the nation’s sick economy objective: understand the causes of the great depression
TRANSCRIPT
The Nation’s Sick Economy
OBJECTIVE: Understand the causes of the Great Depression
Economic Troubles Brewing
• Big industries (steel, textiles, railroads) not making profits
• Diminishing demand for new products and new construction
• Agricultural business withering• Congress passes price supports for farmers• Pres. Coolidge vetoes price supports twice,
1927 & 1928
HOW ARE THESE BUSINESS CHANGES RELATED TO WWI?
CONSUMERS BAD HABITS
• Americans are buying less. Why?
• Business are producing more. Why?
• Americans use credit more. Why?
OUTCOME: The gap between rich and poor was rapidly spreading.
FACT: In 1929 5% of US controlled nearly a third of its wealth, while 40% of US only has 10% of its wealth.
“To get a sense of how the very wealthy have prospered over the past generation, consider this: The share of total income going to the top-earning 1 percent of Americans went from 8 percent in 1980 to 16 percent in 2004.
That doesn't mean that the average family is worse off than a generation ago; more people own homes, go to college, drive reliable cars and have access to sophisticated health care than ever before. But while the average family has done well, the very rich have done much, much better.” http://www.npr.org/templates/story/story.php?storyId=7180618
ELECTION OF 1928
CANDIDATES:Al Smith runs for DemocratsHerbert Hoover runs for Republicans
ISSUES:Smith’s Catholicism, opposition to prohibition, and connections to NYC
VERSUS the apparent prosperity under
Republicans
OUTCOME: Hoover wins handily.
President Herbert Hoover, 1928-32
Hoover runs for Republicans• Efficient bureaucrat/businessman• Well-known humanitarian• Quaker• Isolationist, “dry,” conservative
•Preaches “rugged individualism”Al Smith runs for Democrats
• His Catholicism is an issue• New Yorker• Liberal, “wet,” progressiveCAMPAIGN UGLY IN ANTI-CATHOLIC BIGOTRY
http://fisher.lib.virginia.edu/collections/stats/elections/maps/1928.gif
STOCK MARKET CRASH
CAUSES
• Buying on margin
• Speculation
• Global System of Debt and Reparations
EFFECTS
• Black Tuesday (10/29/29)
• Run on banks
• Great Depression
TARIFFS AND REPARATIONSAllies
struggle to pay
Back loans
Allies cannotmake a profit or pay loans
US demands repayment
Fordney-McCumber
Tariff !!!
Allies demand
reparations from Germany
Germany bankrupt
US loans $ to Germany
Germany gives $ to Britain and France
US paid in its own $
OUTCOME:Bad feelings all around.
Unstable economic house of cards.
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BEGINNING OF THE GREAT DEPRESSION
CAUSES EFFECTS• Old and decaying
industrial base• A crisis in the farm
sector• The availability of
instant credit• An unequal
distribution of income
• Hawley –Smoot Tariff
• Falling demand for consumer goods
• Gross Nat. Product cut in half!!!
• Unemployment rises to 25%!!!
• Interests rates fall, people borrow $ and fall into deeper debt
• Collapse of investment and banks
• Global Depression
Unemployment, in millions
15
12
9
6
3
0 1928 1929 1930 1931 1932 1933
Bank Failures, in thousands
5
4
3
2
1
0
1928 1929 1930 1931 1932 1933
Business Failures, in thousands
35
30
25
20
15
1928 1929 1930 1931 1932 1933
STOCK MARKET CRASH
STOCKMARKETCRASH
HARDSHIP AND SUFFERING DURING THE DEPRESSION
OBJECTIVE:Understand the conditions
during the Great Depression
http://www.weru.ksu.edu/new_weru/multimedia/multimedia.html
Depression in the Cities
CAUSES:Debt, unemployment and inflation
People loose their homes and apartments
EFFECTS:• Shantytowns (AKA Hoovervilles) • Bread Lines and Soup Kitchens • Minorities suffer the most
• Race Riots• Deportations• 50% unemployment (vs. 25%)
http://content.answers.com/main/content/wp/en/thumb/e/e8/270px-Hoovervilles_big.jpg
A Hooverville in Central Park, NYC
Soup Kitchens and Bread Lines
http://www.americanpresident.org/history/franklindelanoroosevelt/biography/resources/images/FDRCampaigning.image.jpg
http://www.elderweb.com/history/images/acoffee_sm.jpg
Depression in Rural Areas
CAUSES:• Falling crop prices Rising Rural Debt• Dust BowlEFFECTS: • 400,000 Farms foreclosed b/w 1929-
1932• More tenant farmers / sharecroppers• “Okies” = migration West from Dust
Bowl
Map: The Dust Bowl
The Dust BowlFrom the Dakotas southward to the Mexican border, farmers in the Great Plains suffered from a lack of rainfall and severe soil erosion in the 1930s, worsening the hardships of the Great Depression
Copyright © Houghton Mifflin Company. All rights reserved.
http://www.weru.ksu.edu/new_weru/multimedia/multimedia.html
Dorothea Lange photo of migrant mother and childDorothea Lange became one of the most famous photographers of the Depression. Her photo of a migrant mother and her children at a migrant camp in Nipomo, California, captured the human tragedy of the Depression. Seeking jobs and opportunities, over 350,000 people traveled to the state, most finding few opportunities. (Library of Congress)
Dorothea Lange photo of migrant mother and child
Copyright © Houghton Mifflin Company. All rights reserved.
Hoover’s Philosophy
• Depressions were normal, healthy part of business cycle
• Depression will correct itself• Belief in “rugged Individualism” and
voluntary action• Government should do as little as
possible• No Direct Relief
PROBLEM: Depression does not “fix itself”
• Hoover asks businesses to voluntarily hold wages and employment
• Economy continues to collapse• Democrats win 1930 Congressional
Elections• Farmers rioting & destroying crops• Starvation & Homelessness haunts US
Hoover Acts: Too Little, Too Late
• Authorizes public works projects: dams, bridges, roads
• 1932: Reconstruction Finance Corp. (RFC)
• 1933: Federal Home Loan Bank Act
CRITICISM:This aid goes to big companies and banks, does not “trickle down” to average citizens
Construction of a Dam by William Gropper. (Smithsonian American Art Museum,Washington,D.C. Art Resource, NY)
Construction of a Dam by William Gropper
Hoover does direct some government aid to major construction projects, such as the Boulder Dam (now called Hoover Dam)
Gassing of Bonus Army
IMPACT? Hoover’s popularity falls
lower. Helps FDR win in 1932.
EVALUATION OF HOOVER
HOOVER’S RESPONSE
RESULT