The Great Depression
By: Teja Devanaboyina
Fundamental Causes of the Depression
- Drop in farm prices
- Massively uneven distribution of income
- "Get rich quick" schemes in real estate and stocks
- Over extension of Credit: DEBT
- Increase inventories of goods
- Immediate cause: October 1929 stock market crash
Black Tuesday
- October 29th, 1929
- More than 16 million shares traded in one day
- Stock market lost $30 billion
- Beginning of the "Great Depression"
Banking System Collapses
- Banks invested heavily in the market
- Collapse of market led to bank failures
- Banks lost millions after crash
- 1920-1929 600 banks closes
- 1930-1933 10,000 banks failed nationwide
- Many depositors panicked, leading to even more bank failures
- no "Safety Net"
Hoover's Response
- President Hoover overwhelmed
- Business owners to stay open and not cut wages
- let corporate profits suffer rather than purchasing power
- Believed that private charity was best suited to solve problems
- "Trickle down" method
- Most efforts taken failed
- Unable to find solutions to: unemployment, failing banks, foreclosures and the rapidly declining economy
- Hoover lost public support
- ridiculed and blamed for the Depression's economic issues
Dust Bowl: Causes
- Over cultivation of land in the Great Plains
- Drop in value of wheat, needed to plow more land to make a profit
- Sustained drought throughout the region
- Very hot temperatures
- loosened and broken up soil dried out more quickly
- High winds blew away loose topsoil
- Soil from the Great Plains found in New England
- More livestock
the Dust Bowl: Causes
- Over cultivation of land in the Great Plains
- Drop in value of wheat, needed to plow more land to make a profit
- Sustained drought throughout the region
- Very hot temperatures
- loosened and broken up soil dried out more quickly
- High winds blew away loose topsoil
- Soil from the Great Plains found in New England
Map of the Area's Affected by the Dust Bowl
The Dust Bowl: Impact
- More than 500,000 left homeless
- Storms blew large amounts of dust from the Plains into the cities such as Chicago and Buffalo
- Four pounds of dust per person fell on the city
- "Red Snow" fell on towns in New England
- major loss of livestock
- many people died
- dust pneumonia was very common
Civilian Response
- Hunger Marches started breaking out after the crash
- 1,200 hunger marchers assembled and chanted, "Feed the hungry, tax the rich"
- Farmers Revolt!
- During WW1 farmers heavily mortgaged farms to pay for seed, feed and equipment
- After WW1, prices sank and farmers could not pay back what they owed
- 1930-1934 nearly one million farms were foreclosed, taking possession of the farm, evicting families
- Farmers started destroying crop in an attempt to raise crop prices by reducing supply
- In Nebraska, farmers burned corn to heat their homes
- In Iowa, food growers prevented the delivery of vegetables to distributors
- In Georgia, Dairy farmers blocked highways and stopped milk trucks
- they then dumped milk
The Election of 1932
Franklin D. Roosevelt
He seems like a strong and thoughtful president.
????????????
Herbert Hoover
He has lowered many Americans hopes.
Once Franklin D. Roosevelt got elected as the new president he...
- Attempted to restore confidence in the American people
- "The only thing we have to fear is fear itself"
- Asked for broad executive powers to combat the Depression
The "New Deal"
- Named after a phrase in FDR's 1932 nomination speech
- Became the nickname for FDR's economic program
- Relief: attempting to solve the immediate problems of the depression (Unemployment and Bank Failures)
- Recovery: Get the economy back to the pre-crash levels
- Reform:Ensure that the conditions that led to the depression never reoccurred
The First Hundred Days
- Three month period after inauguration
- Saw most of the New Deal's relief programs established, such as:
- Agricultural Adjustment Act
- Tennessee Valley Authority
- Glass-Steagall Banking Act
Solving the Banking Crisis
- 1930-1933: Nearly 10,000 banks closed
- FDR established a Bank Holiday
- Banks closed for four days for inspection
- Federal inspectors would review the banks assets and determine if healthy enough to reopen
- Emergency Banking Relief Act
- permitted banks to reopen
- Fireside chats
- FDR insisted for people to trust banks again
- Deposits exceeded withdrawals
- Glass-Steagall Banking Act Created the Federal Depositors Insurance Corporation (FDIC)
- Made the federal government the insurer of individual bank deposits
- Protecting private accounts from bank failures
Managing Farms and Industry
Agriculture
- Farmers were suffering because prices were too low and production too high
- The Agricultural Adjustment Administration (AAA)
- Government would pay farmers not to raise certain livestock and crops
- $100 million paid to cotton farmers to plow under 25% of crop
- Farmers withdrew millions of acres from production, receiving $1 billion in support payments
- Accomplished Goal: Farm surplus fell and food prices rose, increasing farm incomes
- Fall backs: benefited large commercial farmers, hurt small farmers
- Small farmers lost jobs and became homeless
Business
- Allowed business, labor and government to cooperate, setting up rules for each industry
- Codes of fair competition
- Set prices
- Limiting what could be manufactured
- Established minimum wages
- limited factories to two shifts per day
- Shortened working hours
- Guaranteed workers right to form unions
- National Recovery Administration(NRA)
- Businesses signing on to code agreements:
- Urged consumers to buy products from industries with the blue eagle
- Benefited large corporations
- limited competition
- Both NIRA and AAA were deemed unconstitutional and disbanded in 1935
- "Fair competition" was never defined
- Schechter Poultry Co. Vs. U.S.
- Exceeded power to regulate commerce
- Basically told businesses what they could or could not produce
- Told farmers what they could or could not produce
- U.S. Vs. Butler
- Tax imposed by the act to encourage farmers to produce less
Key Economics
- Increase government expenditures and lower taxes
- Saving industries through government spending
- Creating jobs
- Opening banks
- Stimulates demand
Tennessee Valley Authority
- Tennessee River valley was very underdeveloped
- poverty-stricken
- High illiteracy rates
- disease rampant
- TVA created to assist the area
- Provided flood control and cheap hydroelectric power
- Protected the social and economic welfare of people in the area
- The Tennessee River Valley became the largest producer of hydorelctric power in the nation
The Second New Deal
- FDR was disturbed at the failure of the New Deal to generate a rapid economic recovery
- 1935, launched the Second New Deal...
- ...with another series of programs and reforms
- Hoped it would speed up the nation's recovery
- provide economic security to every American
- Ensure his re-election in 1936
the new deal impact for...
Women
Many of the New Deal programs discriminated against women
- Not directed towards women
- given lower paying jobs
- sewing, book binding, helping the elderly
- New Deal brought an increase in women's political influence
- linking personal friendships and professional connections
- Presence felt in national politics
- Actively promoted women"s suffrage, labor law reform, and welfare programs
- Found jobs for 100,000 women (Nursing and sewing)
- Frances Perkins: First women cabinet member, Secretary of Labor
- Helped create the Social Security Act and the Fair Labor Standards Act
Minorities
African Americans suffered through the 1930's
- "Last hired, first fired"
- FDR made little effort to fight racism
- Did not want to offend the powerful southern democrats
- New Deal programs accepted discrimination
- CCC established separate camps for African Americans
- NRA labor codes established lower wages for black workers
- African Americans could not get jobs from the TVA
- AAA reduced acreage and production in the south, thousands of black sharecroppers were forced off the land
- FDR banned discrimination in WPA projects
- Minimum wage of $12 a week
- FDR appointed several African Americans to second-level administration positions, Known as the "Black Cabinet"
- Massive layoffs, deepening poverty and deportation
- 400,000 Mexican nationals returned to Mexico, due to lack of relief from the government
- Native-born Americans believed this would reduce unemployment for Americans
What did the "New deal" do?
- Increased the role of the federal government in American lives and communities
- Social Security established the framework for a welfare state
- American Government took responsibility for assisting the needy
- American Government guaranteed the rights of workers to join trade unions, set minimum wages and maximum hours
- Government would become a much greater center of economic regulation and political power