CHAPTER 22:

THE GREAT DEPRESSION BEGINS

SECTION 1 :

Economic Troubles on the Horizon

Industries in trouble

A lot of industries got hit strongly after the WWI which was giving them

huge profits. Railroads, textiles and steel industry couldn’t make much profit after

the war as no more supplies are moved as much as wartime, and they didn’t make

as much weapons. Mining and lumbering, expanded during wartime had no more

high demand just as other industries. Coal mining industry decreased hugely with

new resources : hydroelectric, fuel, natural gas. Construction, automobiles,

consumer goods and other industries related fell dramatically, as well.

Farmers need a lift

Farmers were in a huge trauma as well. They loaned money during WWI

and farmed as crop demand was high

during war, but demand fell sharply after

war, and had to face 40% decrease in

crops’ price. Farmers produced more crops

in hope of selling more, but resulted more

depressed prices. As a side effect to this,

banks start to fall with unpaid loan from

farmers. As the situation becomes a serious

problem, Congress helps with McNary-

Haugen bill: federal price-supports for

wheat, corn, cotton and tobacco, where government buys products and sells abroad.

Consumers have less money to spend

Life was worse for the consumers. Products’ costs go up fast compare to

their wages, and earnings were unpredictable. Great depression widened the gap

between rich and poor.

Living on Credit

Life seemed to get better with the new credit system. Large number of

consumers bought products by credit, which is an arrangement that says consumers

agree to buy now and pay later. However, debts got bigger in fast rate as they

couldn’t pay back on time, that consumers couldn’t afford to buy products

anymore.

Uneven distribution of income

Gap between rich and poor were enormous. Rich people got incredibly rich,

poor people couldn’t even afford their housing and food. Half of the homes in a

city couldn’t afford electricity or furnace for heat, 70% of family earned $2,500 a

year, but even if you earned double that money, they couldn’t afford most of

household furniture.

The nation’s sick economy:

Hoover takes the nation:

1.The election of 1918

Herbert Hoover wanted to against Democrat of Alfred E. Smith. Americans

wanted a republican leader led them back to prosperity and Hoover was a mining

engineer with no experience he didn’t run for any public office. Smith serve 4

terms as a governor of New York. Herbert Hoover have major advantage and

people believe him when he declared so Herbert Hoover won the election.

2.Dreams of riches in the Stock Market

People put more hope in stock market. Dow Jones industries Average is the

most widely used barometer of the stock markets health. They count base on stock

prices of 30 representative in large group of trading in New York Stock Exchange.

American bought stock and began with bull market it’s time of stock price began.

Speculation is buying stocks and they wait for a quick profit without thinking of

the risk they will take. Buying on margin means people borrow money from

government and buy stock and if the value of stocks go down people who bought

on margin have had no way to pay all the loans so the government let them do it to

make the economic goes on.

The Stock Market Crashes

On October 24, market is falling down and stock prices began to fall down.

October 29, known as Black Tuesday shareholders are all mess up and trying to

sell all the stock before the price go even lower. More worse most of people who

had bought stock on credit they stuck with a huge debt. By mid-November

investors had lost $30 billion finally all the panic had gone.

Financial collapse

The collapse of the economy

made the depression more severe. After

the crash of stock market, banks and

business failures, people panicked and

withdrew their money from banks. but

some couldn't get their money because

the banks had invested it in stock

market. The government did not

protect people bank accounts , so

million of people lost their saving bank

accounts . In 1929, 600 banks closed.

1933, 11000 of the nation's 25000 banks had failed.

The Great Depression also has an

effect on businesses .Between 1929 and 1932, the national product - such as goods

and services - was cut nearly a half, decrease from $104 billion to $59 billion.

90000 business people, railroad companies and prosperous automobile were failed

completely.

Million of workers lost their jobs, unemployment increase from 3% to 25%

in 5 years. People who kept their jobs faced paycuts and reduced hours.Luckily ,

before the crash, some speculators had sold off their stocks and made money, such

as Joseph P.Kennedy -the father of future president John F. Kennedy.

Worldwide shock waves:

Europe was also gripped by the Great

Depression. They tried to recover their countries

from the ravages of WWI faced high war debts.

Germany had to pay money to compensate the

Allies for the damages Germany had caused.

The Great Depression made America’s

ability to import European goods difficult to

Americans products and manufacture abroad.

1930, Hawley-Smoot Tariff Act was passed. The

act established the highest protective tariff in US history, it protects Americans

farmers and manufacturers. But in the other hand, it had some opposite effects.

The tariff prevented other countries from earning American currency to buy

American goods, it also made unemployment worse in industries that could no

longer export goods to Europe.

After a few years, world trade had fallen more than 40%.

Causes of the Great Depression:

Some factors that led to falling demand for consumer goods:

+ Tariffs and war debts policies that

cut down the foreign market for

American goods.

+ A crisis in the farm sector .

+ The availability of easy credit

+ An unequal distribution of income

The government kept interest

rates

low, following companies and

individuals borrow money easily and

build up large debts.

On November 1929, president Hoover encouraged Americans to remain confident

about economy. At last, the depression in American was better.

SECTION 2:

1) The depression in the cities:

The depression brought a lot of consequences to people’s lives, such as

homelessness ( slept in parks , wrapping themselves by newspaper ), hardship,

hunger to millions, lost their jobs.....Soup kitchens – offering free or low-cost food.

Bread Lines – the lines of people waiting to receive food provided from charitable

organizations or public agencies.

Conditions were very difficult.

Unemployment were higher, they were the

lowest paid. 24 African Americans died

because of discrimination.

Even though many Latinos had been

born in America, Whites still demanded

that they had to be deported or expelled

from the country. Most of Mexican decent

relocated to Mexico by the late 1930s.

Others were deported by the government

The Depression in rural areas:

Life is here was hard, but it still

have one advantage : most farmers could

grow food for their own families. With

falling process and rising debt, many

farmers lost their land.

Between 1929 and 1932, 400,000

farms were lost through foreclosure.

Farmers changed into tenant farming and

barely scraped out a living.

The Dust Bowl:

The drought in the early 1930s devastating on the Great Plains. Farmers used

tractors to break up the grassland and plant millions of acres of new farmland.

Plowing had removed the thick protective

layer of prairie grasses. The grasslands

became unsuitable for farming.

When the drought and wind began,

little grass and few trees were left to

hold the soil down. Wind destroyed the

topsoil , sand and grit underneath. One

windstorm in 1934 picked up millions of

ton of dust from the plains and carried it

East Coast cities.

The region that was the hardest hit

( Kansas, Oklahoma, Texas, New

Mexico, Colorado ) came to be known as

Dust Bowl. Farmers and sharecroppers

left their land behind. They packed up

their families and belongings following

Route 66 to California. Okies

( migrants ) worked as farmhands. By the end of the 1930s, hundreds of thousands

of farm families had migrated to California and other Pacific Coast states.

Effects on the American family

Men in the streets

During the great depression, there

were huge unemployed population.

Unemployed men went on the streets

looking for jobs, and they were called as

hobos and this number was around 1/3 of

non-farmer labors. Their tragic conditions

could go on for years and some discouraged

men abandoned their family. There were no federal system of direct relief –

provided food or cash from

government on poor until later on. New

York gave $2.39 a week per family, and

this was a generous payment compare to the

economic situation at the time.

Women struggling to survive

Some people think that women were less

sufferers of great depression, however, women

did their very best to help their family to survive. They

canned food, sewed clothes and saved as much money as

possible to help their family as much as possible. They had

more difficulties finding jobs. Women had to face

resentments when they worked outside home as many

men thought that women shouldn’t be working when even

men are unemployed. These ideas resulted some cities

refused to have married women as school teachers.

Children suffer hardships

Poor diets and lack of money had

led children into serious health problems

such as malnutrition or rickets. And as

they didn’t even have money to eat, they

went to work rather than going to school. Eventually, 2600 schools closed and

more than 300,000 students were out of school. Thousands of teenagers got on

train, looking for jobs (teenage hobos). It was too dangerous since many accidents

happened, and teenagers got killed and injured.

Social and psychological effects

Many people became very weak and lost their will to live on, so that suicide

rate went up more than 30% between 1928 and 1932. Continuous hunger and

poverty shaped some people to be obsessive about the wealth and set their life to

focus only on not being poor again.

SECTION 3 :

Hoover tries to reassure the nation:

After the great depression, President Herbert Hoover tried to reassure

American the nation’s economy on sound footing .He

declared Americans to remain optimistic and to go

about their business as usual. Moreover, some experts

believed was to do nothing and let the economy fix

itself. However, Herbert felt that the government

could play a limited role in helping to solve the

problem. He believed that if business and labor were

in a conflict, government should step in and help

them find a solution. Thus, Hoover opposed any form

of federal welfare or direct relief to the needy. He

called together key leaders in the fields of business,

banking, and labor. However, none of these steps made much of a difference. A

year after crash the economy was still shrinking and unemployment was still

raising.

Boulder dam

Year earlier when Hoover served as

secretary of commerce, his earliest proposed

initiatives was the construction of a dam on the

Colorado River.

Democrat win in 1930 congressional

elections

When the economic went down, the political tide turned again Hoover and

Republicans. Americans grew more and more frustrated by the depression, they

expressed their anger in a number of ways. Despite public criticism, Hoover

continued to hold firm to his principles. At last, he attempts to relieve the

depression for example: he backed the creation of Federal Farm board. Thus

Hoover tried to prop up the banking system by establish the national credit

corporation. In 1932, Hoover signed into law the Federal home loan bank act

which allowed farmed to refinance their farm loans.

Gassing the bonus army

In 1932 10,000 and 20,000 WWI veteran and families arrived in Washington D.C,

they called themselves the Bonus army. Nervous that the angry group could

become violent, Hoover decided Bonus army should be disbanded. Most

Americans were stunned and outraged at the government’s treatment of the

veterans

Citation

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Sarah White, In Search of American Hobo, University of Virginia, May 20, 2010,

http://xroads.virginia.edu/~MA01/white/hobo/intro.html

The Eleanor Roosevelt Papers."The Great Depression." Teaching Eleanor

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Eleanor Roosevelt National Historic Site, 2003). May 20, 2010,

http://www.nps.gov/archive/elro/glossary/great-depression.htm

Unknown author, "America in the Great War," EyeWitness to History, May 10,

2010, www.eyewitnesstohistory.com (2000).

http://www.eyewitnesstohistory.com/snprelief1.htm

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Robert S. McElvaine. “ The Great Depression: America 1929-1941” New York:

Times Books, 1981

http://www.gusmorino.com/pag3/greatdepression/

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documented narrative.”1936

http://en.wikipedia.org/wiki/Herbert_Hoover

Unknow author. “American National Biography (20 volumes, 1999)”, May 2005

http://en.wikipedia.org/wiki/Republican_Party_%28United_States%29

James Bovard. “Hoover’s Second Wrecking of American Agriculture”. April

6,2006

http://www.lewrockwell.com/bovard/bovard25.html

Unknown author. “Federal home loan bank”. March 10,2001

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Unknown artist, Photograph, unknown date, United States Congress Major Acts,

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Unknown artist, Photograph, Bukisa, April 23, 2009, Web. May 18 2010,

http://www.bukisa.com/articles/74203_the-toll-of-human-suffering-during-the-

great-depression

Unknown artist, Photograph, Creative Capital, December 1, 2008 Web. May 18

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the-depression/

Unknown artist, Photograph, CLTV, October 15, 2008 Web. May 19, 2010,

http://weblogs.cltv.com/news/local/chicago/afua/

Unknown artist, Photograph, The Bridge, Web. May 20, 2010,

http://errollincolnuys.blogspot.com/

Unknown artist, photograph . March 20, 1931.

http://www.english.illinois.edu/maps/depression/photoessay.htm

Unknown artist, photograph. July 5, 1932.

http://www.english.illinois.edu/maps/depression/photoessay.htm

Photographer: Walker Evans, in Alabama. 1935 to 1936 . Bud fields and his family

http://lcweb2.loc.gov/pnp/ppmsc/00200/00234r.jpg

Unknown artist ,photograph. November 7,1994

http://upload.wikimedia.org/wikipedia/commons/0/05/Adams_Boulder_Dam_1942

.jpg

Unknown artist,photograph. June 3,1945

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Unknown artist,photograph. Feb18,1945

http://4.bp.blogspot.com/_Ij3jK_XODIg/SAhXIwvezCI/AAAAAAAAAA4/P0_lF

0LgfW4/S660/kapitbisig%2Bpic%2Bduring%2Bmartial%2Blaw-

%2Btear%2Bgas.jpg

Unknown artist, photograph. January 28,2009

drblues.wordpress.com/2009/01/28/188-hoovers/

Unknown infomation .

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Unknown artist, unknown photograph, October 1929. Black Tuesday.

http://bambamworld.com/blog/wp-

content/uploads/blogger/_egRCbsh7s60/R5XyELBN41I/AAAAAAAAAZQ/-S-

yOAdQ7q0/s400/outside-the-ny-stock-exchange-on-black-tuesday.jpg