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Ch. 9. The Great Depression (1929-1932). The depression had devastating effects in both the industrialized countries and those which exported raw materials. International trade declined sharply, as did personal incomes, tax revenues, prices and profits. Cities all around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming and rural areas suffered as crop prices fell by 40 to 60 percent. Mining & logging areas had perhaps the most striking blow because the demand fell sharply and there were few employment alternatives. Dorothea Lange's Migrant Mother depicts destitute pea pickers in Liberal democracy was weakened and on the California, centering on Florence defensive, as dictators such as Adolf Hitler, Owens Thompson, a mother of 7 Joseph Stalin & Benito Mussolini made major children, age 32, in Nipomo, CA, gains, which set the stage for WWII in 1939. March 1936. Alfred E. Smith endured a smear campaign in the 1928 election because he was Catholic. Sec. I. Causes. A. Election of 1928 – Decided by religious prejudice & Prohibition (Hoover won). Hoover was from CA. Republican Herbert Hoover was a Quaker, a “dry” & supported Prohibition. Democrat Alfred Smith was a Catholic and a “wet.” Many Protestants were willing to believe that if Smith won, the Catholic Church would run the US gov’t. Republicans took full credit for economic prosperity. Hoover slogan “two cars in every garage.” B. Bull Market – Long period of rising stock prices led many to risky investments (buy stocks). 1. Stock Market – System of buying & selling shares in companies. Stock Exchange The opposite of a Markets Bull Market (confident) are in is the Bear Market several (pessimistic). major cities (NYC). Margin – buy stocks with small down payment (10%), the stockbroker loaned the rest; safe as long as the market rises. Margin Call – Broker demands that the investor repay the loan at once. Speculation – Instead of investing in company’s future, they took risks and bet the market would continue to rise & make money quickly. C. The Great Crash – The October 29, 1929, stock market crash led to bank failures across nation. 1. Black Tuesday – stocks lost $10- 15 billion in value. When the market began declining on Oct 21st, frightened customers began selling their stocks, lowering their value. The Stock Market Crash was not the major cause of the Great Depression, but it undermined the economy’s ability to hold out against its other weaknesses. A ticker tape machine prints the current stock prices. Groucho looked around and spotted his broker: “He was sitting in front of the now-still ticker tape machine, with his head buried in his hands. Ticker tape was strewn around him on the floor and the place…looked as if it hadn’t been swept out in a week. Groucho tapped [him] on the shoulder and said, ‘Aren’t you the fellow who said nothing could go wrong?’ ‘I guess I made a mistake,’ the broker wearily replied. ‘No, I’m the one who made a mistake,’ snapped Groucho. ‘I listened to you.’” -- Quoted in 1929: The Year of the Great Crash Groucho Marx, comic star of stage and screen, was bankrupt. D. Banks in a Tailspin: 1. Lost $ to investors; 2. Lost $ in market crash; 3. Made fewer loans, making less $ available, causing a recession. 4. Not gov’t insured (customers lost $ & confidence in banks). 5. Runs on banks (many bankrupt). During first two years of Depression, over 3,000 banks (10% of national total) closed. a) Bank Holidays – Closed banks by many Governors to prevent bank runs. E. Uneven Distribution of Income – Overproduction caused depression. 2007 Most economists agree that overproduction was a key cause of the Great Depression. Many Americans used Installment Plans to purchase goods. 1929, top 5% of U.S. households earned 30% of the nation’s income; In contrast, 2/3 of Americans earned less than $2,500 a year, leaving little expendable income. F. Loss of Export Sales – The ‘Hawley-Smoot Tariff’ raised tariffs to all time high. Representative W.C. Hawley, and Senator Reed Smoot shake hands in agreement on new Republican tariff bill. Higher tariffs damaged sales abroad and made products more expensive for Americans. U.S. banks made fewer loans to foreign companies making them less likely to buy American products. G. Mistakes by the Federal Reserve – Kept interest rates low. The Federal Reserve System (informally The Fed) is the central banking system of the U.S. Created in 1913 by the Federal Reserve Act, it is a quasi-public (part private, part gov’t) banking system. 12 regional Federal Reserve Banks located in major cities throughout the nation. With low interest rates, it encouraged banks to make risky loans; Led business leaders to think the economy was still expanding and they borrowed money to expand production leading to overproduction when sales were falling. The slowdown in retail led to layoffs – Lower radio sales led to fewer orders for copper wire, wood cabinets, and glass radio tubes; Led to layoffs in Montana copper mines, Minn lumberjacks, and Ohio glassworkers; Layoffs led to even fewer purchases. II. Life During the Depression. One of the Hoovervilles. 4,004 Banks closed. 25% unemployment. 31% loss of nation’s production. Hoover → local responsibility. As banks continued to fail and people lost their jobs and homes, soup kitchens and shantytowns sprang up throughout the U.S. Droughts during the 1930’s made the Depression worse for farmers. A. The Depression Worsens. 1. Soup Kitchens – Charities set-up to give poor people a meal. 2. Shantytowns – Homeless people put up shacks on unused or public lands, forming communities. 3. Hoovervilles – Blaming President Hoover; name for shantytowns. 4. Hobos – many homeless & unemployed “rode the rails.” Hobos walked, hitchhiked, or wandered around the U.S. Children in front of signs criticizing Hoover's policies. A Hooverville Soup line and Soup kitchen 5. Dust Bowl – The Great Plains pastures & wheat fields became vast dust bowl. a) Nearly penniless, many left and headed West. Crop prices began to drop in the late 1920’s; The wild grasses that held the moisture was gone; A drought began in 1932; Dust covered everything; More severe storms. Many came to CA, but met with hostility due to competing for jobs; most remained homeless and impoverished. Those from OK became known as “Oakies.” Route 66 “(Get Your Kicks) Route 66” by Nat King Cole. B. Escaping the Depression – Movies & radio shows allowed people to forget the miseries of Depression. 1. Hollywood Fantasy Factory – 60-90 million weekly viewers. a) Walt Disney – 1st feature-length animated film Snow White, 1937. Snow White’s box office hit led to The Wizard of Oz (1939, MGM). Gone With the Wind. Dietrich Garbo Groucho Marx – comedy of Animal Crackers. European artists, producers, and directors moved to Hollywood for work and escape dictatorships. Germany’s Marlene Dietrich – movies Morocco & Shanghai Express. Sweden’s Greta Garbo – Highest paid female actress during 1930’s. 2. Radio – Families listened every day. a) Soap Operas – Daytime dramas. Burns and Allen Jack Benny, George Burns and Gracie Allen, or the Green Hornet. The shows sponsors were often makers of laundry soap, hence the name. 3. Art – Captured experiences of people. a) John Steinbeck – The Grapes of Wrath (1939); OK family escaping the Dust Bowl for CA. Many Californians felt that the arrival of Dust Bowl refugees represented more unwanted people who were unemployed. John Steinbeck Describes people in flight along “Route 66.” b. William Faulkner – The Sound and the Fury. The Sound and the Fury is a Southern Gothic novel written by American author William Faulkner, which makes use of the stream of consciousness narrative technique pioneered by European authors such as James Joyce & Virginia Woolf. American Gothic, Grant Wood (1930) Stream of Conscious technique, shows what the characters are thinking before they speak; Exposed hidden attitudes of southern whites and African Americans in a fictional MS town. Grant Wood (painter) – American Gothic, led the regionalist school emphasizing traditional values, especially in the Midwest and South. III. Pres. Hoover Responds. Drk Blue = 6+ Democratic gain Med Blue = 3-5 Democratic gain Lgt Blue = 1-2 Democratic gain Gray = no net change Hoover was a successful engineer and former head of the Food Administration during WWI. Hoover’s cautious efforts did not help the economy; many Republican Congressmembers lost their seats in mid-year elections (49 Congress seats and their majority; only held Senate by 1 seat). In March 1930, Hoover said “the worst effects of the crash…will have passed during the next 60 days.” A. Public Works – Gov’t financed building projects (Hoover Dam). Construction began in 1931 and was completed in 1935. It was designated a National Historic Landmark in 1985 The Hoover Dam generates over 4 million kilowatt-hours of electricity per year (serving over a million people). New construction made up only a fraction of the lost jobs. Hoover refused to massively increase gov’t spending. B. Banks. 1. Reconstruction Finance Corporation (RFC) to make loans to banks, railroads, agricultural institutions. The agency gave $2 billion in aid to state and local governments and made loans to banks, railroads, farm mortgage associations, and other businesses. It was continued by the New Deal and played a major role in handling the Great Depression in the U.S. and setting up the relief programs that were taken over by the New Deal in 1933. Failed to meet needs; economy continued to decline. C. Help for Citizens. 1. Relief – $ that went directly to needy families. Hoover did not believe the federal gov’t should participate in relief. Reluctantly, Hoover signed the Emergency Relief and Construction Act (1932) with $1.5 billion for public works and $300 million in loans to states for direct relief; Could not reverse the collapse. The Empire State Building is a 102-story Art Deco skyscraper in New York City, NY at the intersection of 5th Ave & West 34th St. Its name is derived from the nickname for the state of NY. It stood as the world's tallest building for more than forty years, from its completion in 1931 until construction of the World Trade Center's North Tower was completed in 1972. Chrysler Bldg. Lunch break during construction of the Empire State Bldg., 1930. The Chrysler Building is an Art Deco skyscraper in NYC, standing at 1,047 ft high, it was briefly the world's tallest Empire State building (now 3rd in NYC) before it was surpassed by the Bldg. Empire State Bldg in 1931. However, the Chrysler Building remains the world's tallest brick building. D. Angry Mood. 1. Hunger Marches held by the Communist Party. The march was organized by Communists, but non-Communists joined the protest against Ford as well. The Dearborn police, who functioned almost as a branch of Ford's own company police, confronted the marchers and four strikers were killed in the conflict. 15,000 people joined the Hunger March funeral in Detroit. Dec 5, 1932, freezing cold, about 1,200 hunger marchers gathered & chanted “Feed the hungry, tax the rich.” Police herded them to a blocked-off area where they had to spend the night, deprived them of water, food, and medical attention, until Congress allowed them their right to petition their gov’t. 2. Farmers destroyed their crops to raise prices. Low crop prices since WWI; Between 1930-1934, creditors foreclosed on almost 1 million farms. 3. Bonus Army – WWI veterans marched to Washington D.C. to lobby Congress to approve their bonuses. In the summer of 1932, at the height of the Depression, some 45,000 veterans of the Great War descended on Washington, D.C. from all over the U.S. to demand the bonus that had been promised them 8 years earlier for their wartime service. They lived in shantytowns, white & black together, and for 2 months they protested and rallied for their cause. Congress approved $1,000 bonus per veteran in 1924, but delayed due to Depression. Also called the “Bonus Marchers.” a) General MacArthur dispersed the marchers. Douglas MacArthur Shacks, put up by the Bonus Army on the Anacostia flats, Washington, DC, burning after the battle with the military, 1932. After the Senate voted down the bill, most went home, but many stayed and moved into unoccupied buildings downtown; Hoover ordered the buildings cleared and the police used brutal force (fired into crowd killing two veterans) and the Army under Douglas MacArthur (used bayonets, tear gas, and killed a baby boy). Hoover failed to resolve the Depression, but did expand the economic role of the federal gov’t more than any other; The Reconstruction Finance Corp was first time the federal gov’t established an agency to stimulate the economy during peacetime; Hoover will be remembered for routing the Bonus Marchers and lingering Depression. African-Americans, in front of a pre-1929 billboard, stand in a soup line during the Great Depression. Activity Cause Effect In groups of two, list the 1. The Stock Causes and Market Crash Effects of 2. issues 3. during the 4. Great 5. Depression. 6.
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