United States History

1. Chapter 24: The Great Depression United States History

2. The Imminent Disaster • In the booming 1920s economy, few thought that trouble lay ahead • Several factors contributed to the crash of the economy • Credit: Billions of dollars in goods were bought on credit, with no way to pay back the credit if income was lost • Stock market: because of the booming stock prices, people wanted to invest, even borrowing money to buy stock that wasn’t guaranteed to pay out • Black Thursday and Black Tuesday: October 24, 1929 and October 29, 1929 • Worried by rising interest rates, millions of dollars in stock were sold on the 24th, causing the market to plunge • Even more was sold on the 29th, dumping millions into the market • Companies called out the debts and people lost millions • As a result, companies closed and millions lost their jobs

3. The Depression Begins • President Hoover and other economic officials thought that the crash was a temporary setback • As companies and people lost money on the market, banks lost money too • Many banks closed when bad loans defaulted • Fear set in, and runs were made on banks to withdraw accounts, causing more banks to fail • Companies couldn’t sell their products, so layoffs and production cuts ensued • The gross national product (GNP) plummeted • Unemployment rose from 3.2% in 1929 to 23.6% in 1932 • The Great Depression would last until the beginning of World War II in 1941

4. Causes of the Depression • The crash, cheap credit and bank failures were not the only causes of the Depression • World War I had caused a financial disaster in Europe, leading to massive debts and causing depression in Europe, worsening the American one • Smoot-Hawley Tariff: to protect American industry, the highest tax on imports in history were passed in 1930 • Income Gap: the rich were richer, but the poor were poorer during the 1920s • However, some argue that the Depression was unavoidable • The business cycle is a natural up and down cycle of the economy • Better planning during the 1920s could have lessened this impact • Regardless, the Great Depression was the worst economic downturn in the nation’s history

5. The American Workers • Millions lost their jobs, and for those that kept their jobs, wages were cut drastically • Immigration practically ceased • People fought over garbage cans, hoping to get scraps of food • Breadlines formed outside charities • The homeless built crude “neighborhoods” within cities known as shantytowns • As the Depression worsened, shantytowns became known as “Hoovervilles” after the president • Farmers had it especially bad • Many lost their farms due to falling prices and inability to pay their mortgages • Banks sold all of their equipment in foreclosure sales • However, people helped their neighbors by purposely bidding mere pennies on goods to give back in “penny auctions”

6. Hoovervilles

7. Family Life • Families had to dig down deep to survive • Marriage rates and birthrates fell • Families recycled and reused as much as possible and produced as much as they could, like soap and their own bread • The mental state of many took as hit as well • To take their mind of things, people tried to occupy and entertain themselves • Movies and cartoons were popular and cheap • Radio programs and music were also popular • Many authors, such as William Faulkner, wrote stories to keep people occupied • A board game called Monopoly was created in 1935, portraying a dream that anybody could live, if only for a few hours

8. Hoover’s Policies • Hoover tried to remain optimistic, but failed to provide direct relief • Before the crash, the majority of people felt that the government should stay out of the economy • Now people were calling for the government to step up • Hoover felt that it would create more government and inflate the budget • He encouraged people to work hard and build character, hoping volunteers from charities could help • Hoover tried to stimulate the economy some public works programs, but to little effect • The Boulder (Hoover)Dam is the largest program from his time • Farmers were hit hard and surplus food could not be sold, thus making prices fall • Hoover encouraged farmers to limit growth, but they refused

9. Protest • People began to grow tired of the government’s lack of incentive to help the economy • More and more began to join the Socialist and Communist Parties, hoping they could help • The biggest protest came from WWI veterans in Washington DC in 1932 • Troops were due pensions from the war, but were not receiving them • Veterans marched on DC in protest and build Hoovervilles in the shadows of the Capitol • The US Army was sent in to disperse the vets and burned their “homes” • The group became known as the Bonus Army

10. Election of 1932 • Hoover’s chance at reelection looked grim, regardless of his opponent • The Democrats nominated New York governor Franklin D. Roosevelt (FDR) • Roosevelt was influenced by the Progressive policies of his distant cousin, Teddy Roosevelt • His wife Eleanor was very helpful as well, especially with his paralysis from polio • He continuously attacked Hoover’s policies and vowed to fix the economy • FDR and the Democrats won Iandslide in not only the presidency but also in both houses of Congress • FDR promised that he would bring the nation a “New Deal”, something that he would set out to do right away in 1933

11. Franklin D. Roosevelt