Unit 3 Lesson 2 the Period Between the

Unit 3 Lesson 2 the Period Between the Wars Double Catastrophes of the 1930 s (the party is over)

Great Depression 11. 6 Students Analyze the different explanations for the Great Depression and how the New Deal fundamentally changed the role fo the federal government.

Table of Contents 1. Causes of GD a. Failure of Dawes Plan b. uneven distribution of wealth c. credit problem d. the stock market crash i. speculation 2. Fall Out a. A perfect storm b. Tariffs 3. Keynesian Economics 4. Effects of GD 5. The Dust Bowl 6. Hoover a. failed response b. Hoovervilles c. RFC d. trickle down economics e. Bonus Army

What you will learn: § Uneven wealth § farmers and unskilled workers lost money § Overproduction caused lost jobs § The Federal Reserve increases rates § Tried to slow stocks but failed § During the summer of 1929 production decreased § Black Thursday – stocks crash in 1929

I. Global Depression Dawes Plan Failed Overall US production plummets Allies cannot pay debts to United States U. S. investors have little or no money to invest Europeans cannot afford American goods U. S. investments in Germany decline German war payments fall off

II. Unevenly distributed Wealth § Rich became richer § Worker annual income: § $2000 a YEAR RICH: $100, 000 § 1% of the population controlled most of the wealth in America § The wealthy did not buy enough to keep the economy booming § Overproduction and underconsumption

The Down Turn Begins § Stock market gambling included § Americans borrowed heavily to bet on stocks § businesses put their cash into margins loans rather than into new machines and factories § the connection between the real value of companies and their stock prices was reduced

Credit Problem § People used credit § Installment plans § By end of 20 s 80% of radios and 60% of cars bought on credit § Problem: America was living beyond its means

The Economy is in Trouble § Signs that the economy might be weakening or be in trouble in the 1920 s § rural bank failures § wealth was unevenly distributed § United States imports declined by the end of the decade

Stock Market Crash § Confidence in Market important § Speculation § Investors gambled with money they did not have, stocks increased and a profit was made § Stock Market began to fall § Fall became a free fall by end of Oct. 1929 § Confidence in market over

More Troubles Brewing § Stock prices grossly inflated § Buying on margin § Too much borrowing from banks § Do not have real value § Buying stocks on margin contributed to the Great Crash § as prices fell, stockholders either had to sell their stocks or pay more cash

Stock Market Crashes § The Stock Market “crash” refers to § the huge drop in the value of stocks § Basic Cause of the Depression § overproduction of consumer goods

October 29, 1929 § GE stock went from $400 to $283 § People pulled money out of the stock market § Billions of dollars were lost § Economy contracted

§ What caused the Stock Market to crash? Could have it been prevented?

Fall out § § § Banks Collapse People took their money out of the bank 1929 641 banks failed 1930 1350 Why were there so many bank failures?

Effects of the Great Crash § Investors and business lose millions § Thousands of banks fail § Savings are wiped out § Business production cut § Lay off thousands of workers § Unemployment rises § Consumer spending further drops § The Great Depression sets in

A Perfect Storm § Federal Reserve cut interest rates in the 1920 s to stimulate growth (sound familiar? ) § By 1929 the FR limited money in circulation to stop lending § So then there was not enough money in circulation after the Crash § Result: investors went to banks that did not have enough cold hard cash to take out their money

Spiraling out of control § Not enough money + Not enough buyers +Not confidence = business fails § Businesses respond by: § Cutting pay roll, lay offs, cutting production, § Closing doors § 1933 25% of Americans were out of jobs

§ Presidential Lack of Action President Hoover opposed direct government relief for individuals § § Hoover’s way of dealing with the depression § § the character of the American people would be damaged tax cuts higher tariffs a limited program of public works In the 1930 s duties were boosted on a thousand items by the § Hawley-Smoot Tariff Act

Hoover Tries § Reconstruction Finance Corporation helped § § large corporations banks insurance companies Did not help § § Farmers People in need § Poor homeless people built shantytowns called Hoovervilles (Play song)

Tariffs § June 1930 Congress passed Hawley-Smoot Tariff § Raised prices on foreign imports § foreign goods could not compete in U. S. § Europe passed their own tariffs § Tariff added to problems § We had too much stuff and now could not sell it to Europe!!! § H-S Tariff destroyed international trade

Keynesian Economics § § § John Maynard Keynes What caused Great Depression: Gov’t did not have proactive polices

1932 § The Bonus Army § § a march on Washington was made by a group of unemployed WWI veterans Presidential election § Republican platform § § letting the nation’s problems be solved by natural forces Democratic platform § the repeal of Prohibition and fairer distribution of the products of industry

Keynes Analysis of the Causes of the GD 1. 2. 3. 4. Short money supply Uneven distribution of wealth Stock speculation Consumer spending, productivity and employment

IV. Effects of the Depression § millions of unemployed people § malnutrition in children § fewer marriages

More Effects § Women and African Americans § often lost their jobs to white men § Heavily discriminated § Scottsboro Case § the justice system ignored the civil rights of African Americans

Yet Even More Effects § Farmers economic problems § falling demand rising supply of crops § The poverty of the depression exists amid the plenty of the rich country

FDR Wins 1932 election § People did not like Hoover § Wanted to do whatever possible to try to end the Depression § Had a political history of establishing a relief program

The Dust Bowl 11. 6. 3 Discuss the human toll of the Depression, natural disasters, and unwise agricultural practices and their effects on the depopulation of rural regions and on political movements of the left and right, with particular attention to the Dust Bowl refugees and their social and economic impacts in California.

V. Dust Bowl § Causes § § § dry-farming techniques drought wind § Migrants headed to California

Agriculture § § § § One fourth of American work force WWI – increase crop demands Did not adjust for post war consumption Crop prices fell Ogallala aquifer – put a straw in it Dust Bowl – top layer of soil gone Lots of dust

Farming Techniques § Heavy farming § Ruined the top soil § Removed natural grassed that kept soil down § Disaster § Heavy winds § Loose soil

Dust Bowl § § 1932 - Great Plains Began in Tx, Ok, Ks, NM and Co Storms killed cattle and birds Seeped into houses and covered everything

§ 1930 – 1934 – one million farmers lost their farms § Banks sold farms at auction § Some became tenant farmers on their own land

Migration § Ecological and Economic Disaster caused people to move § Dust Bowl refugees: Okies § Moved west to CA, OR and WA § 800, 000 moved out of Ar, Ok, Tx § Millions left the midwest § Rural states depopulated § Large cities gained people

Affect on families § “breadwinners” § Shame as a man § Desertion of families § Guilt § Felt bad if doing better than suffering friends and fam. § § Reduced birthrates, lowest in U. S. history Making something out of nothing Kids quit school Broken families

Hoover and Volunteerism § § § Hoover product of his times: laissez faire Hoover’s policy: do nothing Hoover asked businesses to: § Keep wages, prices up and unemployment down § Governments: reduce taxes, interest rates and create public works § Richer people to donate to charities § Encourage consumption and production

Hoover Fails § Good ideas, but relied on volunteer cooperation § “pull yourself up by your bootstraps” § Faith in localism: local and state governments could resolve the problems § They did not have the resources

Hoovervilles § Failure linked to president’s name § Campfire = hoover heaters § Homeless camps = hoovervilles

Hoover Policies § Reconstruction Finance Corporation (RFC) – Hoover tried to get Congress to create the RFC. § RFC gave billions the railroads and large business (sound familiar? ) § Money given to banks so they could lend money

§ Hoover believed that banks could: § Give money to businessmen, businessmen would hire workers, production goes up and consumption rises § Known as trickle down economics. § Banks got money, but did not lend it or increase loans § Businesses did not hire more workers § Money did not “trickle down”

Bonus Army § 1932 WWI vets went to D. C. to demand the bonus Congress promised § Called the Bonus Army § 1931 Congress passed the bill, Hoover vetoed it § 20, 000 vets occupied the capital § A riot broke out when police tried to evict