4/13 & 4/14ICEBREAKER ~ TAKE OUT YOUR NOTES OPEN

NOTEBOOK QUIZ ON THE CIVIL WAR

AREA OF STUDY #7 ~ THE GREAT DEPRESSION AND THE

AMERICAS 1929 – 1939 • THIS WILL COVER TOPIC / QUESTIONS #13 & #14 ON YOUR EXAM

• HOMEWORK ASSIGNMENT FOR THIS UNIT ~ ANSWER ONE OF THE FOLLOWING ESSAY QUESTIONS

13. DISCUSS HOOVER’S RESPONSE TO THE GREAT DEPRESSION.14. ANALYZE THE IMPACT OF THE GREAT DEPRESSION ON ONE COUNTRY OF THE REGION

CAUSES OF THE GREAT DEPRESSION

THE GREAT DEPRESSIO

N IS ONE OF THE MOST

MISUNDERSTOOD

EVENTS IN AMERICAN HISTORY…

SOME POINT TO THE CRASH OF THE STOCK MARKET

AS THE CAUSE OF THE DEPRESSION…

NOT TRUE.

SOME BLAME HERBERT HOOVER,

CLAIMING HIS “HANDS-OFF”

ECONOMIC POLICIES DRAGGED

AMERICA INTO THE DEPRESSION…

NOT ACCURATE.

THE GREAT DEPRESSION WAS A WORLDWIDE

EVENT.

BY 1929, THE WORLD SUFFERED A MAJOR

RISE IN UNEMPLOYMENT.

IN THE FIRST FOUR YEARS OF THE DEPRESSION,

REAL ECONOMIC OUTPUT (GROSS DOMESTIC

PRODUCT) FELL BY 30%

FROM 1929 TO 1933.

THE U.S. STOCK MARKET LOST 90% OF ITS VALUE.

THERE ARE SEVERAL EXPLANATIONS, BUT THE MOST OBVIOUS CAUSES ARE FOUR:

1. OVERPRODUCTION2. BANKING & MONEY POLICIES 3. STOCK MARKET ACTIONS 4. POLITICAL DECISIONS

1. OVER-PRODUCTION:

THE “ROARING TWENTIES” WAS AN ERA

WHEN OUR COUNTRY PROSPERED

TREMENDOUSLY.

AVERAGE OUTPUT PER WORKER INCREASED 32% IN MANUFACTURING AND

CORPORATE PROFITS ROSE 62%.

BUT IN REALITY THERE EXISTED:* UNDERCONSUMPTION OF THESE GOODS HERE AND ABROAD, BECAUSE PEOPLE DIDN’T HAVE ENOUGH CASH TO BUY ALL THEY WANTED…* THERE STILL EXISTED AN UNEVEN DISTRIBUTION OF WEALTH AND INCOME.

AMERICAS’ FARMS WERE OVERPRODUCING, AS WELL.DURING WORLD WAR I, WITH EUROPEAN FARMS IN RUIN, THE AMERICAN FARM WAS A PROSPEROUS BUSINESS.

INCREASED FOOD

PRODUCTION DURING WORLD WAR I WAS AN

ECONOMIC “BOOM” FOR

MANY FARMERS, WHO BORROWED

MONEY TO ENLARGE AND MODERNIZE

THEIR FARMS.

SO, TO SUMMARIZE IT, HIGH DEMAND FOR CONSUMER

GOODS AND

AGRICULTURAL PRODUCTS LED TO OVERPRODUCTION

.

2. BANKING & MONEY POLICIES

THE UNEVEN DISTRIBUTION

OF WEALTH DIDN’T STOP

THE POOR AND

MIDDLE CLASS FROM

WANTINGTO POSSESS

LUXURY ITEMS, SUCH AS CARS AND RADIOS…

ALTHOUGH WAGES WERE NOT KEEPING UP WITH THE PRICES OF

THOSE GOODS…”BUYING ON CREDIT”

OFFER A SOLUTIONS!

BY THE END OF THE 1920S, 60% OF THE

CARS AND 80% OF THE RADIOS WERE BOUGHT

ON INSTALLMENT CREDIT.

THE FEDERAL RESERVE BOARD

WAS CREATED BY CONGRESS

IN RESPONSE TO THE BANKING CRISIS OF

1907.

THE FEDERAL RESERVE WAS SUPPOSE TO SERVE

AS A PROTECTIVE

“WATCHDOG” OF THE NATION’S

ECONOMY.

IT HAD THE POWER TO SET THE INTEREST RATE

FOR LOANS ISSUED BY BANKS.

SO,TO SUMMARIZE, BANKING POLICIES WHICH OFFERED “BUYING ON CREDIT” FIRST WITH LOWER INTEREST RATES, THEN RAISING THOSE RATES, CAUSED A DANGEROUS SITUATION IN THE ECONOMY.

BUYING ON CREDIT

INCREASED PERSONAL DEBT.

HIGHER INTEREST RATES CAUSED LESS DEMAND FOR GOODS.

3. STOCK MARKET ACTIONS

THE STOCK MARKET WAS AN INDICATOR OF NATIONAL

PROSPERITY.

THE STOCK MARKET GROWTH

IN THE 1920S TELLS A STORY OF

RUNAWAY OPTIMISM

FOR THE FUTURE.

SMALL INVESTORS WERE MORE APT TO

INVEST INTHE STOCK MARKET IN LARGE NUMBERS

BECAUSE THE “MARGIN

REQUIREMENT” WAS ONLY 10%.

GEORGE OLSEN AND HIS MUSIC "I'M IN THE MARKET FOR YOU”

I'LL HAVE TO SEE MY BROKERFIND OUT WHAT HE CAN DO.

'CAUSE I'M IN THE MARKET FOR YOU.

WITH MARGIN I'M ALL THROUGH.

'CAUSE I WANT YOU OUTRIGHT IT'S TRUE.

WE'LL COUNT THE HUGS AND KISSES,

WHEN DIVIDENDS ARE DUE,'CAUSE I'M IN THE MARKET FOR

YOU.

AS BUSINESS WAS BOOMING IN THE

1920S AND STOCK PRICES

KEPT RISING WITH BUSINESSES’ GROWING PROFITS,

BUYING STOCKS ON MARGIN

FUNCTIONED LIKE BUYING A CAR ON

CREDIT.

The extensive speculation

that took place in the late 1920s

kept stock prices high, but the balloon

was due to burst…

THE CRASH:

“BLACK TUESDAY”

OCT. 29, 1929, THE STOCK MARKET CRASHED.

OVER 16 MILLION

SHARES SOLD IN MASSIVE

SELLING FRENZY.

LOSSES EXCEEDED

$26 BILLION.

THE STOCK MARKET CRASH OF 1929

WAS ONLY A SYMPTOM- NOT THE CAUSE OF THE

GREAT DEPRESSION.

BUYING ON MARGIN WAS A

RISKY MARKET PRACTICE.

BANK LOANS FOR STOCK PURCHASES

WAS AN UNSOUND PRACTICE.

MORE POOR BANKING POLICIES…

THE FEDERAL RESERVE WAS ALSO

ESTABLISHED TO PREVENT

BANK CLOSINGS.

IT WAS SUPPOSE TO SERVE AS THE “LAST RESORT” LOANER TO

BANKS ON THE VERGE OF COLLAPSING.

IN EARLY 1930, THERE WERE 60 BANK

FAILURES PER MONTH.

EVENTUALLY, 9,000 BANKS CLOSED THEIR DOORS BETWEEN 1930

AND 1933.

SIMPLY PUT, WHEN A BANK FAILS, A LARGE AMOUNT OF MONEY DISAPPEARS FROM THE ECONOMY.

THERE WAS NO INSURANCE FOR DEPOSITORS AT THIS TIME, SO MANY LOST THEIR SAVINGS.

AS BANKS CLOSED THEIR DOORS AND MORE PEOPLE LOST THEIR SAVINGS, FEAR GRIPPED DEPOSITORS ACROSS

THE NATION.

BUSINESS ALSO LOST ITS MONEY AND COULD NOT FINANCE ITS ACTIVITIES…

MORE BUSINESSES WENT BANKRUPT AND CLOSED THEIR DOORS, LEAVING MORE PEOPLE UNEMPLOYED…

…CAUSING UNEMPLOYMENT TO REACH EVEN HIGHER LEVELS.

4. POLITICAL DECISIONS:

THE DEPRESSION COULD HAVE BEEN LESS SEVERE HAD POLICY

MAKERS NOT MADE CERTAIN MISTAKES…

LEADERS IN GOVERNMENT AND BUSINESS RELIED ON POOR ADVICE

FROM ECONOMIC & POLITICAL EXPERTS...

“THE SOLE FUNCTION OF THE GOVERNMENT IS TO BRING ABOUT A CONDITION OF AFFAIRS FAVORABLE TO THE BENEFICIAL DEVELOPMENT OF PRIVATE ENTERPRISE.” HERBERT HOOVER (1930)

BUT DID HOOVER REALLY BELIEVE IN A “HANDS-OFF”

FREE MARKET PHILOSOPHY?

HOOVER DID TAKE ACTION

TO INTERVENE IN THE

ECONOMY, BUT IT WAS TOO

LITTLE TOO LATE-

WITHIN A MONTH OF THE

CRASH, HOOVER MET

WITH KEY BUSINESS

LEADERS TO URGE THEM TO KEEP WAGES HIGH, EVEN

THOUGH PRICES AND

PROFITS WERE FALLING.

THE GREATEST MISTAKE OF THE HOOVER

ADMINISTRATION WAS PASSAGE OF THE SMOOT-

HAWLEY TARIFF, PASSED IN 1930.

OFFICIALS BELIEVED THAT RAISING TRADE BARRIERS WOULD FORCE

AMERICANS TO BUY MORE GOODS AT HOME, WHICH WOULD KEEP AMERICANS

EMPLOYED.

Smoot Hawley Tariff of 1930 and Trade Reform Act of 1934

0

1

2

3

4

5

6

7

1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940

Billion

s of

Nom

inal

Dol

lars

ExportsImports

IT VIRTUALLY CLOSED OUR BORDERS TO

FOREIGN GOODS AND IGNITED A VICIOUS

INTERNATIONAL TRADE WAR.

4/15 & 4/16

• ICEBREAKER ~ • WHAT WERE THE FOUR CAUSES TO THE GREAT DEPRESSION???

• ESSAY AND REVIEW DUE FRIDAY/MONDAY• QUIZ FRIDAY/MONDAY

13. DISCUSS HOOVER’S RESPONSE TO THE GREAT DEPRESSION.14. ANALYZE THE IMPACT OF THE GREAT DEPRESSION ON ONE COUNTRY OF THE REGION

CAUSES OF THE GREAT DEPRESSION

1. Overproduction2. Banking & Money Policies 3. Stock Market Actions 4. Political decisions

EUROPE HAD DEBTS FROM WORLD WAR I AND

GERMANY HAD REPARATIONS TO PAY.

FOREIGN NATIONS WERE FORCED TO CURTAIL THEIR

PURCHASE OF AMERICANS GOODS.

FOR EXAMPLE,AMERICAN

FARMERS LOST 1/3

OF THEIR MARKET.

FARM PRICES PLUMMETED

AND THOUSANDS OF FARMERS

WENT BANKRUPT.

TO COMPOUND THE EFFECTS OF THE ECONOMIC SLUMP,FARMERS WOULD EXPERIENCE ONE OF THE WORST, LONGEST DROUGHTS IN HISTORY DURING THE 1930S…

...CREATING A “DUST BOWL” OF UNPRODUCTIVE, ERODED

FARMLAND.

THE DUST BOWL: CAUSES• OVERCULTIVATI

ON OF LAND IN THE GREAT PLAINS• SUSTAINED

DROUGHT THROUGHOUT REGION• HIGH WINDS

BLEW AWAY LOOSE TOPSOILA dust cloud approaches the town of Stratford,

Texas, in 1935

THE DUST BOWL: IMPACT• MORE THAN 500,000 LEFT

HOMELESS

• STORMS BLEW LARGE AMOUNTS OF DUST FROM THE PLAINS INTO CITIES SUCH AS CHICAGO AND BUFFALO

• “RED SNOW” FELL ON TOWNS IN NEW ENGLAND

THE PLIGHT OF THE “OKIES”• FARMERS FROM

OKLAHOMA FLED THE DUST BOWL• WENT TO CALIFORNIA

AND THE INTERMOUNTAIN WEST FOR FARM JOBS• NEARLY 15 PERCENT OF

OKLAHOMA’S POPULATION BECAME MIGRANTS

A woman and her child rest beside their car during their trip

west

THREE YEARS LATER, INTERNATIONAL TRADE PLUMMETED TO 33% OF

ITS 1929 LEVEL.

THE LOSS OF SUCH TRADE WAS

DEVASTATING AND HAD RIPPLE EFFECTS, SIMILAR TO THE BANK FAILURES.

IN SUMMARY, THE SMOOT-HAWLEY TARIFF CREATED TRADE WARS AND WORSENED WORLD ECONOMIC CONDITIONS.

HUGE INCREASE IN TAXES HURT COMPANIES AND INDIVIDUALS.

LET’S REVIEW THE MAJOR CAUSES

FOR THE GREAT DEPRESSION:

1. OVERPRODUCTION (RESPONDING TO HIGH DEMAND FOR GOODS)2. BANKING & MONEY POLICIES (LOW INTEREST RATES, BUYING ON CREDIT, RAISE IN INTEREST RATES, LOW RESERVE RATES FOR BANKS.)3. STOCK MARKET PRACTICES (BUYING ON MARGIN, BANK LOANS FOR STOCK PURCHASES)4. POLITICAL DECISIONS (SMOOT-HAWLEY TARIFF, INCREASE INCOME TAX)

HOOVER’S RESPONSE• PRESIDENT HOOVER

OVERWHELMED• BELIEVED THAT PRIVATE

CHARITY WAS BEST SUITED TO SOLVE PROBLEMS

• MOST EFFORTS FAILED• RECONSTRUCTION

FINANCE CORPORATION ACHIEVED SOME SUCCESS

• HISTORY SHOWS VERY LITTLE DIFFERENCE BETWEEN HOOVERS’ INITIAL PROGRAMS AND ROOSEVELT’S, ONLY SIZE.

President Herbert Hoover

HOOVERVILLES• SETTLEMENTS OF

SHACKS INHABITED BY TRANSIENTS AND UNEMPLOYED

• DERISIVELY NAMED AFTER PRESIDENT HOOVER

• MANY CITIES AND TOWNS HAD AT LEAST ONE

THE BONUS ARMY• PATMAN BILL WAS TO

MOVE UP BONUS PAYMENTS FROM 1945 TO 1933

• VETERANS CAMPED NEAR THE CAPITOL TO SUPPORT THE BILL

• BILL FAILED IN CONGRESS

• HOOVER’S REMOVAL OF VETS MADE HOOVER APPEAR HEARTLESSWith the U.S. capitol visible in the

distance, shacks erected by the Bonus Expeditionary Force burn

THE ELECTION OF 1932• REPUBLICANS

RENOMINATED HOOVER• DEMOCRATS

NOMINATED FRANKLIN D. ROOSEVELT

• HOOVER’S INABILITY TO SOLVE THE DEPRESSION BECAME THE CHIEF ISSUE

• FDR WON IN A LANDSLIDE

Hoover Roosevelt

THE “NEW DEAL”• NAMED AFTER A

PHRASE IN FDR’S 1932 NOMINATION SPEECH, BECAME THE NICKNAME FOR FDR’S ECONOMIC PROGRAM• CONSISTED OF THREE

SEPARATE ASPECTS:• RELIEF• RECOVERY• REFORMFDR campaigning in 1932

FIRST HUNDRED DAYS

• FIRST 100 DAYS FDR WAS IN OFFICE HE AND CONGRESS PASSED 15 BILLS

GOALS OF THE FIRST NEW DEALRELIEF ~ FOR THE UNEMPLOYEDRECOVERY ~ FOR THE ECONOMYREFORM ~ PREVENT ANOTHER DEPRESSION

RESTORING CONFIDENCE

• 1ST DAY AFTER INAUGURATION CONGRESS MET AND APPROVED THE EMERGENCY BANKING BILL ~ ALLOWED PRESIDENT TO SHUT DOWN BANKS IN ORDER TO ALLOW THEM TO GET THINGS IN ORDER ~ CALLED IT A BANK HOLIDAY

• REFORMING THE FINANCIAL SYSTEM ~ FEDERAL DEPOSIT CORPORATION ~ INSURED BANK DEPOSITS OF UP TO $5000

• SECURITIES AND EXCHANGE COMMISSION ~ REGULATE STOCK MARKET AND MAKE IT SAFER FOR INVESTMENTS

FIRESIDE CHATS• RADIO “TALKS” • FDR SPOKE

PLAINLY WITH AUDIENCE ABOUT ISSUES AND CONCERNS• USUALLY

CONDUCTED IN AN INFORMAL MANNER

FDR addresses the nation during a 1935 fireside chat

HELPING FARMERS

• AGRICULTURE ADJUSTMENT ACT (AAA) – SOUGHT TO END PRODUCTION AND RAISE CROP PRICES

• PROVIDED FINANCIAL AID, GAVE FARMERS MONEY TO NOT PLANT PART OF THEIR LAND OR KILL EXCESS LIVESTOCK

• 1934 FARMERS PRICES BEGAN TO RISE

TVA

• TENNESSEE VALLEY AUTHORITY – BUILT A SERIES OF DAMS ALONG TENNESSEE RIVER VALLEY TO CONTROL FLOODS AND GENERATE ELECTRIC POWER

• REPLANTED FORESTS, CREATED JOBS, AND ATTRACTED INDUSTRY WITH THE USE OF CHEAP POWER

• CRITICS OF TVA CALLED IT A MONOPOLY BECAUSE SMALLER COMPANIES COULD NOT KEEP UP WITH THEM

CCC

• CIVILIAN CONSERVATION CORPS ~ PROVIDED JOBS FOR OVER 2 MILLION MEN 18 – 25

• REPLANTED FORESTS, BUILT TRAILS, DUG IRRIGATION TRENCHES, AND FOUGHT FIRES

OTHER RELIEF PROGRAMS

• CIVIL WORKS ADMINISTRATION – PROVIDED JOBS ON PUBLIC WORKS PROJECTS

• HOME OWNERS LOAN CORPORATION (HOLC) LOANED MONEY WITH LOW INTEREST RATES TO HOME OWNERS WHO COULD NOT MAKE PAYMENTS

• FEDERAL HOUSING ADMINISTRATION (FHA) INSURED BANK LOANS USED FOR BUILDING AND REPAIRING HOMES

• FEDERAL EMERGENCY RELIEF ACT (FERA) – GRANTED FEDERAL FUNS TO STATE AND LOCAL AGENCIES TO HELP THE UNEMPLOYED

PUBLIC WORKS ADMINISTRATION• BUILT BRIDGES,

SCHOOLS, AIRPORTS, ROADS, NAVY SHIPS

• SPENT MORE THAN $6 BILLION

NATIONAL INDUSTRIAL RECOVERY ACT• DEVELOPED CODES OF

FAIR COMPETITION TO GOVERN INDUSTRIES • REGULATE MIN.

WAGE & PRICES OF GOODS

NEW DEAL REFORM MEASURES• SOUGHT TO ENSURE THAT

CONDITIONS LEADING TO DEPRESSION DID NOT REOCCUR• MANY REFORMS RADICALLY

CHANGED AMERICAN SOCIETY• SEVERAL NEW DEAL PROGRAMS

AND REFORMS STILL IN EFFECT TODAY

• SOCIAL SECURITY• PURE FOOD AND DRUG LAWS• TENNESSEE VALLEY AUTHORITY• FDIC

FOOD, DRUG, AND COSMETIC ACT• SIGNED INTO LAW IN 1938;

STRENGTHENED FDA

• SET STANDARDS FOR AND REGULATED QUALITY OF FOOD

• EVALUATED SAFETY AND LEGITIMACY OF DRUGS

• CONTROLLED PRODUCT ADVERTISING

Lash-Lure, a cosmetic eyeliner which blinded at least one

user, was one product banned by the FDA

THE “NINE OLD MEN”• SUPREME COURT

DOMINATED BY CONSERVATIVES

• FDR UNABLE TO MAKE APPOINTMENTS TO COURT

• COURT DECLARED SEVERAL NEW DEAL PROGRAMS UNCONSTITUTIONAL

FDR’S “COURT-PACKING” PLAN• FDR DETERMINED TO PRESERVE NEW DEAL

REFORMS

• INTRODUCED LEGISLATION FOR REVAMPING THE JUDICIARY

• LAW WOULD ALLOW HIM TO APPOINT ONE NEW JUDGE FOR EVERY SUPREME COURT MEMBER OVER AGE 70½

• WOULD INCREASE SUPREME COURT TO A MAXIMUM OF 15 MEMBERS

• PLAN SOUNDLY DEFEATED; FDR LOST POLITICAL SUPPORT

• COURT-PACKING BATTLE ENDED AS A DRAW

THE AMERICAN LIBERTY LEAGUE• SAW FDR AS A

“TRAITOR TO HIS CLASS”

• BELIEVED THE NEW DEAL WAS LEADING THE COUNTRY TOWARD SOCIALISM

• FORMED TO OPPOSE NEW DEAL

THE TOWNSEND PLAN• PROPOSED A MONTHLY

PENSION OF $200 FOR ALL CITIZENS OVER 60

• TO BE PAID FOR BY A NATIONAL SALES TAX

• RECIPIENTS REQUIRED TO SPEND ENTIRE PAYMENT EACH MONTH

• SOCIAL SECURITY ACT

Dr. Francis Townsend

SOCIAL SECURITY ACT OF 1935• FIRST SUGGESTED

BY FRANCES PERKINS

• PROVIDED FOR • OLD-AGE PENSIONS

• UNEMPLOYMENT INSURANCE

• AID TO DEPENDENTS

• FUNDED BY A PAYROLL TAX

THE LEGACY OF THE NEW DEAL• ENLARGEMENT OF

GOVERNMENT

• DEFICIT SPENDING

• WELFARE STATE

• INSPIRATION FOR FUTURE WELFARE PROGRAMS, SUCH AS LBJ’S “GREAT SOCIETY” FDR shakes hands with Texas NYA

director—and future president—Lyndon Johnson

CRITICS OF THE NEW DEAL

• CONSERVATIVES ACCUSED FDR OF BEING SOCIALIST, BELIEVED HE ONLY WORRIED ABOUT BANKING SYSTEM AND ENSURING PROFITS FOR BUSINESSES

• SENATOR HUEY LONG – CALLED FOR INCREASE TAXES ON THE RICH

• FATHER COUGHLIN – CALLED FOR STRONGER ACTION AGAINST INVESTORS AND BANKERS

END OF THE DEPRESSION

• FEDERAL SPENDING ON AN UNPRECEDENTED LEVEL FAILED TO STOP IT• THE LARGEST ENTRANCE OF THE FEDERAL

GOVERNMENT INTO THE AMERICAN ECONOMY• MADE THE FEDERAL GOVERNMENT INTO A

“BROKER STATE” BETWEEN LABOR AND CAPITAL• SOCIAL PROGRAMS AND “SAFETY NET” • BROUGHT FED GOV’T INTO THE LIVES OF

NEARLY ALL WESTERNERS• WWII ENDED THE DEPRESSION