The Great Depression

The Great Depression• “Brother Can You Spare

A Dime” – By Bing Crosby– Performed By Al Jolsen

• How did the working class Americans feel about the “hard times” they were facing in the 30’s?

Soup line in Chicago 1933

The Great Depression

• the gov. had let them down

• they are forgotten now

• they did everything their country had asked of them

• cannot find a job

• “What did I do wrong?”

The Great Depression

• Why American were optimistic during the 1920’s– highest standard of living– medical advances increased life expectance

• males 59 / women 53

– stock market continued to go up– real wages had increased by 40%

The Great Depression

– women were going to college– unemployment falls below 4%– heroes of the day were business men

• they are saying everything is fine

• unusually high confidence in the business world

• welfare capitalism

– employers provided workers with raises and benefits

The Great Depression

Contributing Factors that lead to the Great Depression

The Great Depression1. Decline in Foreign Trade

– high tariffs wanted people to buy American goods

– built a tariff wall• Fordney-McCumber Tariff - 39%

• Hawley-Smoot Tariff - 60%

– global decline in trade

The Great Depression

2. Increase in Labor Saving Technology– more goods being produced with fewer labor– equals less job openings

The Great Depression

3. Decline in Purchasing Power– wages and salaries couldn’t keep up with the

rising prices– wages were rising more slowly than prices of

goods

The Great Depression4. Uneven distribution

of wealth– mainly the rich getting

richer– huge cooperation

rather than small businesses dominated American industry

• 200 companies controlled 49% of industry• 71% of Am. families earned < $2,500• 80% had NO savings

The Great Depression

5. Poor Government Policies– 1920 Feds cut interest rates to spur economic

growth– in 1929 prior to crash introduced a tight $$$

policy• increased interest rates

– meant that after crash NO money in circulation

– economy was unable to recover

The Great Depression

6. Overproduction in Agricultural and Industry– farmers’ depression started in early 1920’s– overproduced during WWI– not needed now that war was over and

Europe was feeding itself– crop princes fell 50%– price support is vetoed by Coolidge

The Great Depression

– farmers could not repay loans - lost land– rural banks went under when loans were not

repaid

The Great Depression

• In Industry– late 20’s warehouse had piled up with un-

bought consumer goods– overproduction caused some industries to

slow– auto industry slumps in 1925– housing fell in 1928

The Great Depression7. Installment buying and Buying on

Credit– people buy items while paying from

them (w/ interest) over many months– people flocked to buy many new

products whether or not they could afford them

– advertising made new goods irresistible– increase in personal debt

The Great Depression

8. Buying on the Margin– paying a small % of a stock’s price as a down

payment and borrowing the rest– 10% down borrowed 90% from broker who

charged HIGH interest rate– as stocks went up - sell - pay back the broker– broker could demand payment at any time

(call)

The Great Depression• Stock Market Crash

– Black Tuesday on Oct 24, 1929– wave of selling as people who

had brought on the margin were called

– 13 million shares changed hands– banks and insurance companies

bought in order to stabilize

The Great Depression• Black Tuesday Oct 29, 1929

– people and corporations alike tried to sell stocks– record # of stock sold - 16 million– panic continues for two weeks– total lost 30-40 million – people rush to banks to withdraw– banks did not have money had also invested in

Stock Market– 5 thousands banks closed their doors

The Great Depression• President Herbert Hoovers response to the

crisis– did more than any other president before him

to aid the economy– offers words of confidence– volunteer action/charities– asked

• business leaders not to cut pay

• labor leaders not to ask for more money

• farmers to limit three production

The Great Depression• put through tax cuts

• made it easier to borrow money

• set aside $800 million for public workers programs– Boulder Dam (Hoover Dam)

• Federal Home Loan Bank Act

• made loans to key industries– Reconstruction Finance Corporation

– Tickle Down

The Great Depression• Congress cold

– wanted Republicans out of office– blame them for depression – get Franklin Delano Roosevelt in office

Herbert Hoover

Franklin Delano Roosevelt

The Great Depression

• Why only these things– Short sidedness– rugged individualism– must have balance budget– rely on charities and private organization– felt relief programs would harm the

character and strength of Americans

The Great Depression

• First Bonus Army hurts Hoovers reputation

• Hoovervilles

First Bonus Army

The Great Depression• Actions of President Franklin Roosevelt

– Fire side chats• to restore confidence and optimism in the American public

– First Hundred Days in Office• “try something if it doesn’t work try some else”

– Brian Trust• a group of lawyers, social workers, college professors, and

economists

– New Deal• for the Forgotten Man

• to provide relief, recovery, and reform

Members of Roosevelt’s Brain Trust

The Great Depression

• First Action as President– declared a Banking Holiday– past Emergency Banking

Relief Act• inspect banks

– took US off gold standard

• “Runs” on a bank• fearful people line up outside a New York City bank

to withdraw their deposits

The Great Depression

• Personality– handsome,

charming, magnetic, tough

– “Happy Days Are Here Again”