1929-1939. “a chicken in every pot and a car in every garage” – herbert hoover
TRANSCRIPT
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1929-1939
The Great Depression
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1928: Hoover v. Smith
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“A chicken in every pot and a car in every garage” – Herbert Hoover
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A period of severe economic decline, marked by unemployment, decreasing business activity, and falling prices.
Previous depressions: 1830s, 1870s, and 1890s
Depression:
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Shocking after a decade of unprecedented prosperityImpacted all areas of American lifeDamaged confidence in the future
Great Depression: 1929-1939
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Median incomes plunged to half of what they had been in 1929
¼ out of workImpacted all areas of American lifeDamaged confidence in the future
Rock bottom: 1932-1933
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1920s prosperity was superficialCauses of the Depression were complex and largely
ignored throughout the decade
Causes of the Great Depression
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The wealthiest 5% took in nearly 1/3 of the nation’s income
Nearly ½ of the nation’s families earned less than $1,500 a year—while H. Ford made $14 million
Causes: 1) Mellon’s tax cuts 2) Businesses increased profits while holding down wages
Effects: Depressed consumer purchasing power
1. Uneven distribution of income
Secretary of Treasury Andrew Mellon
1921-1932
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In 1929, 200 corporations controlled ½ of the corporate wealth
Some industries thriving (auto) while others like agriculture declining steadily
Average income for a farmer $273
2. Uneven distribution of corporate wealth
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For an economy to function properly, the total demand must equal total supply
In 1920s there was an oversupply of goods (mechanization of industry & farming responsible)
3. Overproduction & under-consumption
demand
supply
1920s Economy
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Installment plansBorrowing on margin to buy stocksPrivate banks loaned out millions rising debt
throughout the 1920s
4. Easy credit
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America prospered in the 1920s, while European nations struggled to rebuild after the war
U.S. lent $7 billion to Europe during the warAnother $3 billion by 1920
5. Large scale international wealth distribution problems
Britain & France
U.S.
Germany
loansreparations
investments
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Fordney-McCumber Tariff of 1922Hawley-Smoot Tariff of 1930
Protective tariffs
Now the British item is priced at $5
Americans are encouraged to buy the cheaper item produced in the US
A 25% tariff is levied on such itemsA $1 tax is added to the price
How a tariff worksAn item costs $4 to make in Britain
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By 1929 about 4 million Americans or 3% of the population owned stocks
Stockbrokers were willing to lend up to 75% of the stocks purchasing price
Americans wanted to take advantage of the “bull market” (rising stock prices)
6. Speculation on the stock market
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Example: RCA stock $85 in Sept. 1928, $420 one year later—even though the company had not paid a single dividend
Stock prices peaked in Sept. 1929
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Stock Market plungesPanic on Oct. 24, 1929 (Thursday), stocks prices plungeOct. 29, 1929 (“Black Tuesday”), 16 million shares of stock
dumped in one day
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7. Shortsighted government policiesMellon’s tax cutsProtective tariffsFederal Reserve Board tightens credit
Tax cutsProtective
TariffsTightening of credit
1. Depressed purchasing power
2. Inability to sell goods at home or abroad
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Depressions effectsWidespread bank failuresBankrupt businessesHigh unemployment
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Depression effectsDecrease in worldwide tradeIncreasing numbers of homeless personsWidespread hunger and illness
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Dust storm approaching Stratford, Texas - 1934
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Dust buried cars and wagons in S. Dakota in 1936
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Storm approaching Elkhart, Kansas in 1937
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Public opinion made him the villain of the Great Depression. In fact, the 31st president was a visionary -- but a hopelessly inept politician.
--David M. Kennedy
Hoover is ineffective at responding
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Hoover Dam (Public Works Projects)
Hoover successfully organized and authorized the construction of the Boulder Dam (Now called the Hoover Dam) The $700 million project was the world’s tallest dam (726 feet) and the second largest (1,244 feet long)The dam currently provides electricity, flood control and water for 7 western states
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Hoover Dam Today
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The World War Adjusted Compensation Act of 1924 had awarded WWI Veteran bonuses in the form of certificates they could not redeem until 1945.
The principal demand of the Bonus Army was the immediate cash payment of their certificates.
Bonus Army 1932
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President Herbert Hoover ordered the army to clear the veterans' campsite.
General Douglas MacArthur commanded the infantry and cavalry supported by six tanks.
The Bonus Army marchers, with their wives and children were driven out, and their shelters and belongings burned.
Hoover responds
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Death & disaster: 4 dead, 1,017 injuredAt least 69 police injured
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Franklin D. Roosevelt
Herbert Hoover
Party Democrat Republican
Home state New York Iowa
Running mate John Gardner Charles Curtis
Electoral votes 472 59
States carried 42 6
Popular vote 22,821,277 15,761,254
% of Popular vote 57.4% 39.7%
1932 Presidential Election
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A vote against Hoover = FDR win
Happy days are here againThe skies above are clear againSo, Let's sing a song of cheer again!
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A New Deal“I pledge you, I pledge myself, to a new deal for the
American people.” –FDR 1932
Relief, Recovery, Reform
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Depression/New Deal Vocab.First 100 days- special session of CongressAlphabet soup- New Deal legislationLame Duck Amendment- 20th Amend.
Pump priming-the theory that government spending projects can generate economic growth in a recession.
1st New Deal: 1933-19352nd New Deal: 1935-1936 (greater focus on reform)End of the New Deal: 1936-1939
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New Deal Vocab.Brains Trust—professors from Columbia Univ. who had
informal conversations about economic and social policy with President Roosevelt.
Black Cabinet—men and women who composed the first sizable representation of African Americans in white-collar posts in the federal government (i.e. Mary McCleod Bethune
Rexford Tugwell
Mary McLeod Bethune