The Great Depression in the United States Panics were normal. From 1819 onwards there was at least one panic every decade right up to the Great Depression. After panic of 1911, the economy continued to grow until 1929 when the stock market crashed. The Great depression was the longest and deepest economic downturn in U.S. history.
4 phases of the Great Depression in USAPhase 1: Leading up to the crash of 1929Phase 2: late 1929to 1933: from panic to deep depressionPhase 3: 1933-1937: recoveryPhase 4: 1937-1941: further recovery ending with joining ww1
Phase 1: Causes of the Great Depressionthe 1920’s was a time ofeconomic growth and politicalconservatism in the United StatesFor eight years stock prices roseand for the first time manyordinary people owned stockSo what happened?
5 Main Causes of Great DepressionPoliticsSpeculation and Easy CreditExpansion of CreditOverproductionIncome disparity
PoliticsCalvin Coolidge (R) waspresident from 1921-1929 andwas very pro-business.Practiced a hands off policytowards the nations economyHowever, insurmountable tariffwalls are built around the UnitedStates- 32 tariff hikes in 6 yearsHoover, elected in 1928,initially keeps same conservativepolicies
Speculation and Easy CreditInstead of buying stocks withcash, investors borrowedmoney from banks: buyingon marginBuyer would put down 10%of the stock price and borrow90% from bankBanks also willing to expandconsumer loans
Expansion of CreditEasy credit fueled consumerdemandMany new householdappliances such as washingmachines, refrigerators, andair conditioners arrived instoresconsumer loans allowed thesenew products into homes, butincreased personal debt
OverproductionFarm prices were droppingfrom overproductionWe had been producing tonsof food to feed the nations ofEurope during WWI, but nowthey can make their own foodagainMachines revolutionizefarming and allow biggercrops on larger areas
Income DisparityUneven distribution of incomethrough the 20’s resulted inwealth becoming concentratedin the upper classesby 1929, almost one-half offamilies in the United Stateslived at subsistence level ofbelowthe declining income of lowerclasses reduced theirpurchasing power
The CrashSeptember 3, stock market reaches anall-time highOctober 24, first big crash. Banksannounce funds are available topurchase more stockOctober 29, Black Tuesday, the marketcrashed and banks could not stop sell offSmall investors lost their life savings. Bythe end of 1929, stock holders lost $40Billion.The crash did not cause the greatdepression- but signals the beginning
Phase 2: 1930-1933 From Bad to WorseHoover was president at the time; he was elected a year beforethe crash promising to continue Coolidge’s policy of minimumgovernment involvement.Hoover and the Federal Reserve PolicyIn the months following the crash, Hoover reduced governmentspending; the panic became the deepest depression in thenations history
Stupidity AbroadIn an attempt to save domestic producers,Congress passed the Hawley-Smoot tariff act inJune 1930. This established a high protectivetariffthis caused other nations to retaliate with theirown tariffexports worldwide drop 50% and cause adeepening of the depression
What hurt the most?Bank closings- in one year, 1,300 banks closedHard-earned savings disappeared as thousandsof banks close across the countrywithout banks to extend credit and capital,businesses and factories close9,000 banks closed in the 1930sby 1933, depositors saw $140 billiondisappear in bank closures
Social Effects of the DepressionEconomic downturn affected the entirecountryMajor cities saw unemployment rise above50% by 1932In some cities, unemployment hit 80%Men walked the streets looking for workmany families lost their houses, forcingthem to move to the outskirts of towns.
In the HeartlandA long term drought struck much of the middle of thecountry at the same time as the depression, hittingfarmers who were already suffering from a devastatingdrop in incomedrought started in 1930 and lasted for a decadeThis drought combined with bad farming practices toform a devastating series of dust storms called theDust Bowl (1930-1936)Worst environmental disaster in United States historyMillions of people flee the heart land to escape thedust bowlThe Grapes of Wrath
The Effect of the Depression of MinoritiesThe Great depression his minoritygroups even worseOverall, the 1930s set all groupsback, whatever economic gainshave come about during theprevious decades were lost
African AmericansIn certain regions of the United States, African Americans had seenimprovements in the 1920s50% of blacks life in the southRural souther blacks lost farms as cotton prices fell. In cities, blacks lost jobs aswhite men took the jobs as janitors and street cleanersSome whites formed groups to keep blacks out of workby 1932, 75% of black people are unemployed. The general unemploymentnumber is 25%Lynchings start to increaseAs a result of worsening economic and social conditions, close to half a millionblacks moved to northern cities to find work- joined the Great Migration
Hispanic AmericansAt the start of Great Depression, there werebetween 1.5-2m Latinos in the UnitedStates“last hired first fired”Like African Americans, many move to thecities when their agriculture jobs disappearAs city populations swell, local governmentshave raids and try to force MexicanAmericans outClose to a half-million Latinos moved toMexico during the great depression
WomenThe Great Depression causes aworsening of circumstances, andincreased their responsibilitythe number of working marriedwomen increase by 50% in the1930sBlack women had it especially hardSurvivalist Entrepreneurship
Phase 3:1933-1937 RecoveryThe episode with the Bonus Army sealed the final nail in thecoffin for Hoover’s chances of being re-elected in 1932FDR, New York’s Democratic Governor, won the 1932Presidential election in a landslide.FDR tried many different programs over the next two terms to tryto pull America out of the Great Depression, but it took the entryof the United States into WWII to finally achieve real recovery
FDRLongest serving president in U.S. history(1933-1945)Elected to four termscontracted Polio in 1921, refused to letthe public see him in a wheelchair.Wanted to appear vigorous.Gov. responsible for individual welfarePeople felt connected with him- firesidechats
The New DealAt first it was a vague campaignpromise, then it became a dramaticchange in policy.First New Deal (1933-1935)focused on economic activity.The Three R’s- Relief, Recovery,ReformSee chart
Second New Deal1935-1938As attacks on the new deal mounted fromConservatives and Liberals, FDRabandoned the middle and moved left.This new deal focused on social justicecritiqued “money class”higher taxes for corporations and higherincomesexamples?
Roosevelt and the Court SystemThe supreme court ruled the AAA unconstitutional in January,1936. Also struck down 10 other New Deal agencies.The court showed itself to be hostile to a large government rolein the economyFDR wanted to name a new justice to the bench for every justiceover 70this means he would be able to name 6 more justicesThis idea dies in congress, and is seen an overreaching
Opposition to the New DealThe New Deal was attacked by both the left and the rightWhy from each?While the majority of Americans supported the president’spolicies, the strength of opposition did limit New DealLegislation