AN06c\_Ch22-The Great Depression
Timeline:** _1929 – 1934_
FS: From Boom to Bust. The Fast Times of the 1920s comes to a Screeching Halt._
Main Idea: As the prosperity of the 1920s ended, severe economic problems gripped the nation. During the Great Depression Americans did what they had to do to survive. Not too surprising, President Hoover’s conservative response to the Great Depression drew criticism from many Americans._
I. Economic Troubles
A. Weakening Businesses
1. Housing Construction & Automobile Manufacturing
2. Decreasing need for natural resources brings an economic ‘slump’ to mining and lumber.
B. Farmers in Peril
1. Consumer demand for agricultural products in the 1920s led farmers to borrow funds for crop expansion.
2. Collapse of consumerism and overproduction depresses prices. Farmers cannot repay loans.
3. Any aid from the government in the form of ‘price-supports’ was dashed when Pres. Coolidge vetoed the proposal twice.
C. Consumer Debt & Spending Failing
1. Farmers and the general population spend less.
a. Overwhelmed by debt.
b. Falling wages, job loss, rising prices as vendors try to makeup for reduced spending.
2. Most consumer credit was to be paid back in installments over time. The Depression made it impossible for millions of Americans.
D. Disproportionate Distribution of Wealth: The rich get richer. The poor get poorer. A fraction of the nation’s population hold a majority of the wealth.
II. Stock Market Crash and Financial Collapse
A. Speculation and “Dreams” of wealth led many Americans to make risky investments with funds they took on “Margin” (funds borrowed to make an investment).
B. Banks fail as loans cannot be paid. As news of the failures spread via radios and newspapers, many Americans withdraw investments and funds from bank accounts.
C. “Black Tuesday”: 29 October 1929″
D. The nation’s economic output falls 50%. More than 33% of all banks fail. Unemployment reaches 25%.
E. The impact reverberated globally.The passage of protective tariffs by the US economically hurt other nations.
III. The Depression & it’s Effect on American Families
A. The widespread appearance and multiplication of Shantytowns, Soup Kitchens, and Bread Lines.
B. Racial unrest as dwindling jobs leads “Whites” to blame “non-Whites” (African-Americans, Latinos) for job scarcity.
C. Rise in foreclosure of properties that could not be paid for (failure to repay loans).
D. Ecological Disaster: Heavily planted soils suffer from lack of minerals and erosion=\> The Dust Bowl.
E. Families were ‘broken’, dwindling budgets from shrinking tax revenues forced shortened school days and closures.
F. The drive to ‘survive’ will affect generations of Americans to come.
IV. Hoover and the Nation
A. Reassurance became increasingly difficult as the crisis worsened.
B. Values regarding self-reliance and individual effort marked the Hoover philosophy. This impeded the flow of aid to the needy on ‘moral’ grounds.
C. Cautious Steps
1. Encouraged Business, Consumers, and Labor to negotiate=\> cut wages, layoff workers, etc. No ‘direct’ intervention, however.
2. Public works projects, Hoover Dam, has a positve effect (locally).
3. The one major governmental intervention was the Reconstruction Finance Corporation (RFC). Its purpose was to loan funds to failing banks so they can remain in the business of providing financial credit. The effort was a significant intervention, but too late to relieve the nation’s economic woes or preserve President Hoover’s administration.
D. The Bonus Army
1. WWI veterans sought the lump-sum payment of a bonus they were granted to receive.
2. The bill to authorize the payment was turned down and President Hoover forcefully disbanded the protesting veterans. Tear gas was used in the effort and many Americans were stunned by the action.
V. Summary: Why it matters today
The Great Depression has had lasting effects on how Americans view themselves and their government. For decades after the Great Depression, many Americans were more cautious about saving, investing, and borrowing. Such a widespread and damaging economic calamity forced the government to become more involved in the health and wealth of the people.
– The Americans
– Slide Presentation
– ABC’s “America’s Century”