Great Depression Slide-Doc


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Great Depression Slide-Doc

  1. 1. The Great Depression M. Shomaker 2014 Effects of Demobilization The transition from wartime to peacetime production sparked a spending spree for formerly off-limit goods. From 1916—1919, US industry had been focused on wartime production and was producing materials at an enormous rate. As more American men were drafted, women took on industrial labor positions. With the cessation of hostilities, roughly 4.5 million US soldiers returned to industries not producing at wartime levels and found mass unemployment instead.
  2. 2. The Great Depression M. Shomaker 2014 Despite the drop in production and rising unemployment, Americans began buying previously rationed goods nationwide. Huge demand and low supply led to major price increases and helped lead America into a recession in 1920—1921.
  3. 3. The Great Depression M. Shomaker 2014 Farmers, who benefitted from the destruction of European farms during World War I, lost captive markets and money as Europe rebuilt and foreign farms stabilized.
  4. 4. The Great Depression M. Shomaker 2014 President Warren G. Harding Promised a return to “Normalcy!” The transition from wartime to peacetime production sparked a spending spree for formerly off-limit goods.
  5. 5. The Great Depression M. Shomaker 2014 His pro-business platform  Tax revision  High tariffs  Limits on immigration The promise of “normalcy”  World War I cast a gloom over the majority of America  Harding promised a return to a simpler and more peaceful time Harding and the “little guy”  Appealed to farmers tired of falling crop prices.  Appealed to middle-class Americans tired of labor strikes and high taxes. Less government in business  Harding felt that government should not interfere with the economy except to aid business. These four elements together were to accomplish Harding’s two chief goals: 1. Reduce the national debt 2. Promote economic growth
  6. 6. The Great Depression M. Shomaker 2014 WAS HARDING SUCCESSFUL? Yes. Harding was able to reduce the national debt by reducing government spending. Yes. Kind of. Acts like the Fordney-McCumber Tariff Act of 1922, which enforced high tariffs on manufactured goods, kept prices and profits high. However, Harding’s policies often ignored anti-trust laws and even facilitated consolidations. Also, farmers did not see many fruitful results because of shrinking markets, low prices, high interest rates, and debt from the 1920—1921 recession.
  7. 7. The Great Depression M. Shomaker 2014 President Calvin Coolidge The transition from wartime to peacetime production sparked a spending spree for formerly off-limit goods. Calvin Coolidge, President Harding’s vice president, assumed the presidency after Harding died of a heart attack. Coolidge immediately fired many government officials involved in the Harding-era scandals and then carried on Harding’s pro-business policies.
  8. 8. The Great Depression M. Shomaker 2014 Coolidge easily won the Republican nomination and the election in 1924, after which he proved even more supportive of big-business than Harding had been.  Favored legislation to aid businesses  Repealed the gift tax, cut estate taxes, and reduced taxes on the wealthy through the Revenue Act of 1926  Further cut government spending by refusing to honor a WWI veteran’s bonus bill  Passed the McNary-Haguen Bill, which allowed the government to buy surplus crop to sell abroad.
  9. 9. The Great Depression M. Shomaker 2014 President Herbert Hoover Calvin Coolidge decided not to run for reelection in 1928 and Herbert Hoover won the Republican nomination and the presidency. Once in office, he followed the pro-business platform of Harding and Coolidge. After the stock market crashed in 1929, America entered the period known as the “Great Depression.” Many people looked to the government for advice on how to cope. Hoover’s response was one common and long-accepted by many Americans. “During the war we necessarily turned to the government to solve every difficult economic problem…However justified in time of war if continued in peace time it would destroy not only our American system but with it our progress and freedom as well…We were challenged with a peace- time choice between the American system of rugged individualism and a European philosophy of…paternalism and state socialism. The acceptance of these ideas would have meant…the undermining of the individual initiative and enterprise through which our people have grown to unparalleled greatness.” -Herbert Hoover—1928 campaign speech
  10. 10. The Great Depression M. Shomaker 2014 ONCE IN OFFICE, HOOVER ADVOCATED TWO BIG IDEAS  Hoover argued that direct relief would create a large bureaucracy, inflate the federal budget, and reduce the self-respect of people receiving aid.  He instead encouraged hard work, saving, and strength of character.  He also believed that private charities and local communities could best provide for those in need.  Hoover believed that private charities and local communities could best provide for those in need.  However, a lack of money and resources among charities complicated the plan as local and state governments were stretched beyond their limits.  The President’s Committee for Unemployment Relief (PCUR) was created to assist local and state relief efforts but had little success beyond urging more donations from Americans. Opposing direct relief Encouraging volunteerism
  11. 11. The Great Depression M. Shomaker 2014 As the severity of the Depression worsened, Hoover did involve the government in business by asking businesses to keep pre-Depression levels of industrial production, employment, and wages. He also funded public-works programs, created a Federal Farm Board to help farmers, and created the Reconstruction Finance Corporation (RFC). The RFC loaned money to troubled banks, insurance and railroad companies, and other institutions in order to stabilize them. The RFC had limited success but it, along with Hoover’s other efforts, failed to end the Depression.
  12. 12. The Great Depression M. Shomaker 2014 America “Plays” the Market Bolstered by the nation’s economic prosperity, a growing number of Americans bought on credit, which the government encouraged by keeping interest rates low. The problem: easy credit enabled Americans to buy goods without having the money to pay for them. In addition to consumer credit, American also began playing the stock market. Stock speculation—buying and quick selling to make a profit—was widespread. The problem: speculation led to inflation in which stocks sold for more than they were worth. This was fine as long as demand was high. If demand dropped however, the stock’s worth would bottom out. Margin buying—purchasing a percentage of the stock with borrowed money—further aggravated the situation. The problem: many speculators only put up 10% of the money for the stock. If the stock could be sold at a higher price, the different would be covered. If the stock bottomed out however, the speculator would be left with a debt.
  13. 13. The Great Depression M. Shomaker 2014 The Market Crashes The stock market crashed in October, 1929 when a large number of investors, nervous about rising interest rates, dumped huge amounts of stock on the market, which wrecked investor confidence, causing stock prices to plunge. On “Black Tuesday,” October 29, panicked investors dumped more than 16 million shares on the market causing it to bottom out. Speculators who bought stock on margin were left with a debt they were unable to pay. The eventual losses in the stock market in 1929 totaled more than all of the money the US spent on the war effort during World War I.
  14. 14. The Great Depression M. Shomaker 2014 Why was it so severe? Like other American investors, large banks suffered significant losses when the stock market crashed. The worst crisis came when borrowers began defaulting on their loans. As the large banks began floundering, customers across the country became scared and countless numbers tried withdrawing their funds at once causing smaller banks to close. Businesses suffered from both the stock market crash and the banking crisis. Customers refused to buy products on credit and many businesses refused to sell on credit. Economic trouble in Europe was another cause of the Depression’s severity. Global trade declined in the 1920s—1930s, which left American manufacturers with large surpluses. Some historians have argued that the unequal distribution of wealth was another central cause of the Great Depression. The income gap between rich and poor meant that most people did not have the buying power to boost the economy.
  16. 16. BUSINESS-CYCLE 1930s
  17. 17. The Great Depression M. Shomaker 2014 The Election of FDR Franklin Delano Roosevelt was a two-term governor of New York who implemented policies that proved to be effective in combating poverty and unemployment. FDR was a reform-minded politician who defeated Hoover by nearly 10 million popular votes. His Democratic Party claimed a 2/3 majority in the Senate and a 3/4 majority in the House, which was the largest party takeover since before the Civil War. Roosevelt came to office with a mind for change and a Congress to help accomplish it.
  18. 18. The Great Depression M. Shomaker 2014 Roosevelt’s “100 Days” Once FDR became president in March of 1933, he launched 100 days of intense political maneuvering during which Congress passed more than 15 major pieces of “New Deal” legislation. The Emergency Banking Relief Act was passed and FDR declared a bank holiday during which all banks in the nation were shut down and inspected. The Treasury Department reopened financially sound banks. The Glass-Steagall Act established the Federal Deposit Insurance Corporation (FDIC), which insured bank accounts in order to reassure would-be investors. The 21st Amendment was pushed through Congress to repeal prohibition and helped boost government revenue through taxes.
  19. 19. The Great Depression M. Shomaker 2014 Roosevelt’s Critics Father Charles Coughlin was a Catholic priest who broadcast radio political sermons with an estimated listening audience of 40-45 million people.. Dr. Francis Townsend, a California doctor, argued FDR did not do enough for the elderly and proposed massive government support to that population. The Louisiana Kingfish, Huey Long, was a senator who believed FDR’s “New Deal” did not do enough for the poorest citizens. He proposed the “Share Our Wealth” plan.
  20. 20. The Great Depression M. Shomaker 2014 The “Alphabet Soup” Programs SEC: Regulated companies that sold stocks to protect investors from fraud. AAA: Lowered production of crops and livestock to keep prices high. TVA: Built dams along the Tennessee River to provide jobs and electricity to rural areas. CCC: Employed single men between 18-25 to build roads, develop parks, plant trees, and other conversation jobs. NIRA: Created the PWA, CWA, and NRA. HOLC: Gave government loans to homeowners about to be foreclosed upon. FERA: Direct financial aid to Americans. FSA: Helped tenant farmers become landholders and created camps for migrant farm workers. WPA: Crated over 8 million jobs in almost every field. NYA: Education, jobs, counseling, and recreation for young people. Social Security Act
  21. 21. The Great Depression M. Shomaker 2014 FDR Verses the Court FDR was up for reelection in 1936 and won easily after vowing to continue his New Deal programs. Some of his Republican and, to a lesser extent, conservative Democratic support wore off when he was accused of “court packing” after his reelection. FDR was upset that the Supreme Court had ruled that many New Deal programs were unconstitutional. He labeled the justices “Nine Old Men”—six were 70 or older—and asked Congress to give him the power to appoint 1 new justice for each member 70 or older. Congress rejected FDR’s request but most of the older justices died or retired soon afterwards and by 1945 eight of the nine justices were FDR’s appointees.
  22. 22. The Great Depression M. Shomaker 2014 The Dustbowl Farmers were some of the hardest hit during the Depression because of heavy loan debt, massive overproduction, which led to lower crop prices, and the “Dustbowl”. The Dustbowl—Poor agricultural practices, a sustained drought, and erosion of top soil left dry, unnutrious dust carried freely by the wind across the Great Plains. Huge dunes of dust appeared across Kansas, Oklahoma, Texas and farming families were forced to leave the area in order to plant or find another living. In 1939, author John Steinbeck wrote “The Grapes of Wrath” about Tom Joad and his “Okie” family moving to California to escape the conditions in the Midwest. Steinbeck was financed and enabled to write this now classic novel through a government program called the “Federal Writers’ Project”.
  23. 23. The Great Depression M. Shomaker 2014 Roosevelt and Labor Roosevelt signed the Wagner Act into effect: -Prohibited threatening striking or union workers -Prohibited firing union members -Prohibited interfering with union organizing -Set up a board to hear testimony about unfair practices FDR also signed the “Fair Labor Standards Act,” which set maximum workweek hours at 40, set minimum wage, set safety rules for employees under 16 and banned hazardous work for those under 18 Labor Disputes So, in spite of, or, in response to the 2nd New Deal labor reforms, union membership grew dramatically from 1934-1937. The American Federation of Labor (AFL), the United Mine Workers of American (UMW), and the Congress of Industrial Organizations (CIO) were instrumental in empowering potential union members with the tools and knowledge to get their demands met.