What Caused the great depression and how did the U.S. survive and recover from it?

1. Ch. 14 and 15: The Great Depression What Caused the great depression and how did the U.S. survive and recover from it?

2. Ch. 14, Section 1 What issues with industry, farmers, & consumers contributed to the economic crash?2. What was the impact of bank and business failures and a high protective tariff?

3. Industry: Key industries struggled for profits in the 20s. RRs had to compete with automobile, buses. Mining/lumber not in high demand after war & coal replaced by new forms of energy (gas, hydroelectric power). Housing also drops- # of new houses being built goes down, which affects other industries (furniture, construction, lumber). prosperity leads to problems

4. Farmers: During war, demand for crops (wheat, corn) high in U.S. and around world. Saw prices go up. Farmers planted more, took out loans for land/equipment. After war, demand and prices fell. Farmers plant more so can sell more, but pushes prices down further. Farmers couldn’t pay off loans, many rural banks failed.

5. Consumers: By late 1920s, Americans buying less b/c of rising prices, stagnant wages, over buying on credit, and increase in distribution of wealth. Prosperity of 20s often a façade. Many Americans buy on credit (buy now, pay later) which led to large consumer debt. Many couldn’t pay it off, so cut back on spending. Many people in America did not gain wealth in 20s. More than 70% earned less than $2,500/year- minimum $ needed for decent standard of living. Americans didn’t have money to buy up all goods being produced.

6. 1928 Presidential Election: Republican Herbert Hoover vs. Democrat Alfred E. Smith. Hoover sells US on past economic success of Republicans and wins election. In 20s, many Americans show confidence in U.S. economy. Many people invest in strong, rising stock market. Some buy on margin- pay small % of stock price and then borrow money to pay for the rest. Rise and fall

7. Early Sept., 1929- stock prices peaked then began to fall. Confidence in stock market wavered- many sold stocks and pulled out of market. Oct. 24, 1929- stock market plunges and causes investors to panic. Many unload shares. Oct. 29, 1929: Black Tuesday- 16.4 million shares sold with fear of prices dropping even lower than they were. Market value bottomed out- lost $14 million in value. People who bought on margin stuck with huge debts, others lost all savings.

10. http://www.history.com/videos/1929-stock-market-crash#1929-stock-market-crashhttp://www.history.com/videos/1929-stock-market-crash#1929-stock-market-crash Comparison to: 1987 and 2008 http://www.history.com/videos/black-monday-1987 http://www.youtube.com/watch?v=fXLmH5kGS14&feature=related

11. Stock market crash was beginning of the Great Depression (1929-1940), but was not the CAUSE. Economy plummeted, unemployment skyrocketed. Financial collapse

12. After crash, people panicked and withdrew $ from banks. Some banks had invested people’s $ in stock market and had lost everything. By 1929, 600 banks closed. By 1933, 11,000 of 25,000 failed. No government protection or insurance of bank accounts means people lost their savings. Many American businesses went bankrupt, workers lost jobs. About 90,000 businesses bankrupt Unemployment went from 3% in 1929 to 25% in 1933.

14. http://www.history.com/videos/banking-crisis-hits-america

15. Play Media Rich Video #1 (Crash)

16. U.S. inability to import European goods or to sell U.S. goods abroad hurts the world economy- especially in Europe where still struggling to recover from WWI. Shockwaves around the world

17. Hawley-Smoot Tariff passed in 1930- protective tariff to eliminate foreign competition (for farmers, manufacturers). Effect was opposite of what expected. Flow of goods into U.S. was reduced, so other countries unable to earn American currency by selling products in America. Meant they could not purchase American goods. Unemployment rose as industries could no longer export to Europe. Other countries set up own tariffs and prevent U.S. from exporting. Word trade falls by 40% in the next few years.

18. WHY? Factors leading to GD: tariffs/war debt policies that cut down foreign market for U.S. goods, farm crisis, availability of easy credit, unequal distribution of income. Demand for goods fell even though more and more goods being produced. Fed. government kept interest rates low so more people/businesses borrowed money easily and build up large debt. Some of that money spent on stocks, which eventually went bust.

19. Ch. 14, Sec. 2 1. How did the depression affect cities and rural areas in similar and different ways?2. how were the lives of Americans changed by the Great depression?(women, men, children, minorities)

20. Cities: Many people lost jobs & were evicted from homes leading to life on the street. Some sleep in parks, sewers and others built shacks out of scrap materials (boxes, old cars, crates). See shantytowns- towns of shacks- spring up all over U.S. Poor had to dig through trash & beg for food. Soup kitchens offer free/low-cost foods and bread lines (lines of people waiting to receive food from public agencies/charities) seen became common. The depression in the city

21. African-Americans and Latinos hit harder than most. Unemployment rates higher with them and saw increased racial violence as they compete with whites for jobs. Whites begin to ask that Latinos be deported, even if had been born in U.S. By late 1930s, hundreds of thousands of Mexican-Americans relocated to Mexico- by choice or deportation.

26. As farms deal with overproduction, price reduction, and high debt, many families lost their land (foreclosure) and had to turn to tenant farming or sharecropping. The Dust Bowl: In previous decades, farmers in Midwest had been plowing & breaking up Great Plains (grasslands) for farming. Farmers overproduced on land and it began to lose nutrients. In early 1930s, droughts and wind hit. Windstorms carried topsoil and dust across the U.S., leaving sand and grit instead. The Depression in rural areas

27. Region becomes known as the Dust Bowl. Many had to leave their land behind so could try to move on and find work. See large migration of people to California and Pacific Coast states where find work as farmhands and migrant workers, but many left wandering in search of food and work. “Okies”- originally referred to those who left Oklahoma during the Dust Bowl era, but became a negative word for all migrants from the midwest

28. Play Media Rich Video #2 (Welcome)

29. http://www.history.com/shows/america-the-story-of-us/videos/america-black-blizzard#america-black-blizzardhttp://www.history.com/shows/america-the-story-of-us/videos/america-black-blizzard#america-black-blizzard

32. Many Americans relied on strong family ties and traditional values to provide hope and strength. Much adversity for families to overcome and surviving for many was a struggle. In worst cases, families broke apart and were scattered. Many so demoralized that lose will to survive. Suicide rate rose 30% between 1928-1932. Many people admitted to state mental hospitals as well. Effects on american families

33. Americans had to make sacrifices and compromises on many things. Many stop going to doctor, children don’t go to college, many put off marriage/families. Sting and fear of poverty and hard times hits people and causes later effects of people having a need for financial security. Also saw Americans show great kindness to strangers by giving clothes, food, place to stay to those who needed it. Families & communities grew stronger as they helped each other. People were forced to develop habits of saving and thriftiness in order to survive.

34. Men: Accustomed to supporting families, so found it hard to be out of work and on the streets. Many went out each day to find work with no luck. Can often take for a few weeks, maybe months- but after years become discouraged. Some stop trying, others left families. Effects on American families

35. Transients (hoboes) wander the country in RR boxcars, sleeping under bridges. Most were men and ended up in big city shelters. No direct relief system in early years of GD. No cash payments or food provided by the government for the poor.

36. Women: Worked to help support family. Many canned food, sewed clothes, managed budgets. Women working outside the home face resentment as many feel they have no right to work during such hard times. Most women suffer quietly because too ashamed to reveal hardships.

37. Children: Many develop serious health problems because of poor diet, no health care, malnutrition, diseases. School year was shortened or ended because taxes revenue was down and school boards could not keep them open. Many couldn’t go to school and had to work instead. See many teenagers seek an escape from GD, so hop on trains and move around country seeking work, adventure. “Wild boys” or “Hoover tourists” came from all areas of society and were eager to travel America. Was also dangerous for teenagers- many beaten or jailed by freight yard patrolmen, could be locked in cars for days, prey to murderous criminals.

40. Play PBS Video- Crash of 1929 for 30 min.

41. Hoover had mixed ideas of government. He believed the government should step in when needed, but did not think people should rely on the government to bail them out (direct relief). • Hoover Dam (Boulder Dam) built on Colorado River in 1929 Hoover’s failures

42. Hoover realized he must take more proactive action. 1932: Federal Home Loan Bank Act- lowers mortgage rates and helps people avoid foreclosure. Reconstruction Finance Corporation: $2 billion set aside for emergency financing of banks, insurance companies, RRs, other large businesses (leading to job growth, higher wages). RFC ended up being too little, too late as wages stay low and businesses continue to close

43. Bonus Army formed of WWI vets & families to support bill to pay a bonus to vets. Hoover did not support and neither did Congress (it did not pass). Hoover told Bonus Army to disband. All but 2,000 left. July 28, 1932- Gen. Douglas MacArthur and aide, Major Dwight D. Eisenhower forced remaining bonus army out of DC. Gas was used on over 1,000 people, two shot, many injured.

44. http://www.history.com/shows/america-the-story-of-us/videos/the-hoover-dam#the-hoover-damhttp://www.history.com/shows/america-the-story-of-us/videos/the-hoover-dam#the-hoover-dam

45. Ch. 15,

46. Americans blamed Hoover for doing too little with depression, so turn to the friendly, confident, “can-do” governor of New York, Franklin Delano Roosevelt (1932/1933) • “Fireside chats:” FDR uses radio to talk to American people about issues. • The New Deal: relief for the needy, economic recovery, financial reform. FDR and his “brain trust” (advisors) design it to alleviate problems of the GD. • FDR uses first Hundred Days to expand government role in economy and launch the New Deal Enter FDR

47. Bank recovery: Emergency Banking Relief Act (help banks get back to business), Glass-Steagall Act (FDIC formed to protect accounts), Securities and Exchange Commission (regulate stock market). Rural Assistance: Agricultural Adjustment Act (Gov. paid people not to farm to lower supply and raise prices). Tennessee Valley Authority (built dams, flood control) The first new deal

48. Public Works Administration: Civilian Conservation Corps (youth work building roads, parks, plant trees- paid $30/month),National Industrial Recovery Act/Civil Works Admin. (jobs given to help build schools, community buildings) Federal Emergency Relief Admin. gives direct relief to needy (food, clothing, work relief programs)

49. Play Media Rich Video#3(New Deal)

50. Many upset at deficit spending- US spending more $ than it made in revenue (even FDR). Some feel New Deal did not do enough, others think it gave too much control to government. • Conservative critics appeal to poor Americans (Huey Long- LA, Charles Coughlin). Advocate shared wealth • FDR still popular with most Americans. Reelected in 1936. Response to the New Deal