Ms. Buckman’s U.S. History The Great Depression Causes of the Great Depression Overproduction Of Consumer Goods & Farm Products 1. Sales declined a. Surpluses piled up (you have all these extra goods not being sold just sitting on the shelves) b. Results- businesses closed; unemployment 2. Product/Crop prices declined Surplus of goods + Stagnant wages = Decline in Sales Unequal Distribution of Income Wages had risen very little compared to the large increases in productivity ... If people made more money, the depression would have been less severe. **1920s created a large income gap between the rich & the poor** Stagnant Wages = When productivity increases, but YOUR income doesn’t increase, it stays the same.... As the cost of living goes up each year, you can’t afford certain things that you could in the past – you’re income isn’t moving! Buying On The Margin Buying stock w/ borrowed $ Stock Speculation Buying/selling to make a quick profit ***Led to the stock market crash of 1929! Debt 1. Individual debt 2. International debt caused by WWI Stock Market Crash 1. October 29, 1929 2. Shares sold and prices plunged (millions lost) Depressions are inevitable part of business cycle! ***Conditions characteristic of an economic depression -- high unemployment rates & overproduction President Herbert Hoover 1929-1933 In his inaugural speech, Hoover predicted poverty would soon be banished from the land. Rugged Individualism Success comes through individual effort 1. Not the federal government’s responsibility to care for the people -- meaning he was a more laissez-faire president (he didn’t want to interfere with the process very much) ***Because of this, in the early part of the Great Depression the federal government DID NOT respond with aid for the people!!! His Efforts 1. Encouraged businesses to keep wages up 2. Encouraged labor unions not to strike 3. Funded federal projects to provide jobs & stimulate business ****4. Hawley-Smoot Tariff: Effort to buy American products only (Backfired- Europeans retaliated by not buying American goods and it hurt trade!) 5. Reconstruction Finance Corporation: Allowed credit to big businesses (Too little, too late) 6. Agricultural Marketing Act (AMA): Allowed government to buy surplus crops…Plan too costly; had little impact Hoover's Unpopularity 1. Said "no one was actually starving". 2. Commented that some Americans made more $ selling apples on the street 3. In an interview w/ reporters, he fed his dog red meat. 4. Hoovervilles, Hoover blankets, Hoover flags & other terms were used b/c poor Americans blamed him for their suffering & misery. 5. Out of touch with reality- "Better days are ahead." & "Prosperity is just around the corner." Impact of the Great Depression Society 1. 25 % unemployment 2. Men moved around to find work. 3. Wages- 10 cents an hour 4. Blacks fired 1st 5. Women worked for less (hired more) 6. People still feared that immigrants would take their jobs. 7. Many sold apples on streets. Cities 1. City governments, Salvation Army & Red Cross provided direct relief, especially in those early years (NOT the federal government) 2. Breadlines & soup kitchens were common. 3. Shantytowns developed outside cities. a. nicknamed Hoovervilles Farmers 1. Surplus of crops; no one could buy crops 2. Farmers could not afford the mortgages on their land (went bankrupt or land was auctioned off) 3. Neighbors would bid low on land & tools at auction (Ex. $800 farm sold for 1.90). 4. Forced to destroy their over-supply of crops by letting them rot and kill off livestock; hoped to drive up prices by decreasing the supply Families 1. Families moved in together; took in boarders 2. People waited to get married 3. Made own food and clothes Banks 1. Many were unable to pay bank loans 2. People were scared and withdrew money 3. Banks could not pay customers Entertainment of the 1930s Radios & movies popular; provided escape Board Games were popular Discontent: Bonus Army Bonus Army 1. WWI vets that were promised $ for service (many were homeless) and they demanded that Congress fulfill these payments 2. March in Washington 3. Congress denied the bonus bill a. Many stayed in protest b. Hoover forced the vets out (By any means necessary -- only added to his bad public image) Great Plains: Dust Bowl Dust Bowl ***Occurred in the Great Plains 1. Caused by long-term drought, erosion, and poor farming techniques 2. Many abandoned their farms... Families moved west to California to find work as migrant workers 3. Showed how geography & natural disasters can seriously affect people’s lives ***Eventually, as a way to prevent soil erosion and in hopes to keep another Dust Bowl from occurring, FDR developed a program to plant millions of trees along the Great Plains. Election of 1932 – FDR’s Presidency Results Hoover (R) vs. Franklin D. Roosevelt (D) FDR wins this election because the American public would rather have ANYONE than Hoover serve another term as president! Remember they blame him for the Great Depression! FDR’s Promise & Style During his campaign Roosevelt promised to help fix some of the economic hardship facing the nation by establishing work programs and making sure the federal government finally got involved. **** He was NOT for laissez-faire! He wanted the government to help solve the problems of the Great Depression! **** a. Wants to "reassure" Americans all will be ok b. Met with press on weekly basis c. Fireside Chats 1. FDR spoke on radio to inform America 2. Discussed his New Deal plans d. Radio brought news & entertainment to a mass audience. Restore Confidence In Banks – Bank Holiday 1. FDR ordered all banks to close for 3 days. 2. Only banks that were stable & financially sound could reopen. This was meant to help restore public confidence in banks! If a bank reopened, it must be safe to use. The New Deal & Its Agencies The New Deal 1. FDR promised "a New Deal" for American people. 2. Created to provide RECOVERY, RELIEF, & REFORM programs (3 R’s of FDR’s New Deal) ***3. It funded public work relief programs. (Agencies provided jobs or some type of government aid) 4. Nicknamed "alphabet agencies" New Deal Agencies 1. Federal Deposit Insurance Corporation (FDIC) a. People lost $ in banks -- THIS (along with the bank holiday, restored public confidence in banks) b. Insured bank deposits up to $5000 c. Still exists (today $250,000) 2. Farm Credit Administration (FCA) a. Farmers were losing their farms, couldn't pay taxes & needed better seeds, equipment, etc. b. Gave $ to pay off their farms, taxes & buy supplies c. Successful 3. Home Owners Loan Corporation (HOLC) a. Home owners had difficult time making mortgage payments. b. Gave $ to make sure they didn't lose their homes & helped refinance loans to make monthly payments less. c. Successful 4. Federal Emergency Relief Administration (FERA) a. Some areas were hit harder by depression than others. b. Gave $ to relief agencies in these areas. c. Limited success; $3 billion spent, but wasn't enough 5. Civil Works Administration/Public Works Administration (PWA/CWA) a. High unemployment. b. Gave jobs building roads, bridges, dams, schools, airports & other public services c. Successful 6. Civilian Conservation Corps a. High unemployment. b. Gave men (18-25) jobs working on various conservation projects (fighting forest fires, restoring battlefields, etc.) Combo. of boot camp & Boy Scouts. Paid $35 a mo. & had to send $25 home. c. Most popular & successful program 7. Securities & Exchange Commission (SEC) a. Stock market wasn't regulated. b. Regulated & protected investors from dishonest trading practices (fraud) in the stock market helped to limit the risk associated with making investments/savings. c. Still exists 8. TN Valley Authority (TVA) a. Unemployment, flooding & lack of electricity b. Gave jobs building government-owned dams, which controlled flooding, & created hydroelectric power c. Still exists 9. Agricultural Adjustment Act (AAA) a. Farmers were producing too much; which made prices fall. b. Farmers were paid not to farm a portion of their land. c. Supreme Court declared it unconstitutional. 10. National Recovery Administration (NRA) a. Wasn't a national minimum wage or limit on work hours & companies were overproducing. b. Designed to limit production so prices would go up. c. Established national minimum wage & limited # of work hours. d. Supreme Court eventually declared it unconstitutional. 11. Works Progress Administration (WPA) a. High unemployment. b. Same as CWA/PWA, but in addition, it focused on giving jobs to writers & artists. (interviewed former slaves, painted murals in public buildings, etc.) c. Successful 12. Social Security Administration a. Old-age insurance, paid partially by workers & partially by employers b. Provided monthly pension to people over 65; handicapped people; unemployment insurance wanted to prevent poverty among the elderly c. Still exists Court Packing Plan a. Supreme Court ruled some agencies "Unconstitutional" b. FDR wanted to increase the number of justices changed from 9 to 15 c. He would "pack" the court (people on his side) -he wanted the Supreme Court to support his New Deal programs! d. Congress did not approve plan New Deal Outcomes 1. The New Deal shifted American opinion into believing that the federal government should become more involved with various aspects of American lives (think economic/social involvement). 2. This expanded the role of the federal government!!! 3. It also encouraged workers to even spend money so businesses would be more successful, improving the economy. 4. More money had to fall in the hands of the lowerincome families if the economic situation could ever improve. Critics Of The New Deal A. Some believed FDR had gone too far in expanding powers of the federal government (threatening the system of checks & balances) B. Said this could potentially make people too dependent on the federal government C. The New Deal also raised the national debt D. Francis Townsend: 1. Plan to give people 60 & older $200 a month; would have to spend within the month E. Senator Huey P. Long- Louisiana 1. "Share Our Wealth" plan; would give Amer. an income of $2500 a year 2. Take $ away from those who made over $ 1 mil. F. Father Charles Coughlin 1. Anti-semantic Radio priest 2. Blamed depression on Jews Labor Unions ****A. Wagner Act: Guaranteed workers the right to organize unions & be represented in collective bargaining (negotiating rights) -also referred to as the National Labor Relations ActB. Congress of Industrial Organizations (CIO) 1. organized all workers; used strikes Balanced Budget A. 1937-economy was improving B. FDR wanted to cut spending: 1. People panicked & economy plunged 2. "Hooked" on assistance programs Deficit Spending 1. Definition: Spending more than what you’re receiving in taxes, borrowing to spend 2. Economist John Keynes said this was necessary to “prime the pump” --- in difficult times the government needs to spend well above its tax revenues to initiate economic growth -- increase investment & create jobs 3. FDR hoped this would lead to job creation for the unemployed! 4. Sometimes public money is needed to encourage business! At The End of Everything 1. World War II would help turn America into a world super power. 2. The American spirit prevailed as people refused to give into their problems and found ways to make it work. 3. Term limits for presidents were also established after FDR’s controversy of being elected in 1940.
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