1. Great Depression overview - History with Mr. Bayne · 1. Great Depression overview Little...

1. Great Depression overview

Little History Monster 2018

The Great Depression, which lasted from 1929 to 1939, was the worst economic downturn in U.S. history. The stock market crash of October 1929 signaled the beginning of the Great Depression. As a result, millions of dollars in investments were eliminated. Consumer spending declined nationwide, causing huge reductions in industrial production. As production decreased, failing companies were forced to lay off workers. By 1933, 15 million Americans – 25% percent of the workforce – were unemployed and nearly half the country’s banks had failed. To make matters worse, the Great Plains was struck with a severe drought leading to devastating dust storms known as the Dust Bowl.

President Herbert Hoover believed the economy would improve with little or no help from the government. Once Hoover realized that government intervention was needed, his actions were too little, too late. Many blamed Hoover for America’s troubles. They believe he was not doing enough to help, which led to Franklin D. Roosevelt’s election as President in 1932.

Franklin D. Roosevelt led the nation through the Great Depression by using government programs to help the nation recover. His plan was referred to as the New Deal. Although New Deal programs helped to alleviate some of the suffering, it took the beginning of World War II to end the Great Depression.

A North Carolina woman hoped that a job for her husband meant better times lay ahead:

“After he gets his first pay check, we can get along. But we haven’t had anything in the house to eat for a week now but twomesses of flour and a peck of [corn] meal. The children had nothin’ for breakfast but a biscuit or a slice of corn bread. They come home after school begging for food, but I can’t give them but two meals a day.”

Unemployed Americans wait in line to receive free food

Source: “The Great Depression.” PBS, Public Broadcasting Service, www.pbs.org/wgbh/americanexperience/features/dustbowl-great-depression/.

A young boy helps during a protest

2. Causes of the Depression


The official beginning of the Great Depression was the stock market crash of 1929. The stock market allows for the buying and selling of shares of stock, which represent part ownership of a corporation. During the 1920’s, the price of stocks began rising steadily. Many people invested, hoping to make a profit. In 1929 however, stock prices fell rapidly, causing many investors to sell their shares. Panic set in as millions of shares of stock were traded at ever-falling prices. Millions of shares ended up worthless. The market continued to worsen following 1929. A share of US Steel which had sold for $262 before the crash sold in 1932 for $22.

A weak banking system was another cause of the Depression. The Federal Reserve – the nation’s central bank – was set up by the government to help banks across the country operate properly. The Federal Reserve did not act quickly enough to help banks that were failing all over the country. Banks across the nation had to close. Millions of people who deposited money in the banks lost their savings.

Another factor that led to the Depression was high tariffs, which discouraged international trade. A tariff is a tax on imported products. Tariffs make imported goods from other countries more expensive. In 1930, Congress passed the Hawley-Smoot Tariff, hoping it would encourage Americans to buy American goods, which would improve the economy. The result was disastrous. Foreign countries reacted by raising tariffs on US-made goods. The result was shrinking international trade, whichled to further decline in global economies.

The Depression was intensified by the fact that many Americans had too much debt from buying consumer goods on installment plans. High levels of debt made it nearly impossible for citizens to pay off loans when the effects of the Depression set in.

Excerpt from the New York Times – October 30, 1929:

“Stock prices virtually collapsed yesterday, swept downward with gigantic losses in the most disastrous trading day in the stock market's history. Billions of dollars in open market values were wiped out as prices crumbled…Efforts to estimate yesterday's market losses in dollars… estimated that the New York Stock Exchange lost between $8,000,000,000 and $9,000,000,000 yesterday.”

Panicked New Yorkers flood Wall Street during the stock market crash


“A Victim of Bank Failure” political cartoon

3. Impact of the Depression


The effects of the Depression had severe consequences on nearly all aspects of American life. Consumer spending and investment dropped, causing steep declines in industrial production. As businesses reduced production, they laid off unneeded workers. When consumer spending failed to rise, many business were forced to close, resulting in more unemployment. By 1933, 15 million Americans were out of work and the unemployment rate stood at an astonishing 25 percent.

As people lost jobs, many of them couldn’t pay rent or make payments on home loans. A large portion of unemployed people became homeless and often went hungry. Out of work Americans filled long breadlines to receive food. Homeless formed improvised houses.

More than a third of the nations banks failed in the three years following 1929. Crowds of people flocked to banks demanding the money they had deposited in their bank accounts. Banks loan out most of the money they take in as deposits. If too many peopledemand their money at the same time, the banks can run out of cash. Many banks failed, resulting in closure. Some Americanslost their life savings when banks failed.

Farmers were hit particularly hard by the crisis. Tractors and other machinery helped farmers produce larger crops. The result, however, was overproduction, which lowered the price farmers could get for their crops. Many farmers struggled to pay back farm equipment loans and some went bankrupt.

Peggy Terry recalls seeing unemployed living in shantytowns known as “Hoovervilles.”

“My father said: ‘If you think it's been rough for us, I want you to see people that really had it rough.’ This was in Oklahoma City, and he took us to one of the Hoovervilles, and that was the most incredible thing. Here were people living in old, rusted-out car bodies. I mean that was their home. There were people living in shacks made of orange crates. One family with a whole lot of kids were living in a piano box. This wasn't just a little section, this was maybe ten-miles wide and ten-miles long. People living in whatever they could junk together.”

Families living in makeshift “Hooverville” homes during the depression


Soup line in front of ironic billboard

4. The Dust Bowl


During the 1930’s, disaster struck the Southern Plains region of the United States. Poor soil conservation practices combined with drought conditions caused severe dust storms, which intensified the misery of the Great Depression and instigated the largest migration in American history.

The Dust Bowl was the name given to the Plains region which suffered severe dust storms in the 1930’s. Technically, the driest region of the Plains – Colorado, Kansas, Oklahoma, Texas and New Mexico – made up the Dust Bowl, but the entire region, and eventually the entire country, was affected. Strong winds swept huge clouds of choking dust into the air. People and livestock were killed and crops failed across the entire region. Many desperate families left the region in search of work and better living conditions.

The following letter was written by a survivor of the Dust Bowl in McCracken, Kansas, March 24, 1935.

“Dear Family,

For over a week we have been having troublesome times. The dust is something fierce…We keep the doors and windows all shut tight, with wet papers on the sills. The tiny particles of dirt sift right through the walls. Two different times it has been an inch thick on my kitchen floor. Our faces look like coal miners’, our hair is gray and stiff with dirt and we grind dirt in our teeth. We have to wash everything just before we eat it and make it as snappy as possible. Sometimes there is a fog all through the house and all we can do about it is sit on our dusty chairs and see that fog settle slowly and silently over everything. When we open the door, swirling whirlwinds of soil beat against us unmercifully, and we are glad to go back inside and sit choking in the dirt…A lot of dirt is blowing now...This dirt is all loose, any little wind will stir it, and there will be no relief until we get rain. If it doesn’t come soon there will be lots of suffering. If we spit or blow our noses we get mud. We have quite a little trouble with our chests. I understand a good many have pneumonia. As for gardens, we had ours plowed, but now we do not know whether we have more or less soil. It’s useless to plant anything.

-Grace”

Dust storm approaching a Texas farm - 1935

Source: Deb Mulvey, ed., “We Had Everything but Money” (Greendale, Wis.: Reiman, 1992), 43.

5. Hoover and the crisis


President Herbert Hoover initially responded to the economic downturn by reassuring everyone that the economy would improve soon. He believed that the government could not fix the Depression. He felt minimal government interference in the economy was best, and that direct government support would weaken individual character and work-ethic, leading to a dependency on government handouts. He asked charities to help those in need. Charities, along with state and local governments, worked hard to provide aid for the needy, but too many people needed help.

Eventually, President Hoover realized that the federal government had to help fight the Depression. He approved federal money for public works, such as projects like highways and parks, to create jobs. He also approved lending federal money to banks, railroads, and other private companies.

For many, however, these actions were too little, too late. By 1932 many people blamed President Hoover for the Depression. They believed Hoover was out of touch with ordinary people. Shantytowns of makeshift shacks – unfavorably called “Hoovervilles” in disgust with the president’s inaction in the face of crisis – grew across the country as the unemployed, unable to pay mortgages or rent, were evicted from their homes.

Excerpt (secondary source) from Neil Wynn’s book, The A to Z from the Great War to the Great Depression (2009):

“Approved by President Herbert Hoover despite the appeals of over a thousand leading economists to reject it, the Hawley-Smoot Tariff raised tariffs…at some of the highest levels in American history. Proposed by Representative Willis Hawley of Oregon and Senator Reed Smoot of Utah, the tariff was intended to help particularly agriculture in the face of falling prices. However, it was extended to cover many aspects of manufacturing industry. Its effects were disastrous as foreign nations introduced their ownretaliatory duties leading to a further fall in American and world trade and only increasing the impact of the Depression.”

Hooverville of makeshift shacks located in Brooklyn, NY - 1931

Source: “The Great Depression.” Khan Academy, Khan Academy, www.khanacademy.org/humanities/us-history/rise-to-world-power/great-depression/a/the-great-depression.

Herbert Hoover

6. FDR and the New Deal


As the presidential election of 1932 approached, Americans were eager to elect a new president to replace Herbert Hoover. As a result, Franklin Delano Roosevelt, known as FDR, was elected in a landslide. He promised to use the federal government to help the nation recover form the Depression.

As president he asked Congress to start government-run programs to create new jobs and get the economy growing again. The series of federal legislative initiatives was known as the New Deal. Congress agreed to create most of the New Deal programs Roosevelt wanted. The programs were paid for with federal taxes on incomes and businesses. Numerous programs were created, but they can generally be grouped in the following five categories: Federal Work Programs, Environmental Improvement Programs, Farm Assistance Programs, Social Security, and Increased Rights for Labor.

Roosevelt used live-radio broadcasts to communicate his plans and ideas to the American public. The series was known as “fireside chats.” In these talks, he used reassuring tones and plain-spoken language. The New Deal expanded the role of the federal government in the nation’s economy. Although the New Deal did a lot to help the American people and get the economy back on track, it did not end the Great Depression. It took the beginning of World War II, and the industrial production it demanded, to ultimately end the worst economic period in American history.

A excerpt from FDR’s inaugural address, 1933:

“This is the time to speak the truth, the whole truth, frankly and boldly…This great nation will endure as it has endured, will reviveand will prosper. So first of all let me assert my firm belief that the only thing we have to fear is fear itself…This nation asks for action, and action now. Our greatest primary task is to put people to work. It can be accomplished in part by direct recruiting by the government itself, treating the task as we would treat the emergency of war, but at the same time, through this employment, accomplishing greatly needed projects.”

Franklin D. Roosevelt speaks with farmers

WPA poster – a New Deal program


1. Great Depression overview - History with Mr. Bayne · 1. Great Depression overview Little...

Documents

Transcript of 1. Great Depression overview - History with Mr. Bayne · 1. Great Depression overview Little...