- Slides: 65
1929 -1939 The Great Depression
Impacts of Depression n n n Prices of stock dropped 40% 86, 000 business failed 9, 000 banks went out of business 9 million saving accounts Wages were decreased by at least 60% Unemployment from 9% to 25% 15 million people unemployed
The 6 Causes 1. Unequal distribution of Wealth - 2% owned 3/5 (60%) of wealth… - … 98% shared the remaining 2/5 (40%) - ½ population living below poverty level - unequal balance between production and consumption
The 6 Causes 2. Unequal distribution of corporate power - mergers reduced competition - when company fell = loss of jobs & stock - 200 corporations controlled 50% of all products being made
The 6 Causes 3. Poor banking structure - no regulations - small banks “owed” to larger banks - unequal loan to deposit ratio (esp. small towns) “It’s A Wonderful Life” movie clip ** List at least three actions taken by George that would not be permitted in banks today.
The 6 Causes 4. High Tariffs and War Debts - Hawley-Smoot Tariff = tax on imports - What was the goal? - Led to unbalanced foreign trade & … - economic warfare = other countries did same - war debt: U. S. as creditor; E. couldn’t repay
The 6 Causes 5. Overproduction in Industry & Agriculture - farmers bought machinery on credit… - …to increase production - >> overproduction - >> no jobs = no $ to buy - >> couldn’t pay off debt. . . - … foreclosures on farms
The 6 Causes 6. Stock Market Crash - Reasons for investing in market - had $ already to invest - “buying on margin”: borrow $ to invest hoping to get rich quick - October 24 th: Black Thursday - JP Morgan: financer - October 29 th: Black Tuesday ($16 mil)
Buying on Margin Want to buy 100 shares of a stock that costs $50 per share You would need $5, 000 (plus commission) to buy Buy stock on margin: borrow up to $2, 500 (50%) of the purchase price and pay remaining $2, 500 yourself If the stock goes up to $75 and you sell it, you would be able to pay the $2, 500 (plus interest) and keep roughly $5, 000 (a 100% gain). Buying on margin can greatly enhance investing returns…
The Effects Widespread unemployment > poverty > hunger - national income: 1929 = $81 billion 1932 = $41 billion - 15 million jobless
The Effects Breakdown of Families 1. personal suffering >> suicide 2. high school drop out rate >> - kids working in sweatshops 3. runaways (Hobos riding the rails)
The Effects Organized Protests - farmers marching on banks with pitchforks and guns - tried to prevent foreclosures
The Bonus Army Who were they? What did they want? What did they do? What happened to them?
The Effects The Bonus Army - WWI soldiers promised $1 per day extra served - To be paid in 1945 - Allowed to borrow against it in 1931 - 1932 asked for full amount = denied
-Thousands from all over U. S. marched with their families on Capitol Building in D. C. to protest
-Calvary, tanks -Used tear gas and bayonets - Sent home with money from their bonus pay
Rugged Individualism n n No direct relief given by federal government Money would be given to businesses n Local government should give aid n Was nothing new – up until this time, this was the norm…
Resulted in: Hoovervilles – shantytowns of cardboard Hoover Blankets & Hoover Flags
Hoover’s Policies n Boulder (Hoover) Dam ¡ Hydroelectric power Arizona/Nevada n Federal Farm Marketing Board ¡ ¡ Limited production Helped market crops
Hoover’s Policies § Reconstruction Finance Corporation ¡ Loans to banks, railroads, businesses n Home Loan Bank Act ¡ Prevented foreclosures on farms and homes
3 Characteristics: 1. Over-cultivated land 2. Severe drought 3. High Winds
1932 Election: Hoover vs. FDR “This campaign is more than a contest between two men. It is more than a contest between two parties. It is a contest between two philosophies of government. ” - What is this saying about Hoover & FDR? - Their political ideologies? - How was the federal government’s role
FDR vs. Hoover FDR: Keynesian or "pump priming" economics - Based on beliefs of economist John Maynard Keynes - Money should be invested in people, the working class - Then, spending would increase with new money in circulation, then businesses would expand to meet the new demand hire new workers Hoover: supply side or "trickle down" economics - Money was to be invested at top, in business - Then, businesses would expand, hire new workers and in turn, spur on spending and further economic growth http: //www. socialstudieshelp. com/USRA_New_Deal. htm
Escapism “We’re the first nation to go to the poorhouse in an automobile. ” - Actor Will Rogers n Movies n Car rides n Smoking
The Arts in the 1930 s Painting American Gothic Grant Wood
The Arts in the 1930 s Literature
The Arts in the 1930 s Literature Of Mice and Men
The Arts in the 1930 s Literature/Cinema Margaret Mitchell
The Arts in the 1930 s Literature “Citizen Kane” Orson Welles
Getting out of the Depression
Frances Perkins Sec. of Labor
Eleanor Roosevelt A woman is like a tea bag- you never know how strong she is until she gets in hot water. Great minds discuss ideas; Average minds discuss events; Small minds discuss people. It is not fair to ask of others what you are unwilling to do yourself. I could not at any age be content to take my place in a corner by the fireside and simply look on. No one can make you feel inferior without your consent.
1. Relief Immediate action to halt economy’s deterioration 2. Recovery "Pump - Priming" Temporary programs to restart flow of consumer demand 3. Reform Permanent programs to avoid another depression & insure citizens against economic disasters
RELIEF n Bank Holiday ¡ ¡ n Federal Emergency Relief Act (FERA) ¡ n Direct loans to people to prevent foreclosures Civilian Conservation Corps (CCC) ¡ n Closed all banks for inspection Reopened “safe” banks (some with loans) Jobs building roads, plants trees, soil erosion Civilian Works Administration (CWA) ¡ Jobs building bridges, causeways, hospitals
Recovery n Tennessee Valley Authority (TVA) ¡ n Works Progress Administration (WPA) ¡ n Jobs building factories & dams (elec. to farms) Work for artists & build roads, libraries, schl. National Recovery Act (NIRA) ¡ Priced products, set min. wage, work condit.
Reform n n Security & Exchange Commission (SEC) ¡ Watch stock market – no fraud / insider trading Federal Deposit Insurance Corporation (FDIC) ¡ Insured all bank accounts to $5, 000 National Labor Relations Act / Board (NLRA/B) ¡ Wagner Act – fair business (no monopolies) Social Security (SS) ¡ Today’s workers pay for today’s retirees
Senator Huey Long “Share the Wealth” - Socialist - Guaranteed $5, 000 to all - Take millionaire’s $ and divide - Everyone gets car, house, radio - “Every man a king”
Father Charles Coughlin - More economic & political talks on radio than religious - Supported FDR in 1932 - Economic reform = anti-comm. & anti-capit. - Supported fascism - Anti-semitic (nickname) - Isolationist - Silenced
Unconstitutional Congress Can’t Regulate agr State Gov’t to Regulate Intrastate Business… Hurt small business
Court Packing Changing the Supreme Court…. WHY? ? ?
FDR’s Legacy PROS CONS - Unemploy. decreased - National debt increased - Increased income - Doubled fed. - Preserved resources Bureaucracy - Cushion for elderly/sick - Didn’t increase small - Supported unions business activity - Ensured bank safety
FDR’s Legacy Set a precedent that the federal government is responsible for the economic welfare of the people
F. D. Roosevelt: “You have nothing to fear, except fear itself”
IN AT LEAST A ONE PARAGRAPH RESPONSE: n Evaluate the effectiveness of FDR’s NEW DEAL legislation. Look at: impact both short and long term. What should have been done differently? Are there any lessons that Barack Obama should specifically learn from FDR, in your opinion? How has this recession impacted or how will impact you in the long run?