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The Great Depression 1929-1939. Depression Begins. 1 st months after stock market crash – business leaders & public officials insisted that setback minor & temporary. Banking Crisis. Large banks suffered significant losses Borrowers were defaulting on their loans

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depression begins
Depression Begins
  • 1st months after stock market crash – business leaders & public officials insisted that setback minor & temporary
banking crisis
Banking Crisis
  • Large banks suffered significant losses
  • Borrowers were defaulting on their loans
  • Banks left with depreciating assets & little income
  • Banks forced to close – customers lost entire life savings
    • 1930-1932: 5,000 banks failed
business failures
Business Failures
  • Industries had lost money in stock market
  • Consumers unwilling or unable to buy their products
  • Companies force to trim inventories & scale back production schedules & lay off employees
  • Factories & mines stood idle
  • Gross National Product – total value of all goods & services produced in one year
  • From $103 billion (1929) to $56 billion (1933)
unemployment
Unemployment
  • Reached staggering levels
global depression
Global Depression
  • Economic trouble in Europe & other parts of the world brought down U.S. economy
    • Massive war debts
    • World trade on decline
u s policy global depression
U.S. Policy & Global Depression
  • U.S. contributed to worldwide economic downturn
    • Slapped high tariffs on imported goods
    • Smoot-Hawley Tariff – highest tariffs in U.S. history
    • Protected American industries from inexpensive imports
    • Accelerated global depression by eliminating American market for foreign manufactures & industries
income gap consumer debt
Income Gap & Consumer Debt
  • Unequal distribution of income another central cause of Great Depression
    • Small class has wealth & rest have debts
    • Income gap meant that most people did not have the buying power needed to boost the economy
    • If workers received higher wages & farmers better prices depression would have been less severe
    • Reliance on credit
business cycle
Business Cycle
  • Depression seen as inevitable part of business cycle – regular ups & downs of business in a free-enterprise economy
  • Length & severity of the Great Depression went far beyond the normal rhythms of business cycle
business cycle1
Business Cycle

PEAK

RECOVERY

BEAR

MARKET

BULL

MARKET

RECESSION

TROUGH

DEPRESSION

hard times
Hard Times
  • 1929 – 1.5 million Americans unemployed
  • 1933 – 15 million
  • Chicago – 50% of city’s workforce was unemployed
  • Toledo, OH – 80% searching for jobs
unemployment1
Unemployment
  • Wages fell to $.10 per hour
  • Factory workers – annual income fell by 1/3
  • Reduced number of hours
american worker
American Worker
  • African Americans particularly hard hit
  • Women hired more cheaply than men
trying to make
Trying to Make $
  • Some unemployed workers took to selling apples on the street
  • In fall of 1930 – 6,000 unemployed workers sold apples in NYC
  • Traveled from city to city hopping freight trains or hitchhiking
life in the city
Life in the City
  • Federal gov’t did little to assist struggling city-dwellers
  • City gov’t, religious groups, & charitable organizations tried to provide direct relief
helping one another
Helping One Another
  • Mexican Americans – mutualistsas (mutual aid societies)
  • Chinese Americans – open barrels of rice
  • Harlem – rent parties
  • Avoid eviction
breadlines
Breadlines
  • Passed out bowls of soup & pieces of bread
  • 1 out of 5 children in NYC suffered from malnutrition
    • Long-term health effects with teeth & eyes
shantytowns
Shantytowns
  • Collections of makeshift shelters built out of packing boxes, scrap lumber, corrugated iron, & other thrown-away items
  • “Hoovervilles”
life on the farm
Life on the Farm
  • Shrinking demand for farm products caused prices to drop
  • Farmers had more products than they could sell
    • Crops are rotting in the fields & animals slaughtered
  • Banks foreclosed on farms
selling the farm
Selling the Farm
  • Bank auctions – residents banded together in order to fight foreclosures
    • Bid absurdly low prices
    • Neighbors would give back goods to original owners
migrant farmers
Migrant Farmers
  • Gov’t officials wanted to remove illegal aliens & recent Mexican immigrants from U.S.
    • Believed would ease strain of depression
  • Authorities provided funds to transport Mexican migrants to Mexico
family life
Family Life
  • Economic hardship led to families being broken apart
    • Marriage rate fell dramatically
    • Young people put off getting married & starting families
    • Birthrates declined
psychological impact
Psychological Impact
  • More than 20,000 Americans committed suicide in 1932
  • Shame associated with losing businesses, homes & being unable to provide for family
  • Guilt with not being able to provide for family
hoover s policies
Hoover’s Policies
  • Economic recovery through individual effort not from government assistance
    • Rejected idea of direct government aid
  • Feared direct federal aid would create large bureaucracy & inflate federal budget
  • Americans should lift themselves up through hard work & strength of character
rugged individualism
Rugged Individualism
  • Success comes through individual effort & private enterprise
  • Private charities & local communities, not federal government, could best provide for those in need
  • Local government forced to stretch already inadequate funds to cover growing numbers of needy families
president s committee for unemployment relief
President’s Committee for Unemployment Relief
  • Designed to assist state & local relief efforts
  • Appointed experienced philanthropists & businesspersons to encourage donations to private relief organizations
boosting the economy
Boosting the Economy
  • Cabinet continued to propose laissez-faire approach to economy
  • Urged business leaders to maintain pre-depression levels of production, employment, & wages voluntarily
  • Started to found some public-works programs (Hoover Dam)
coping with farm crisis
Coping with Farm Crisis
  • Agriculture Marketing Act – established Federal Farm Board
    • Find ways to help farmers help themselves
    • Offered loans & financed creation of farmers’ cooperatives
    • Allowed for purchase of necessary materials
    • Provided storage facilities & instructed to buy up surplus
    • Farmers refused to limit production
home loan bank act
Home Loan Bank Act
  • Established Home Loan Bank Board – provided money to savings banks, building & loan associations, & insurance companies for low-interest mortgages
    • Encourage home construction
    • Reduce foreclosures
reconstruction finance corporation
Reconstruction Finance Corporation
  • Lend $2 billion to stabilize trouble banks, insurance companies, railroad companies & financial institutions
    • Hoped to reduce business failures & create more jobs
  • Provided no direct aid to industries or to small businesses
  • Money did not trickle down quickly enough to help ordinary citizens
bonus army
Bonus Army
  • 10,000 WWI veterans & families protested in Washington D.C.
    • Support of veteran’s bill that would have granted veterans early payment of pension bonuses owed for services during war
bonus army1
Bonus Army
  • Demonstrators lived in empty gov’t buildings & camped in open area across Potomac River
  • Congress rejected bill
  • 2,000 veterans refused to leave
violence
Violence
  • Authorities clash – 2 veterans & 2 police officers killed
  • Hoover orders army to disperse squatters
  • U.S. Army moved in with machine guns, tanks, & tear gas – burned shacks
    • Hundreds injured & 3 died (11-week-old baby)
  • Americans shocked at government’s treatment