Warm-Up Nov 17 4 October 29 1929 the

Warm-Up Nov 17 4. October 29, 1929, the day when stock prices took the steepest dive of that time, is known as A. B. C. D. Black Thursday Black Tuesday Bloody Monday Panic Tuesday

Warm-Up Nov 18 5. Beginning in 1932, American pastures and wheat fields from the Dakotas to Texas became a vast A. B. C. D. Bread Basket Mud Basin Dust Bowl Prairie

Economic Troubles on the Horizon n n n Problems began threatening economic prosperity by the end of the 1920 s Farm debt - many farmers were forced to sell in the 1920's Consumer debt - many people were buying goods on credit More goods then buyers - prices rose faster than wages Declining Trade - 1920's U. S. raised tariffs other countries raised tariffs to retaliate Important industries struggled Income disparity - Consumers & farmers went steadily deeper into debt

Industries in Trouble n n n Key industries like railroads, textiles, steel barely made profit Replaced by other forms of transportations Mining, lumbering expanded during were no longer in high demand Coal especially hard-hit due to availability of new energy sources - Hydroelectricity, fuel oil, & natural gas Boom industries - automobiles, construction, consumer goods weakened Housing starts declined - Affected many related industries

Farm Troubles n n n International demand for U. S. grain declined after war - prices dropped by 40% or more Farmers boosted production to sell more - Caused prices to drop further Farm income declined & farmers defaulted on loans Rural banks failed Congress attempted to pass the Mc. Nary- Haugen bill to help farmers - Price-supports - government bought surplus crops at guarantees prices - President Coolidge vetoed price-support bill

Consumers Problems n n n n 1920 s - rich got richer & poor got poorer Prices rose faster that wages 70% of families earned less than minimum for decent standard of living - $2500 annually Most couldn’t afford flood of products factories produce Many people had been purchasing goods on credit (buy now, pay later) Businesses gave easy credit & consumers piled up large debts Consumers had trouble paying off debt & cut back on spending

The Election of 1928 n n Democrat Alfred E. Smith four times governor of New York Republican Herbert Hoover has served as secretary of commerce under Warren Harding & Calvin Coolidge U. S. had experienced prosperity under Republicans in 1920 s Hoover won an overwhelming victory

Dreams of Riches in the Stock Market n n n Late 1920 s – Some economist warning of weaknesses in the economy - Most Americans ignored them People began investing in stock market - Looked like an easy way to make money Dow Jones Industrial Average was used as barometer of the market’s health - Measure based on the stock of 30 representative large firms trading on the New York Stock exchange tracks state of stock market

Company Symbol Industry Date Added 3 M MMM Diversified industrials 1976 -08 -09 Alcoa American Express AA AXP Aluminum Consumer finance 1959 -06 -01 1982 -08 -30 AT&T T Telecommunication 1999 -11 -01 (as SBC Communications) Bank of America BAC Institutional and retail banking 2008 -02 -19 Boeing BA Aerospace & defense 1987 -03 -12 Caterpillar CAT Construction and mining equipment 1991 -05 -06 Chevron Corporation CVX Oil and gas 2008 -02 -19 Citigroup C Banking 1997 -03 -17 (as Travelers Group) Coca-Cola Du. Pont KO DD Beverages Commodity chemicals 1987 -03 -12 1935 -11 -20 Exxon. Mobil XOM Integrated oil & gas 1928 -10 -01 (as Standard Oil (N. J. )) General Electric General Motors GE GM Conglomerate Automobiles 1907 -11 -07 1925 -08 -31 Hewlett-Packard HPQ Diversified computer systems 1997 -03 -17 Home Depot HD Home improvement retailers 1999 -11 -01 Intel IBM Johnson & Johnson JPMorgan Chase Kraft Foods Mc. Donald's Merck Microsoft Pfizer Procter & Gamble INTC IBM JNJ JPM KFT MCD MRK MSFT PFE PG Semiconductors Computer services Pharmaceuticals Banking Food processing Restaurants & bars Pharmaceuticals Software Pharmaceuticals Non-Durable household products 1999 -11 -01 1979 -06 -29 1997 -03 -17 1991 -05 -06 2008 -09 -22 1985 -10 -30 1979 -06 -29 1999 -11 -01 2004 -04 -08 1932 -05 -26 United Technologies Corporation UTX Verizon Communications VZ Walmart WMT Aerospace, heating/cooling, elevators 1939 -03 -14 (as United Aircraft) Telecommunication 2004 -04 -08 Broadline retailers 1997 -03 -17 Walt Disney Broadcasting & entertainment DIS 1991 -05 -06

How the DJIA is Calculated n n Calculation To calculate the DJIA, the sum of the prices of all 30 stocks is divided by a divisor. The divisor is adjusted in case of splits, spin offs or similar structural changes, to ensure that such events do not in themselves alter the numerical value of the DJIA. The initial divisor was the number of component companies, so that the DJIA was at first a simple arithmetic average; the present divisor, after many adjustments, is less than one (meaning the index is actually larger than the sum of the prices of the components). That is: where p are the prices of the component stocks and d is the Dow Divisor. Events like stock splits or changes in the list of the companies composing the index alter the sum of the component prices. In these cases, in order to avoid discontinuity in the index, the Dow divisor is updated so that the quotations right before and after the event coincide:

Dreams of Riches in the Stock Market n n 1920 s - stock prices rose steadily “Bull Market” People rushed to buy stocks & bonds to make a quick profit - Many engaged in speculation - buy on chance of a quick profit - Began Buying on margin pay small percent of price, borrow rest

The Stock Market Crashes n n n September 1929 stock prices peaked & then fell Many investors lost confidence & began selling October 24, 1929 Market took plunge & many panicked investors unloaded their shares

The Stock Market Crashes n October 29, 1929 - Stock market crashed (Black Tuesday) - Shareholders sold frantically - Millions of shares had no buyers - People who bought on credit were left with huge debts - Others lose most of their savings

Financial Collapse n n n Great Depression - economy plummeted & unemployment skyrocketed - lasted from 1929– 1940 After crash, people panicked & withdraw money from banks Banks that invested in stocks failed& people lost their money 1929 to 1932 - gross national product was cut nearly in half - 90, 000 businesses went bankrupt 1933 - 25% of workers were unemployed Those with jobs received cuts in hours & pay

Worldwide Shock Waves n n Great Depression limited U. S. ability to import European goods Hawley-Smoot Tariff Act set highest protective tariff ever in U. S. Other countries couldn’t earn American currency to buy U. S. goods - Many countries retaliated by raising their own tariffs International trade dropped & unemployment soared around world

Causes of the Great Depression n n n Factors leading to Great Depression: Declining Trade - Tariffs & war debts cut down the foreign markets for American goods Farm problems - Many farmers were forced to sell Easy credit – Borrowed money to invest in market Income disparity Federal government kept interest rates low & encouraged borrowing

The Depression Devastates People’s Lives n n n People lost jobs & were evicted from homes Had to live in parks or sewer pipes Shantytowns settlements consisting of shacks, arose in cities

The Depression Devastates People’s Lives n n n People dug through garbage & begged - Soup kitchens offered free or low-cost food - Bread lines - people lined up for food from charities & public agencies African Americans & Latinos had higher unemployment & lower pay Minorities were also targets of violence (Lynching or deportation)

The Depression in Rural Areas n n Most farmers could grow food for their families About 400, 000 farms were lost through foreclosure - Many became tenant farmers

The Dust Bowl n n n Farmers in Great Plains exhausted land through overproduction 1930 s - drought & windstorms scattered for hundreds of miles Dust Bowl - area from North Dakota to Texas that was hardest hit

The Dust Bowl n Many farm families migrated to Pacific Coast states (Route 66) - California towns became overcrowded - Many people who moved west were from Oklahoma (Okies)

Men in the Streets n n n Many men used to working & supporting families had difficulty coping n Couldn’t find jobs n Manny stopped trying Some men even abandoned their families - About 300, 000 hoboes wandered country on railroad box cars No federal system of direct relief - cash or food from government

Women Struggle to Survive n n n Women worked hard to help their families survive the adversity Homemakers budgeted carefully, canned food, & sewed clothes Women worked outside home & were resented by unemployed men

Women Struggle to Survive n n Early 1930 s – Some cities refused to hire married schoolteachers Many women suffered in silence & were ashamed to stand in bread lines

Hoover Tries to Reassure the Nation n President Herbert Hoover told Americans the economy was sound Many experts believed depressions were normal part of business cycle - Believed that it was best to do nothing & let the economy fox itself Hoover believed government should foster cooperation between competing groups

Hoover Tries to Reassure the Nation n Many believed that people should succeed through their own efforts People should take care of own families & not depend on government Hoover opposed any form of federal welfare or direct relief to the needy - Believed that hand-outs would weaken people’s self respect & moral fiber - Said that charities & local organizations should help the less fortunate

Hoover Takes Cautious Steps n Hoover’s authorized the construction of the Boulder Dam on the Colorado River - later renamed Hoover Dam - Provided electricity, flood control, water to states on river basin

Democrats Win in 1930 Congressional Elections n People began blaming Hoover & Republicans for the economic problems n Democrats won House of Representatives n Republican Senate majority down to 1 vote n People Grew frustrated with the Depression

Democrats Win in 1930 Congressional Elections n Farmers tried to create food shortages to raise prices n n n Burned fields rather than sell crops at a loss Some declared a farm holiday People began calling shantytowns “Hoovervilles”

Hoover Takes Action n Hoover softened his stance on no government intervention in the economy Hoover negotiates agreements among private entities Backs Federal Farm Board (organization of farm cooperatives) - buy crops, keep off market until prices rise

Hoover Takes Action n n Got large banks to establish National Credit Corporation - Loaned money to smaller banks to prevent bankruptcy Late 1931 - Hoover persuaded Congress to pass measures reform banking, provide mortgage relief, & funnel federal money into business investment - Federal Home Loan Bank Act lowered mortgage rates

Hoover Takes Action Reconstruction Finance Corporation – Authorized emergency funds for businesses - Hoover believed that the money would tickle down to average citizens through job growth & higher wages - Critics said people couldn’t wait for the money to trickle down n Hoover’s measures didn’t improve economy before presidential election n

Gassing the Bonus Army n n 1932 – Incident with World War I veterans further damaged Hoover’s image & public morale 1924 – Congress agreed to pay a bonus to WWI vets who had not been adequately compensated for wartime service - Bonus was to be paid in 1945 in the form of cash & a life insurance policy

Gassing the Bonus Army n Bonus Army – WWI veterans went to D. C. in 1932 to support Patman Bill: - called for immediate payment of bonus to WWI vets ($500 per soldier)

Gassing the Bonus Army n n n Hoover opposed bill Believed they were communists He respected their right to protest (Provided food & supplies for shantytown) June 17, 1932 - Senate voted down Patman Bill Most veterans left Washington About 2, 000 stayed to speak to Hoover

Gassing the Bonus Army n Hoover feared violence & called on U. S. Army to disband Bonus Army - Led by General Douglass Macarthur & Major Dwight Eisenhower

Gassing the Bonus Army n n n Infantry tear gassed over 1, 000 people, including children Many people were injured (11 month old baby died) Public was stunned & outraged by government’s actions

Election of 1932 n n n Democrats nominated NY governor Franklin Delano Roosevelt - reform-minded; projected friendliness & confidence Democrats overwhelmingly won presidency, Senate, & House

Warm-Up Nov 19 6. What was the period called between march 9 and June 16, 1933, when Congress passed 15 major acts to meet the economic crisis? A. B. C. D. the First New Deal the New Nationalism the New Freedom the First Hundred Days

Election of 1932 n n Roosevelt had to wait 4 months to take over 20 th Amendment wasn’t rarified until 1933 (Move inauguration to January) FDR worked with advisors known as “Brain Trust, ” to formulate policies to alleviate problems New Deal – FDR’s program to alleviate the problems of the Great Depression focused on 3 Rs n Relief for needy n Economic recovery n Financial reform

The Hundred Days n n March 9 to June 16, 1933 - FDR took office & launched Hundred Days Congress passed over 15 major New Deal laws that expanded the federal government’s role in the nation’s economy

Bank Holiday n n March 5, 1933 – one day after taking office FDR declared a bank holiday & closed all banks to prevent further withdrawals Emergency Banking Relief Act - Permitted Treasury Dept. to inspect banks n n n Sound banks were allowed to reopen Banks that needed help received loans Insolvent ones remained closed (unable to pay bills) Bank Holiday revived public confidence in banks - Believed that the banks remained open were in good shape

An Important Fireside Chat n n n FDR gave fireside chats - radio talks explaining New Deal measures March 12, 1933 – FDR gave 1 st fireside chat the day before the banks reopened after holiday - Discussed need for public support of government, banks

Regulating Banking and Finance n n Congress took another step to reorganize the banking system Glass-Steagall Act Established Federal Deposit Insurance Corporation (FDIC) n n insured individual bank accounts up to $5000 Regulates banking practices ( forced them to act cautiously with money)

Regulating Banking and Finance Federal Securities Act – Required companies must give all information on stocks n Securities and Exchange Commission (SEC) created to regulate stock market n FDR got law allowing production of some alcoholic beverages n 21 st Amendment repealed prohibition by end of 1933 n

Helping the American People n n Roosevelt administration implemented programs aimed at helping farmers & other workers to stimulate economy Agricultural Adjustment Act (AAA) raised food prices by lowering supply - Government paid farmers not to plant crops

Helping the American People n Tennessee Valley Authority - Created jobs renovating & building dams - Also provided flood control & hydroelectric power to region

Helping the American People n Civilian Conservation Corps (CCC) - public works jobs for young men 18 to 25 - Built road, planted trees & helped in soils erosion & flood control projects - Men sent $25 out of $30 home to family each month

NIRA n n National Industrial Recovery Act established codes of fair practice for industries Created National Recovery Administration (NRA) n NRA sets standards, prices, limits production

NIRA n 1933 - Public Works Administration (PWA) was established as part of the NIRA – It provided money to states to create jobs chiefly in the construction of schools & other community buildings

Food, Clothing, and Shelter n n Home Owners Loan Corporation gave loans to prevent foreclosures Federal Housing Administration gives loans for mortgages & repairs (FHA)

Food, Clothing, and Shelter n Federal Emergency Relief Administration direct relief to needy

The New Deal Comes Under Attack Deficit spending - spending more money than government takes in - funded New Deal n Opposition rose when the New Deal didn’t stop the Depression n Liberals didn’t think New Deal did enough to help poor, & fix economy n Conservatives believed Roosevelt used the New Deal to control business & socialize economy n

The Supreme Court Reacts Supreme Court struck down NIRA & AAA as unconstitutional n FDR proposed “Court-packing bill” n Change the Supreme Court from 9 to 15 justices n Would enable FDR to appoint 6 new justices n Congress & press protested n Starting in 1937 - justices retire & FDR appointed seven new ones n

Huey Long Attacked the New Deal n n n n Governor of Louisiana "King Fish" Built schools and hospitals Ruled Louisiana like a dictator Wanted to be president Decided to challenge FDR Offered new deal "Share our wealth" - Called for every family to get yearly income money to buy food and housing - Taxed the rich heavily Made enemies in his attempt to become president - Shot and killed in 1935

The Second Hundred Days n By 1935, economic recovery not as great as FDR had expected Unemployment remained high n Work programs & productions still behind 1920 s levels n FDR launched second phase n Provided more relief for farmers, workers n

The Second Hundred Days n First Lady Eleanor Roosevelt a social reformer prodded president n n She traveled the country observing the social conditions & reminding FDR about the suffering She also pushed for him to appoint women to government positions

Election of 1936 n n 1936 - Democrats won presidency & large majorities in both houses First time most African Americans voted Democratic First time labor unions supported presidential candidate Election was a vote of confidence in FDR & the New Deal

Helping Farmers n n 1936 - Soil Conservation and Domestic Allotment Act replaced AAA - Rewarded farmers for practicing soil conservation New Agricultural Adjustment Act avoided unconstitutional provision Resettlement Administration gave loans to small farmers to buy land Farm Security Administration - loaned to tenant farmers to buy land - FSA hires photographers to shoot pictures of rural towns & farms

Roosevelt Extends Relief n n 2 nd New Deal established a series of programs to help youths, professionals & other workers Works Progress Administration (WPA) created many jobs for unskilled workers - WPA workers built airports, roads, public buildings - Women workers sewed clothes for the needy - WPA employed professional writers, artists, performers - Gave aid to students in exchange for part-time work

Roosevelt Extends Relief n National Youth Administration (NYA) - provided education, jobs, counseling & recreation to young people

Improving Labor and Other Reforms n n Wagner Act - replaced NIRA - Protected right to join unions & collective bargaining - Prohibited unfair labor practices (threatening workers or firing union members) - Established National Labor Relations Board that heard testimony about labor practices - Held elections to determine if workers wanted unions 1938 - Fair Labor Standards Act sets maximum hours & minimum wage - 44 hrs per week decreasing to 40 in two years & 25 cents per hr.

Social Security Act n n 1935 - Social Security Act created Social Security system Provided insurance for retirees 65 or older Unemployment compensation Aid to disabled & families with children

Expanding and Regulating Utilities n n Rural Electrification Administration (REA) brought electricity to farms - Rose from 12. 6 % in 1935 to 48% in 1945 to 90% in 1949 Public Utility Holding Company Act aims to stop financial corruption

The New Deal Brings New Opportunities for Women n n Several women were named to important government positions Frances Perkins became first female cabinet member (Secretary of Labor) - FDR also appointed 2 women as diplomats & 1 as a federal judge Women still faced discrimination in workplace from male workers National Recovery Administration (NRA) set some lower minimum wages for women Federal work programs hired far fewer women than men

African-American Activism n n FDR appointed more than 100 African Americans to government Educator Mary Mc. Leod Bethune headed Division of Negro Affairs of NYA Helped organize “Black Cabinet” Group of influential African. American who advised FDR on racial issues

The President Fails to Support Civil Rights n n FDR was afraid of upsetting white Southern Democratic voters Refused to approve antilynching law & end to poll tax New Deal agencies discriminated against African Americans - pay them lower wages & favored whites African- Americans generally supported Roosevelt administration & New Deal - Saw them as the best hope for the future

The Lure of Motion Pictures and Radio n About 65% of population went to movies once a week - Movies were still affordable - People watched them to escape real life - Grapes of Wrath - Gone With the Wind - The Wizard of OZ

The Lure of Motion Pictures and Radio n n n 90% of households had a radio Families listened together every day Dramas, variety shows played in evening - Soap operas for homemakers broadcast in middle of day - Children’s shows after school hours - Immediate news coverage became customary

The Lure of Motion Pictures and Radio n Orson Welles - actor, director, producer, & writer

The Arts in Depression America n n n Federal Art Project paid artists to make art, & teach in schools Aim to promote art appreciation & positive image of America Murals typically portrayed dignity of ordinary people at work Federal Theater Project hired actors & artists Singer, songwriter Woody Guthrie sung songs about the of plight of poor

Diverse Writers Depict American Life n n Federal Writers’ Project supported many who become major writers Richard Wright - African. American author who wrote Native Son n John Steinbeck wrote The Grapes of Wrath about Dust Bowl migrants

The New Deal Ends By 1937, economic improvement convinced many that Depression was ending n Congress wanted to cut back programs n By 1939 - New Deal was over n

Supporters and Critics of the New Deal Supporters Believed the New Deal helped country recover from economic difficulties n Conservatives though FDR made federal government too large - stifled free enterprise & individual initiative n Liberals thought New Deal didn’t do enough to socialize economy end inequalities n

Effects of the New Deal n n n Expanded power of federal government & president Social Security Act - Federal government takes responsibility for citizens’ welfare - Provided aid for aged, disabled & needy FDIC still protects individual investors in case of bank failure SEC still monitors stock market, enforces laws on stock, bond sales New Deal laws set standards for wages & hours - banned child labor - Permitted unions Civilian Conservation Corps (CCC ) - planted trees, built hiking trails, & fire lookout towers

Effects of the New Deal n n n Soil Conservation Service taught farmers how to preserve soil - Contour plowing, terraces, & crop rotation 1934 - Taylor Grazing Act reduced grazing on public lands - Grazing had contributed to erosion that caused the dust bowl Tennessee Valley Authority (TVA) created electricity, & prevented floods New Deal reduced suffering & gave people hope - Provided jobs, food & money New Deal didn't end depression WWII did