The Nations Sick Economy Chapter 22 Section 1

The Nation’s Sick Economy Chapter 22 Section 1

Causes of the Great Depression n n Industry: Some industries were less competitive Farming: Farmers produced more than they could sell Easy credit: Many went into debt buying goods on the installment plan Income: Rich got richer while the poor got poorer

A New President The Election of 1928 Democrats Republicans Alfred E. Smith Herbert Hoover Governor of New York Sec. of Commerce Witty / Outgoing Formal / Reserved Hoover Wins

Risky Business n Many Americans practiced speculation & buying on margin n Speculation – very risky n Buying on margin – only paying for part of the stock

Stock Market Crashes October 29, 1929 n Stock prices dropped n Investors started selling all their stocks n Wall Street lost $30 billion in one month

Financial Collapse n Many Americans lost EVERYTHING in the crash After the Crash Americans panicked & tried to withdraw their money from the bank n The banks ran out of money and closed n People lost their savings n

After the Crash, Continued n 85, 000 businesses went bankrupt n 1 out of every 4 people were unemployed n People who kept their jobs had cut hours and less wages

Hawley – Smoot Tariff Act n Highest tariff in US History n Designed to protect farmers and manufacturers from foreign competition n Backfired – foreign countries couldn’t afford to buy American goods

Questions over Section 1 Fill in the following graphic organizer: First Cause of Great Depression: Second Cause of Great Depression: Third Cause of Great Depression: Fourth Cause of Great Depression: Effect: Effect:

Hardship and Suffering During the Depression Chapter 22 Section 2

Depression in the Cities n Many people were evicted from their homes and lived on the street or in shantytowns n Charities provided food in soup kitchens and bread lines

Minorities & the Depression African Americans and Latinos had the highest unemployment rates n Racial violence increased – there were 24 lynchings in 1933 n Many demanded that Latinos be deported to Mexico n Some left voluntarily while others were deported n

Depression in Rural Areas Some farmers were able to grow enough food to feed their families n Over 400, 000 farms were foreclosed due to unpaid debts n Many turned to tenant farming but were VERY poor n Thousands left their land went to California n

The Dust Bowl n Farmers overused land n Grasslands became unsuitable for farming n Drought and winds blew the soil away

n Men & the Depression could not provide for their families n 2 million men abandoned their families and wandered the country

Relief? n The government did not offer direct relief n Some charities gave a weekly payment of $2. 39 for a family

Women and Children n n Women sewed clothes and canned food Managed household budgets Worked outside the home Many women were too ashamed to admit their hardship

n Poor Problems diets and lack of money for health care led to health problems for many children – Malnutrition – Rickets – Pellagra

Social and Psychological Effects Suicide rates rose by 30% n People developed habits of thriftiness n People gave up on dreams n

Positive Effects of the Depression n People showed kindness to strangers n Gave food, clothing and a place to stay for the needy n Shared resources and helped each other out

Answer the following questions n What were positive effects of the depression? n What were negative effects of the depression?

Hoover Struggles with the Depression Chapter 22 Section 3

Hoover’s Philosophy n Tried to reassure Americans that the economy was on strong footing. n Felt the gov. should play a limited role in helping to solve the economy’s problems. n Gov. role to encourage & facilitate cooperation. n Direct relief efforts not support them finacially.

Hoover takes Cautious Steps n Cautious approach to the depression – Asked employers not to cut wages or layoff workers – Asked labor leaders not to demand higher wages or go on strike. – Created a special organization to help private charities generate contributions for the poor. n None of these steps made much of a difference.

Boulder Dam n Hoover dam was approved to be built in 1928. Boulder Dam n World’s tallest dam & second largest dam

Democrats Win in 1930 Congressional Elections n n n Political tide turned Republicans lost control of the House of Representatives & only remained in control by only 1 vote in Senate. Farmers burned crops rather than sell at a loss. Declared a “farm holiday” – refused to work in fields. Calling Shantytowns “Hoovervilles” – Hoover blankets – Hoover Flags

Hoover Backs Cooperatives n Attempts to relieve the depression involved negotiating agreements among private entities reflecting his belief in small gov. n Tried to prop up banking system by establishing the National Credit Corporation. – Loaned money to smaller banks

Direct Intervention n Appealed to Congress to pass a series of measures to reform banking. – – – Provide mortgage relief Funnel more money into business investment Federal Home Loan Bank Act – lowered mortgage rates & allowed farmers credit – Glass – Steagall Act – separated investment from commercial banking – Reconstruction Finance Corporation – authorized $2 billion for emergency financing for banks

Patman Bill Denied n 10, 000 -20, 000 WWI veterans went to Washington D. C. – Bonus Army n Patman Bill authorized the gov. to pay a bonus to WWI veterans. n Was supposed to be paid out in 1945 n Wright Patman believed money should be paid immediately. n Hoover opposed legislation n Called on Bonus Army to leave - refused

Hoover Disbands the Bonus Army n Hoover called for the infantry to gas 1, 000 people who were injured. n Most Americans were stunned & outraged at the government’s treatment of veterans.

Hoover’s Response ? ? ? Hoover’s Responses ? ? ?

Extra-Credit Questions 1. 2. 3. 4. 5. 6. 7. Why was Hoover reluctant to help people during the Depression? What types of action did Hoover take to remedy the effects of the Depression? What measures did Hoover take and what results did he achieve to help the economy? Why did Hoover use to force against World War I veterans? What was the Patman Bill and what happened when it failed in the Senate? What happened to the Bonus Army? How did the treatment of the Bonus Army affect President Hoover?