Unit 6: The Great Depression (1929-1942)

Bellringer---1/8

•Find your seat using the sticky notes•What do you know about the Great

Depression?

Reminders:Homework/ testsEOCRestroom policiesClass expectationsBinders

Part I: The Great Depression Defined

The Great DepressionKey Points• The Great

Depression Defined

Notes• The Great Depression: period from 1929—

1940 in which the economy plummeted and unemployment skyrocketed.

• Triggered by the Stock Market Crash of 1929

The Great DepressionKey Points• Underlying

Factors/Causes of the Great Depression

Notes• Speculation -A person or organization

makes a risky investment in hope of making a quick and larger profit.

• Personal debt-Americans bought more than they could afford

• Overproduction-Agriculture industry-planted more crops than needed since demand declined after WWI

• Mechanization- factories were being built with new machines that could do the work of many people and led to increased national unemployment.

The Great DepressionKey Points• Underlying

Factors/Causes of the Great Depression

Notes• Unequal distribution of wealth-Richer got

richer, poorer got poorer (70% of Americans barely made a enough for a decent living); Consumers with less money to spend

• Domestic and foreign policy-Herbert Hoover believed in the “trickle down” effect economy-benefits big business, tax cuts for wealthy

• Stock market crash and bank failures-no protections provided by the government

Industries in TroubleKey Points• Industries Lost

Business

• Less Spending = Loss of Business

Notes• Key industries such as the railroads & coal

mining lost business due to competition with new markets ▫ Railroads: competing with new

transportation industries (trucks, buses, private automobiles)

▫ Coal mining: competing with new energy sources (hydroelectric power, fuel oil & natural gas)

• Most industries began to weaken by the end of the 20’s because more people were trying to save money instead of spend (to pay off debts)

• Housing market: major indicator of economic problems▫ When it falls, so do related industries:

furniture manufacturing & lumbering

Farmers in TroubleKey Points• Farmers

hardest hit

• Solutions cause more Problems

Notes• Many took out several loans during war

time to keep up with production demand; but after war, demand fell▫ Difficulty paying off their loans▫ As farmers couldn’t pay their loans,

many rural banks failed▫ Many lost their farms

• Boosted production in hopes of selling more crops▫ Lowered prices even farther (less

demand for crops)

Farmers in TroubleKey Points• Government

Help

Notes• Government tried to help by using Price-

Supports▫ Gov. bought surplus crops from farmers

at guaranteed prices & sold them on world market

▫ Coolidge vetoed the bill twice: “Farmers have never made money. I don’t believe we can do much about it.”

Consumers with Less MoneyKey Points• Lower

Consumer Spending

• Lower spending due to debt

Notes• Americans began to buy less because of:

▫ Rising prices▫ Stagnant Wages▫ Unbalanced distribution of income▫ Overbuying on credit previously

• During the “superficial prosperity” of the 20’s many consumers lived outside their means & bought on credit▫ Made payments on goods with interest▫ Large consumer debt

Meant people were not spending as much b/c they had to pay off their debts

Consumers with Less MoneyKey PointsUneven

Distribution of Income

Notes• Only wealthiest 1% of population made

a 75% rise in income• More than 70% of the nation’s families

made less than $2,500 (minimum income needed for a decent standard of living)

Summary:

Part II: The Stock Market and How it Works

The Stock MarketKey Points• Stock Market

• The problem

Notes• Many sought to “get rich quick” via the

stock market▫ Speculation: buying stocks and bonds on

the chance of a quick profit, while ignoring the risks

▫ Investors: People who buy a share in a company.

▫ Shares/Stock: A portion of a company.▫ Margin: paying a small down payment and

borrowing the rest to buy stock

• As the stock market dipped & values of stocks declined, less people were able to pay off their loans

• During the 20’s the stock market was doing well so people were investing heavily to make a profit▫ Less people invested as they had to pay

off debts, however

The Stock MarketKey Points• Depression

• The Business Cycle

Notes• Economic depression—dramatic reduced

economic activity characterized by high unemployment; slow down in buying/selling of goods▫ Why?? People don’t have money to spend

because they have no job because people are not spending money therefore not pumping money into the economy

• Business cycle:

The Stock MarketKey Points• Selling causes

Panic

Notes• Stock values increase but the market

became saturated (everyone who bought stock bought it and most bought it on margin)

• Investors start selling the stock causing prices to fall so more people sold their stock so they wouldn’t lose too much money.

• Brokers and banks called in their “margins” but people could not pay up. Stock sold to get money back cause market to drop and PANIC

The CrashKey Points• First Crash

Oct. 24th 1929

Notes• “Black Thursday”

▫ People begin to stop investing. Selling increases; market goes down.

▫ As the market drops people panic & try to sell all stocks as quickly as possible Lowers the stock market even farther

so that no one makes any profit and most go into debt

• Efforts to stop it: Top Bankers & Rockefellers

Both invested large amounts even though the market was crashing, but it still failed

12.9 million shares traded

The CrashKey PointsSecond Crash

Oct 29th 1929

Notes

• “Black Tuesday”

• 16. 4 million shares dumped in one day

• Great Stock Market Crash- $30 billion lost

• Great Depression Begins

• Other causes: overproduction, low wages, high tariffs and unemployment

Summary: What happened to cause the Great Depression?

Part III: Cause and Effects of the Great Depression

Causes and EffectsKey Points• Causes and

Effects

NotesCauses• Stock market

crashed

• Banks demand repayment of loans

• Farms failed and factories closed

• Reduce foreign trade to protect economy

• Collapse of banking system

Effects• Unemployment

rate skyrockets 30%

• Business go bankrupt

• Citizens lost faith in capitalism and democracy

• Bank failures

• Nations turn to authoritarian leaders

Great Depression EffectsKey Points• Effects on

Cities

Notes• Cities: lost jobs, evictions, homelessness

▫ Shantytowns/Hoovervilles: “towns” of shacks (made of boxes, crates, scrap metal, etc.) set up in parks

▫ Soup kitchens: offered free or low-cost food

▫ Bread lines: lines of people waiting to receive food provided by charitable organizations or public agencies

▫ Unemployment among African Americans & Latinos was the highest Increased racial violence from

unemployed whites competing for jobs

Great Depression EffectsKey Points• Effects on Men

• Effects on Women

Notes• Men: hard to cope b/c they were used to

providing for their families▫ Had to search for jobs every day▫ Mental breakdowns and suicides

increased dramatically▫ Some abandoned their families: hobos

300,000 during the Depression

• Women: did everything for themselves to save money▫ Canned food, sewed clothes, etc.▫ Worked outside the home (targets for

resentment b/c married women were seen as having no right to work when there were unemployed men)

Great Depression EffectsKey Points• Effects on

Children

Notes• Children: malnutrition & health problems

due to lack of money for food & health care▫ Falling tax revenues forced many

schools to close (2,600 by 1933 left more than 300,000 children out of school)

▫ Most went back to work instead to help their families

▫ Teens: hopped RR lines in search of work, adventure & escape Faced RR “bulls” (armed freight yard

patrolmen) beat & jailed the teens Faced criminals & injuries

Great Depression EffectsKey PointsEffects on

Rural Areas

Notes• Rural areas:

▫ One advantage: Farmers could grow their own food for their families

▫ Thousands (400,000 between 1929 & 1932) lost their land when they could not repay their debts

▫ Dust Bowl: forced many to lose their farms & migrate west in search of work

▫ Many turned to tenant farming to scrape by

Summary: What were the significant causes and effects of the Great Depression?

Part IV: Response to the Great Depression

President Herbert Hoover 1929-1933Key Points• Hoover’s

Response

Notes• Hoover’s response to the Depression

▫ Gov. should encourage cooperation between competitors

▫ Gov. should mediate with the economy and not intervene

▫ Believed that gov. should not provide direct relief any type of welfare b/c handouts would weaken people’s self respect and the nation’s morals

▫ Individuals and private organizations should help care for the less fortunate---not the gov!!

President Herbert Hoover 1929-1933Key Points• Hoover’s

Success

Notes• Hoover Dam

▫ Boulder Dam approved in the 1920s but started building in 1929

▫ Project produced electricity, flood control and hundreds of jobs for men

President Herbert Hoover 1929-1933Key Points• Problems

Hoover faced

Notes• The Gross National Income (what everyone

in the country makes in one year added together) was cut in half

• Democrats took control in Congress• Farmers began to protest low crop prices• Hoovervilles - Shantytowns nicknamed

after Hoover---Americans felt he was heartless

• Bonus Army 1932-10,000 WWI vets marched to Washington for a bonus that was due to them

President Herbert Hoover 1929-1933Key Points• Hoover

Responds

Notes• Federal Farm Board-bought crops to get of

the market to raise prices• National Credit Corporation-lent money to

smaller banks• Federal Home Loan Bank Act-lowered

mortgage rates to prevent foreclosure• Reconstruction Finance Corporation-2

billion in relief to business hoping for a trickle down effect

Election of 1932Key Points• Franklin

Delano Roosevelt elected new Pres.

Notes• New Deal Coalition:

"I pledge you, I pledge myself, to a new deal for the American people.” –Franklin D. Roosevelt

• 40 years of Republican leadership ends• Inauguration: March 1933• First 100 Days: 3 R’s—Relief, Recovery,

Reform (15 major acts)

Hoover to RooseveltKey Points Notes

Summary: How did Hoover respond to the Great Depression?

Part V: Life During the Great Depression

Life During the Great Depression

Key Points• 21st

Amendment

Notes• Repealed the 18th Amendment on Dec. 5,

1933• Why did Prohibition fail?

▫ Lack of public support▫ Hurt business/economy▫ Too costly to enforce

Life During the Great Depression

Key Points• Bank Runs &

Failures

Notes

• By 1933, over 9,000 banks failed

• FDR Declares Bank Holiday (March 6-10, 1933) to prevent further withdrawals

• Held fireside chat to urge citizens to keep their money in the banks

Life During the Great Depression

Key Points• Unemploymen

t

Notes• From 1929-1932 Unemployment rate went

from 3.2% to 24.9%▫ ¼ Nation Unemployed

Life During the Great Depression

Key Points• Hoovervilles

Notes• Thousands left homes

▫ Forced to live in shanty- towns known as “hoovervilles”

▫ Hoover refuses aid to the unemployed

Life During the Great Depression

Key Points• Hobos

Notes• 2 million homeless

▫ Railroads attracted many poor/homeless who now had nothing better to do than wander from place to place

▫ Mostly boys & young men

Life During the Great Depression

Key Points• Dust Bowl

Notes• Severe Drought

▫ Farmers weakened the soil by removing prairie grasses & exhausting the land

▫ Kansas, Oklahoma, Texas, New Mexico, Nebraska, N. & S. Dakota & Colorado

▫ Homesteaders most affected▫ 3-4 Inches of topsoil lost▫ “Okies” & Migration: farmers had to turn

their farms over to the bank and head west in search of jobs

Life During the Great Depression

Key Points• Hawley-Smoot

Tariff Act

Notes• June 1930

▫ Raised the average tariff rate to the highest level in American History

▫ Aimed to protect farmers & manufacturers from foreign competition

▫ Decline in American goods sold overseas

Summary:

What was life like during the Great Depression?

Part VI:New Deal (Alphabet Soup)

New DealKey Points• Idea behind

the New Deal

• 100 Days

Notes• The Brain Trust: Professional Advisers to

Roosevelt▫ “The country needs bold, persistent

experimentation…Above all, try something.”—Franklin D. Roosevelt

▫ Government Involvement: business, industry, workforce, economy

• The Hundred Days: March 9—June 16, 1933

Congress passed 15 major acts to meet the crisis

New DealKey Points• Three R’s

• Alphabet Soup

Notes• The focus of the “New Deal” would be on

the “3 R’s” :1. Relief: immediate govt action to help

the unemployed & poor2. Recovery: temporary govt programs to

restart demand for industry & agriculture

3. Reform: long-term govt programs to avoid future economic problems & depressions

• Each program had acronyms like▫ CCC▫ WPA

New Deal Relief

New Deal ReliefKey Points• CCC

Notes• Civilian Conservation Corps

▫ Government organization which employed millions of men planting trees and building trails and facilities at national parks Natural Resource Conservation 2.5 million young men employed physically fit, unmarried, 18-25 yrs old $30 per week/$25 of it had to go to

family

New Deal ReliefKey Points• CWA

Notes• Civil Works Administration

▫ Employment directly by the government▫ Employed 4 million people (300,000

were women)▫ Public service jobs: airports, schools,

parks & roads

New Deal ReliefKey Points• TVA

Notes• Tennessee Valley Authority

▫ Built hydroelectric plants and dams▫ Aimed at improving & attracting

industry to the south▫ Built 20 dams—employed up to 40,000

workers at a time▫ Strung thousands of miles of wire for

electricity

New Deal ReliefKey Points• FCC

• REA

Notes• Federal Communications Commission

▫ June 1934▫ Oversaw communication, regulated

rates & brought services to rural areas

• Rural Electric Administration▫ Brought electricity to rural areas▫ 25% rural homes had electricity by 1939

New Deal ReliefKey Points• WPA

Notes• Works Progress Administration

▫ Combated unemployment; created jobs (including jobs for professionals)

▫ Gov. paid people to build highways, public buildings, parks, bridges & airports.

▫ Cost $11 billion▫ Employed 8.5 million workers▫ “Federal Number One”—Professional

Projects Division Artists, musicians, actors, writers Murals on public buildings, city

symphonies, Federal Theater project, historians interviewing former slaves

New Deal Recovery

New Deal RecoveryKey Points• NRA

• AAA

Notes• National Recovery Administration

▫ Goal: Restore employment & regenerate industry

▫ Codes of Fair Competition—controlled production & prices Set prices, minimum wage and

maximum weekly hours

• The Agricultural Adjustment Administration▫ The (AAA) was founded to pay farmers

for acres of land or livestock they purposely did not use.

▫ The (AAA) forced the price of farm products up which helped all farmers in the long run.

New Deal Reform

New Deal ReformKey Points• SEC

Notes• Securities & Exchange Commission

▫ Government organization given authority to regulate stock market transactions and given authority over public utilities and investment companies

▫ Commercial banks could no longer use investors’ money in the stock market

New Deal ReformKey Points• NLRB

Notes• National Labor Relations Board

Organized secret ballot factory elections

Certified unions ▫ Under the Wagner Act (July 1935)

Guaranteed workers : Right to organize unions without

interference of employers Right to collective bargaining Right to binding arbitration

New Deal ReformKey Points• Social Security

Notes• Social Security Act—August 1935

▫ A federally administered system of retirement payments to national workers from the payroll tax

▫ Unemployment: supplied a temporary income for workers looking for employment

▫ Retirement: Monthly income for people who stopped working at 65

▫ Welfare: small payments to needy (poor families & disabled).

▫ Funded by payroll taxes

New Deal ReformKey Points• Fair Labor

Standards Act

Notes• Fair Labor Standards Act

▫ 1938—more protection for workers▫ Abolished child labor▫ Established 40 hour work week▫ Established National Minimum Wage

Summary:

What was the New Deal? How did it help Americans?

Part VII New Deal Ends

Criticism Key Points• Critics of the

New Deal

Notes1.Conservatives angry at “deficit spending”

(spending more than the govt takes in taxes) and “big government involvement in the economy ▫ these people wanted govt to remain “laissez

faire”

2.Ultra-liberals/radicals felt it didn’t go far enough in involving the govt in fixing the economic problems:▫ “Father Coughlin” – a popular priest & radio

host who wanted a complete take-over of the banks by the govt

▫ Huey Long – Louisiana Senator who wanted a “Share The Wealth” program: A govt-guaranteed income for all Americans,

paid for w/ a 100% tax on all income over $1 million.

End of the New DealKey Points• NRA

Unconstitutional

• FDR reelected

Notes• In 1936, the Supreme Court declared the

NRA unconstitutional.

• FDR was the reelected to a second term in the Election of 1936.▫ FDR won with a huge portion of 65% of

the popular vote

End of the New DealKey Points• FDR tries to

change the courts

Notes• FDR was upset with the Supreme Court

and tried to use his popularity from his reelection to propose the Court-Packing Bill to Congress. ▫ If passed, it would give FDR the power

to appoint someone to the Supreme Court any time a Justice reached the age of 70 and didn’t retire.

▫ At the time when it was proposed, FDR could have appointed 7 justices to the Supreme Court making 16 total.

▫ Even with all of FDR’s Democratic support in Congress, the Court-Packing Bill failed.

End of the New DealKey Points• End of New

Deal

Notes• Congressmen knew that FDR had gone

too far with the Court-Packing Bill. • After 1938, no more major New Deal

legislation was passed.

Summary:

Summarize the two sides’ arguments around the New Deal.

Part VIII: The End of the Great Depression

Legacy of the New DealKey Points• New Deal

Coalition

• Argument for Success

Notes• A major political legacy was the Democratic

party’s “New Deal Coalition” after the 1936 election: ▫ The grouping of Southern “White”

Democrats w/ immigrants, union members, & African-Americans all voting Democratic which lasted until the 1990’s.

• Some people believe the New Deal was successful because it:▫ Raised the incomes of farmers and

workers▫ Provided assistance for the elderly

through Social Security▫ Helped out the less fortunate and gave

many hope

Legacy of the New DealKey Points• Argument

Against Success

Notes

• Some people believe the New Deal hurt our nation in the long run and/or was not that successful because it:

▫ Raised the national debt

▫ Greatly expanded the role of the federal gov’t

▫ Made many people dependent on the gov’t

▫ Did not solve the unemployment problem 7.5 million people were still

unemployed in 1940 a rate of 15% (still very bad)

Legacy of the New DealKey PointsWWII Ends

Great Depression

Notes• Most people would argue that the New

Deal did not end the Great Depression but instead World War II did in 1942-43.▫ The gov’t needed millions of soldiers

and millions of factory workers to help win the war.

▫ The war effort was so massive that anyone who wanted a job could pretty much find one after 1942. Americans got back to work (war

industries)

Summary:

Summarize the arguments for and against the impact of the New Deal