Fields of uncut wheat northwest of Great Falls, Montana. The Depression Despite Hoover’s hope, the economy continued Worsens to shrink & unemployment continued to go up Unemployed workers sit in front of a shack with Christmas tree, New York City, in December, 1937. American Gets Angry!!!!  The Bonus Army In 1932, WWI veterans came to the Capital in Washington, D.C. These veterans had been promised bonuses to make up for their poor wartime pay. Congress was about to vote on a bill to give the vets their bonuses so they wouldn’t have to wait.  Thousands of veterans & their families came to D.C. BONUS ARMY set up tents to live in near the Capitol building.  veterans food…. But after the bonus was voted down in Congress, Hoover told the veterans to leave. About 2,000 stayed. Hoover ordered the army to use force to remove them. The sight of U.S. Army troops using tear gas on U.S. war veterans outraged many people. Shacks put up by the Bonus Army on the Anacostia flats, Washington, D.C., burning after the battle with the military, 1932.  So they’re Angry? What Now?? A) Hunger Marches - Constant looting and protests over hunger. 15,000 marched on DC in 1932. B) Farm Foreclosures - Farmers, with low profits and high debts, lose their farms.  Begin burning all crops to raise prices. C) Bonus Army - WW1 Veterans promised a bonus in 1945. Demanded an early payment of bonus to survive.  15,000 veterans marched into DC  700 (current) Soldiers begin attacking unarmed veterans, killing two.  Disgraces Hoover’s presidency. 15  Bonus Army a. WWI veterans who were promised a $1000 bonus in 1945, * Veterans want it NOW (1932) Patman Bill introduced b. Veterans go to Washington and “camp out” c. Hoover sends in Army (Eisenhower, MacArthur), used tear gas, machine guns, and burned the camp down 15 a 15 BONUS ARMY b TURNED DOWN Hoover called the Bonus marchers, “Communists and criminals” On June 17, 1932 the Senate voted down the Patnam Bill (which authorized early Thousands of Bonus Army soldiers protest bonus payments) – Spring 1932  BONUS MARCHERS CLASH WITH SOLDIERS 15 Hoover told the Bonus c marchers to go home– most did 2,000 refused to leave Hoover sent a force of 1,000 soldiers under the command of General Douglas MacArthur and his aide Dwight Eisenhower  AMERICANS SHOCKED AT TREATMENT OF WWI VETS 15 d MacArthur’s 12th infantry gassed more than 1,000 marchers, including an 11-month old baby, who died Two vets were shot and scores injured Americans were outraged and once again, Hoover’s image suffered Video Clip.. Bonus Army: US military attacks demonstrating American War Veterans (6:53) https://www.youtube.com/watch?v=s NOsIB5VMSQ Bonus Army marches on Washington, DC 1932 (2:38) https://www.youtube.com/watch?v=d WvCCxOUsM8 HOOVER VOTED OUT 1 6 !! Many people blamed Hoover for their economic problems  Bonus Army debacle was final blow  In 1932 election, Hoover faced Democrat Franklin D. Roosevelt  Roosevelt, New York’s governor, wins in a landslide The Election of 1932 Life During the Depression Effects of the Depression The Depression Hard economic brought suffering & times ruined many hardship to many people’s lives. Millions lost jobs, went hungry, or became homeless.  Turning to Many people turned to Charities charitable organizations in order to survive Many people resorted to soup kitchens and bread lines for their food Charities became an major source of assistance to many who were “down on their luck.” Soup Kitchens Where charities served meals to the needy  Bread Lines Those who couldn’t afford to buy food stood in bread lines to receive New York. Bread line beside the Brooklyn Bridge approach