1 Mr. Robson, Hicksville High SchoolThe Great Depression Mr. Robson, Hicksville High School

2 Mr. Robson, Hicksville High SchoolElection of 1928 Herbert Hoover (R) Al Smith (D) Hoover rides the wave of prosperity to White House Continues Laissez-Faire policies of Harding, Coolidge Mr. Robson, Hicksville High School

3 Mr. Robson, Hicksville High SchoolThe Coming Depression Causes? By 1927 – Economic Slowdown (Recession began) Stock Market speculation continues to push stocks higher ( % growth) Margin Buying helped fuel growth Unbridled speculation began to worry some – including Hoover Mr. Robson, Hicksville High School

4 Mr. Robson, Hicksville High SchoolThe Coming Depression Causes? Hoover “warns” banks, raises interest rates 1% at a time of economic contraction – “had no desire to stretch the powers of the federal government” Summer 1929 – Dire economic numbers. All leading indicators point to crisis as higher interest rates take affect Mr. Robson, Hicksville High School

5 Mr. Robson, Hicksville High SchoolThe Coming Depression Causes? Black Thursday (Oct. 24) Hoover “Fundamental business of the country…is on a sound and prosperous basis” Black Tuesday – Oct. 29, 1929 Waves of panic selling Mr. Robson, Hicksville High School

6 Mr. Robson, Hicksville High SchoolSTOCK MARKET CRASH AND FINANCIAL PANIC MONETARY POLICY INDUSTRY AGRICULTURE Mr. Robson, Hicksville High School

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8 Mr. Robson, Hicksville High SchoolThe Coming Depression Causes? Theories? 1920’s Prosperity – NOT for all Agriculture, Textiles, mining Unequal Distribution of Wealth Tax Policy Labor makes little real wage gain in 20’s When market collapses, average American does not have enough $ to revive economy Mr. Robson, Hicksville High School

9 Mr. Robson, Hicksville High SchoolTHE CHART ABOVE SHOWS THAT IN 1929 THE TOP 1/10TH OF 1 % OF THE POPULATION EARNED AS MUCH MONEY AS THE BOTTOM 42% OF THE POPULATION. THE SECOND TWO BARS SHOW THAT THE TOP 1% OF THE POPULATION SAW A 75% INCREASE IN THEIR INCOME WHILE THE OTHER 99% SAW ONLY A 9% INCREASE IN THEIR INCOME IN THE 1920’S. Mr. Robson, Hicksville High School

10 Mr. Robson, Hicksville High SchoolCHART SHOWING WAGES OF UNSKILLED WORKERS. NOTICE HOW LITTLE THE WAGES CHANGED DURING THE SUPPOSED PROSPERITY OF THE 1920’S WHY DO THINK WAGES STARTED GOING UP BEGINNING IN 1938? (WAR SPENDING AROUND THE WORLD) Mr. Robson, Hicksville High School

11 Mr. Robson, Hicksville High SchoolThe Coming Depression Causes? 1920’s Prosperity – NOT for all Purchasing power is affected by this unequal distribution of wealth This fact is hidden for much of 20’s due to installment buying Mr. Robson, Hicksville High School

12 Mr. Robson, Hicksville High SchoolThe Coming Depression Deepening Crisis Self-Perpetuating More contraction = less confidence = less spending and investment = More Contraction = …. Bank Failures cause others to withdraw $, makes things worse Mr. Robson, Hicksville High School

13 Mr. Robson, Hicksville High SchoolThe Coming Depression Causes? Investors Lose Banks Lose – invested in stocks and lent $ to others to invest Bank Deposits NOT insured – many middle class lost savings Crushed confidence in American system Mr. Robson, Hicksville High School

14 Mr. Robson, Hicksville High SchoolThe Coming Depression Deepening Crisis Federal Reserve – supposed to be a “lender of last resort” – fail! Monetary Policy – Federal Reserve increases discount rate = contraction in $ supply Just when banks need $ to avoid failure, Fed refuses to act Americans save $ instead of spending Mr. Robson, Hicksville High School

15 Mr. Robson, Hicksville High SchoolThe Coming Depression Worldwide Depression World Trade dysfunctional since WWI By late 20’s, European nations struggle under heavy debt and trade imbalances with U.S. Collapse in U.S. = less investment in Europe, fewer European goods bought ***Interdependent world economy*** Mr. Robson, Hicksville High School

16 Mr. Robson, Hicksville High SchoolCauses Economists (and politicians) argue over the true cause Keynesian View – pro-business laissez-faire government did nothing to stop the reckless business practices of the 20’s. Modern Industrial economies require government intervention in order to “balance” unbridled capitalism Mr. Robson, Hicksville High School

17 Mr. Robson, Hicksville High SchoolCauses Conservative View (Milton Friedman) – Government was the culprit. While the stock market may have been over inflated, the crash was a normal correction in the business cycle were in not for the government interfering – particularly with the Hawley-Smoot tariff and the Fed’s monetary policy Mr. Robson, Hicksville High School

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19 “It’s so nice to have Daddy home all the time now,” Life, 1930No laughing matter. “Mama,” runs the caption of this illustration published in the December 12, 1930 issue of Life, “it's so nice to have Daddy home all the time now.” By Winter 1930, the situation was too grim a subject to lampoon, even for a magazine that favored arch commentary and collegiate humor. Life itself would become another victim of the Depression; its name was quickly adopted in 1936 by Henry Luce for his new photo-journalism magazine. Victor Anderson, Life, December 12, 1930—American Social History Project.

20 Hoover “Fundamentally, the ship was sound,” New Yorker, 1932"Fundamentally the ship was sound." New Yorker cartoonist Richard Decker comments on the obstinate outlook of conservative business leaders in the face of the nation's mounting economic and social crisis. Richard Decker, The New Yorker, March 5, 1932-Copyright 1932 The New Yorker.

21 "Mellon pulled the whistle Hoover rang the bell Wall Street gave the signal And the country went to hell."

22 Mr. Robson, Hicksville High SchoolWorldwide Depression Hawley-Smoot Tariff Under pressure from his party and despite opposition from almost every economist at the time, Hoover raises tariff rated to an all time high Europe responds in kind…severely limiting world trade. Mr. Robson, Hicksville High School

23 Mr. Robson, Hicksville High SchoolHard Times Invisible Scar Many begin to question Horatio Alger ethic of hard work – begin to alter Americans view of “rugged individualism” Many turned to volunteer relief organizations – churches, relatives etc. Mr. Robson, Hicksville High School

24 Mr. Robson, Hicksville High SchoolII.A Hard Times Invisible Scar With charities overwhelmed, some have to turn to state/local governments for relief – humiliating at the time Mr. Robson, Hicksville High School

25 Families face the Depression Women’s role as homemaker changed little Hard Times Families face the Depression Women’s role as homemaker changed little Middle class families still consumed goods – deflation, credit Movies, cigarettes, gas (cars) held stable Mr. Robson, Hicksville High School

26 Mr. Robson, Hicksville High SchoolHard Times Demographics Marriage and divorce rate falls Birth rate decreases (as expected) Increased access to contraception Birth control begins to fall into realm of health (and economic) issue Mr. Robson, Hicksville High School

27 Mr. Robson, Hicksville High SchoolII.B Hard Times Demographics Married women expand in workforce despite resistance Most still believed in separate roles More finish H.S.- College still privilege - Mr. Robson, Hicksville High School

28 Mr. Robson, Hicksville High SchoolII.C Hard Times Popular Culture Movies – 60% attend once a week! Mea West, Fred Astaire, Ginger Rogers, Marx Brothers More than just entertainment, social commentary – Mr. Smith Goes to Washington Mr. Robson, Hicksville High School

29 Mr. Robson, Hicksville High SchoolII.C Hard Times Popular Culture Movies – 60% attend once a week! Mea West, Fred Astaire, Ginger Rogers, Marx Brothers More than just entertainment, social commentary – Mr. Smith Goes to Washington Mr. Robson, Hicksville High School

30 Mr. Robson, Hicksville High SchoolHard Times Popular Culture Radio – Music (Benny Goodman, Duke Ellington), Variety Shows (Jack Benny), and Serials (Lone Ranger, Superman) Amos ‘n’Andy Church attendance increases, Family time – reading, board games (Monopoly) Mr. Robson, Hicksville High School

31 Mr. Robson, Hicksville High SchoolHarder Times African Americans Made hard times harder – Scottsboro Case- brings attention to legal system in South Lynching increase – incentive to migrate Harlem – 50% unemployment – 1935 Race riot. Shift to Democratic Party begins Mr. Robson, Hicksville High School

32 Mr. Robson, Hicksville High SchoolHarder Times Dust Bowl Migrants Wheat demand in WWI encourage farmers to over farm land 1930’s – terrible drought, wind and loss of natural vegetation = dust bowl. Prompts mass exodus from plains to California on Route 66 Mr. Robson, Hicksville High School

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37 Mr. Robson, Hicksville High SchoolMexicans - Many returned to Mexico (political and economic reasons) Most, not all, migrant farm workers Asians – Many also returned Japanese fare best Filipinos – 1934, Tydings-McDuffie Act – grants independence, no longer citizens Harder Times Mr. Robson, Hicksville High School

38 Mr. Robson, Hicksville High SchoolIII.D. Herbert Hoover Believed depression was temporary downturn Contrary to myth – he does act Agricultural Marketing Act (1929) Lowers Taxes, then raises them! Public Works spending increases Mr. Robson, Hicksville High School

39 Mr. Robson, Hicksville High SchoolIV.A. Herbert Hoover Supported Glass-Steagall Banking Act (1932)– props up failing banks Reconstruction Finance Corporation (RFC) – 1st Federal Institution to intervene in economy during peacetime Provided loans to big businesses to stimulate production. Benefits would then “trickle down” to Americans No significant impact – too cautious Mr. Robson, Hicksville High School

40 Mr. Robson, Hicksville High SchoolHerbert Hoover RFC easy to politicize – He refused to provide DIRECT relief to unemployed – felt it would undermine “American Individualism” Mr. Robson, Hicksville High School

41 Mr. Robson, Hicksville High SchoolHerbert Hoover Discontent Hoover comes to symbolize the GD Hoovervilles, Hoover Blankets, Hoover Flags Protest – Farm Holiday Association, Labor Strikes, Communist Party Bonus Army (Marchers) Mr. Robson, Hicksville High School

42 SOME BONUS MARCHERS BROUGHT THEIR FAMILIES

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45 How do you “fix” the economy?Mr. Robson, Hicksville High School

46 KEYNESIAN OR "PUMP PRIMING" ECONOMICSFDR’S PHILOSOPHY KEYNESIAN OR "PUMP PRIMING" ECONOMICS BASED ON THE WORK OF ECONOMIST JOHN MAYNARD KEYNES. MONEY SHOULD BE INVESTED IN THE PEOPLE, THE WORKING CLASS. SPENDING WOULD THEN INCREASE WITH NEW MONEY IN CIRCULATION. AS SPENDING INCREASED IT WAS EXPECTED THAT BUSINESS WOULD EXPAND TO MEET THE NEW DEMAND AND HIRE NEW WORKERS. THIS WOULD BRING ON MORE SPENDING AND MORE GROWTH. THIS PLAN WAS THE OPPOSITE OF THE REPUBLICAN PLAN ASCRIBED TO BY HOOVER. SUPPLY SIDE OR "TRICKLE DOWN" ECONOMICS. MONEY WAS TO BE INVESTED AT THE TOP, IN BUSINESS. THEN BUSINESSES WOULD EXPAND, HIRE NEW WORKERS AND THIS IN TURN WOULD SPUR ON SPENDING AND FURTHER ECONOMIC GROWTH.

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48 ALMOST 57% OF THE ELECTORATE VOTED ELECTORAL VOTES FOR EACH CANDIDATETHE ELECTION OF 1932 POPULAR VOTE ALMOST 57% OF THE ELECTORATE VOTED ELECTORAL VOTES FOR EACH CANDIDATE

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