1930s/great depression

7/29/2019 1930s/Great Depression

1/41

1930s & The GreatDepression

Mr. Klein

Spring 2013


2/41

Causes of the Depression

Historians and Economists Still DebateWhat was the REAL Cause of the

Depression

No one has the Right Answer

Most agree 4 factors contributed to theDepression .


3/41

Four Factors:

1.Overly Easy Credit

2.Over Production / Loss of Global Markets

3.Uneven Income Distribution

4.Stock Market Crash



4/41

1. Easy Credit

Interest Rates Are Held Low by Govt

Loans easy and cheap to obtain

Installment purchases

Many go into debt orinvest borrowed money instock market



5/41

2. Overproduction / Loss of Global Markets

Businesses Manufacture More ConsumerGoods Than Can Be Sold:

Cars, Washing Machines, etc.

Only Needed ONE

By End of 20s, people who could afford

had one already.

Extra Inventory That Cant Be Sold in U.S.



6/41

2. Overproduction / Loss of Global Markets

European Exports Down

Tariffs 1922 Fordney-McCumber Tariff

Europe Raises Tariffs (Retaliate)

WWI War Debts



7/41

3. Income Disparities

Top 5% earned 1/3 of all income

Bottom 40% earned 1/8 of all income

Means millions of Americans cant affordnew products

Loose Credit helps drive consumerspending early in decade not late indecade

Contributes to problem of overproduction



8/41

4. Stock Market Crash

Stock Market Bullish during 20s

(Keeps Going Up and Up)

Almost EVERYONE invests

Buying on margin Stock Pooling



9/41

Stocks peak in July1929

Savvy Investors sell.

Black Thursday(October 24).

Black Tuesday(October 29).

Institutional

Investors sell

4. Stock Market Crash (cont.)



10/41


11/41

4. Stock Market Crash (Cont.)

Banks collapse

Banks invested in stock market lost that $$. Loans used by people to buy stocks could

not repay.

Banks close depositors lose everything. 5,000 banks in first 3 years 9 million people lose

savings

Run on banks.



12/41

4. Stock Market Crash (Cont.)

Business Suffers:

Businesses lose money in failed banks.

Cant get loans.

Consumers who lost $ cant afford goodsanymore

Forced to cut production means cut jobs.



13/41

President Hoovers Philosophy

No direct government help

Fear of Creating Permanent Bureaucracy

Handouts destroy Work Ethic and AmericanSpirit of Self-Reliance

Private charity should help individuals Private Charity cannot keep up People

turn to Govt after a year

Encourage Business.


14/41

President Hoovers Actions


15/41


Raising import taxes

Smoot-Hawley Tariff Act (1930)

Slows trade even more

Voluntary Cooperation by Business AND Labor

No layoffs or wage cuts

No strikes or demands for higher wages

Income Tax Cuts for All

Taxes so low, no real effect


16/41

The Peoples Response

http://www.wingclips.com/movie-

clips/cinderella-man/im-stuffed http://www.wingclips.com/movie-

clips/cinderella-man/stealing-sausage

http://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promise

http://www.wingclips.com/movie-clips/cinderella-man/asking-for-money
http://www.wingclips.com/movie-clips/cinderella-man/im-stuffedhttp://www.wingclips.com/movie-clips/cinderella-man/im-stuffedhttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/im-stuffedhttp://www.wingclips.com/movie-clips/cinderella-man/im-stuffedhttp://www.wingclips.com/movie-clips/cinderella-man/im-stuffedhttp://www.wingclips.com/movie-clips/cinderella-man/im-stuffedhttp://www.wingclips.com/movie-clips/cinderella-man/im-stuffedhttp://www.wingclips.com/movie-clips/cinderella-man/im-stuffedhttp://www.wingclips.com/movie-clips/cinderella-man/im-stuffed


17/41


Public worksprograms

800 buildings 37,000 miles ofroads

Boulder Dam Project

ReconstructionFinance Corporation

Authorized $1.2 Billion to loan to banks,financial institutions, and businesses

Federal Home Loan Bank Act of 1932

Lowered mortgage rates and let farmers refinance toavoid foreclosure.


18/41


Bonus Army

WWI Vets to getinsurance (bonus)payout in 1945

Want pay NOW (1932)

March on D.C.

Bill Fails

Occupy D.C. Gen MacArthur and 1,000

troops clear the city

3 dead

Th P l R


19/41


Hoovervilles

Hoover Flags


20/41

Farm Problems

Severe Drought GripsMidwest for a decade

Topsoil begins to becarried off by wind

Poor Plowingtechniques

Failed crops mean noroots to hold soil


21/41

Dust Bowl

1930s Dust Bowl

North Dakota to Texas

Massive Dust storms

Lost topsoil = Nothing will grow

Farmers suffer

Eventual Solution:

Plant grass and trees

Cycle crops


22/41

Dust Storms

Dust Pneumonia


23/41

Okies

Frustrated Farmers Leave Midwest Head to California the Promised

Land?

Route 66

No jobs when get there - UNWANTED

The Grapes of Wrath


24/41

Depression Entertainment

Writers and Singers Express Loss and

Struggle

John Steinbeck (Grapes of Wrath)

Woody Guthrie

Oklahoma singersings about common mansstruggle

People Want Escape!

- Swing Music

- Radio Serials

- Movies (80 million tickets a week)


25/41

Franklin Delano Roosevelt

Former Gov. of NY

Enacted Programs tohelp individual Citizens

Wins 1932 Election in

Landslide Dems take WH and both

houses of Congress

The Hundred Days 1st 100 days in office

Implement New Deal

!


26/41

New DealBanks are Back!

Bank Holiday

Stop runs on banks

Emergency Banking ReliefAct

Govt examines banks If solvent allowed to

reopen

Restore Confidence


27/41

Banking Act of 1933

Federal Deposit InsuranceCorporation (FDIC)

Insure deposits up to $5,000($250,000 today)

Take away fear of losingmoney!

Depository banks can no

longer invest in securities(or sell them)

Known as Glass-SteagallAct

Existed until 1999


28/41

Fireside Chats

Weekly RadioAddresses

Reassurance Restore trust


29/41

Brain Trust

Presidential Cabinet andAdvisors

Differing beliefs and viewpoints

Cabinet members and leaders ofindustry

Frances Perkins

Sec. of Labor

First Woman Cabinet Member


30/41

Black Cabinet

FDR Consults African-AmericanLeaders

Informal group of advisors manyappointed to New Deal Agency posts

47 total

Mary McLeod Bethune

Noted educator and founder of FLschool

Later appointed to NYA (National YouthAdministration) post


31/41

The New Deal Alphabet Soup government Goal: Lower 25% Unemployment Rate

See chart on handout

CWA 4 million jobs building roads andairports

CCC single men get jobs planting trees

& improving parksin rural work camps TVA build dams and hydroelectric

power in Tennessee River Valley

FCA refinanced farm mortgages

AAA stabilized prices for farm products(limit production)

NIRA - Eliminate unfair competition setminimum wage

Short-term solution

N D l C i i


32/41

New Deal Critics

1. New Deal Goes TOO FAR:

Huge expansion of government

Give the president too much authority

Like a Dictator

New govt spending = over-taxation

Who:

American Liberty League Business Leaders

Conservative Politicians

H P f G J b ?


33/41

How to Pay for Govt Jobs?

Bottom rate also increases 400% - 1% to 4%


34/41

How to Pay for Govt Jobs?

In addition to federal income taxes:

Corporate taxes up

Estate taxes up

State and Local taxes up

Employment taxes up

Modern economists agree that these taxincreases made problems worse by furthershrinking demand

Less household $$ = less buying of goods(http://www.econlib.org/library/Enc/GreatDepression.html)

N D l C iti


35/41

New Deal Critics

2. New Deal Doesnt Go FAR ENOUGH:

Senator Huey Long (Louisiana)

Tax the Rich to Pay the Poor $5,000each year

Overtly Socialist (Share the wealth)

Fr. Charles Coughlin

Radio Broadcasts with huge audience

New Deal too business oriented

not enough for help for people

Wants nationalization of industry

2nd Ne Deal Programs


36/41

2nd New Deal Programs

Social Security Act:

1st

Govt program to directly provide forfinancial security of citizens.

Funded via taxes on employers andemployees

Wagner Act (Natl Labor Relations Act)

Created after NIRA struck down

Secures collective bargaining rights

NLRB to oversee union activities


37/41

Clashes with Supreme Court

Supreme Court Strikes Down Key New DealLegislation as Unconstitutional

AAA limits on farm output

NIRA minimum wage provisions

In all, 11 of 16 New Deal Programs that werechallenged were struck down


38/41



39/41


Supreme Court Strikes Down Key New Deal Legislation as

Unconstitutional

AAA limits on farm output

NIRA minimum wage provisions

Roosevelt proposes Judicial Procedures Reform Act

Appoint a new Justice for each one over 70 yrs old

court packing to gain approval for his programs

Separation of Powers issues

REJECTED by Democratic Congress


40/41

Prohibition Repealed

December 1933

21st Amendment

Violation of personal

liberty

Revenue source


41/41

Lasting Effects

New Deal Did Not End Great Depression

Depression lasted until WWII required massive production forwar effort

Did Give Hope and Help to Citizens

Resulted in Large Expansion of Role of Federal Govt inOur Lives

Social Security and FDIC still exist

Role of govt in our lives has continued to grow, evenafter Depression ended.

1930s/great depression

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