Transcript
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1930s & The GreatDepression
Mr. Klein
Spring 2013
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Causes of the Depression
Historians and Economists Still DebateWhat was the REAL Cause of the
Depression
No one has the Right Answer
Most agree 4 factors contributed to theDepression .
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Four Factors:
1.Overly Easy Credit
2.Over Production / Loss of Global Markets
3.Uneven Income Distribution
4.Stock Market Crash
Causes of the Depression
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1. Easy Credit
Interest Rates Are Held Low by Govt
Loans easy and cheap to obtain
Installment purchases
Many go into debt orinvest borrowed money instock market
Causes of the Depression
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2. Overproduction / Loss of Global Markets
Businesses Manufacture More ConsumerGoods Than Can Be Sold:
Cars, Washing Machines, etc.
Only Needed ONE
By End of 20s, people who could afford
had one already.
Extra Inventory That Cant Be Sold in U.S.
Causes of the Depression
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2. Overproduction / Loss of Global Markets
European Exports Down
Tariffs 1922 Fordney-McCumber Tariff
Europe Raises Tariffs (Retaliate)
WWI War Debts
Causes of the Depression
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3. Income Disparities
Top 5% earned 1/3 of all income
Bottom 40% earned 1/8 of all income
Means millions of Americans cant affordnew products
Loose Credit helps drive consumerspending early in decade not late indecade
Contributes to problem of overproduction
Causes of the Depression
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4. Stock Market Crash
Stock Market Bullish during 20s
(Keeps Going Up and Up)
Almost EVERYONE invests
Buying on margin Stock Pooling
Causes of the Depression
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Stocks peak in July1929
Savvy Investors sell.
Black Thursday(October 24).
Black Tuesday(October 29).
Institutional
Investors sell
4. Stock Market Crash (cont.)
Causes of the Depression
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4. Stock Market Crash (Cont.)
Banks collapse
Banks invested in stock market lost that $$. Loans used by people to buy stocks could
not repay.
Banks close depositors lose everything. 5,000 banks in first 3 years 9 million people lose
savings
Run on banks.
Causes of the Depression
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4. Stock Market Crash (Cont.)
Business Suffers:
Businesses lose money in failed banks.
Cant get loans.
Consumers who lost $ cant afford goodsanymore
Forced to cut production means cut jobs.
Causes of the Depression
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President Hoovers Philosophy
No direct government help
Fear of Creating Permanent Bureaucracy
Handouts destroy Work Ethic and AmericanSpirit of Self-Reliance
Private charity should help individuals Private Charity cannot keep up People
turn to Govt after a year
Encourage Business.
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President Hoovers Actions
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President Hoovers Actions
Raising import taxes
Smoot-Hawley Tariff Act (1930)
Slows trade even more
Voluntary Cooperation by Business AND Labor
No layoffs or wage cuts
No strikes or demands for higher wages
Income Tax Cuts for All
Taxes so low, no real effect
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The Peoples Response
http://www.wingclips.com/movie-
clips/cinderella-man/im-stuffed http://www.wingclips.com/movie-
clips/cinderella-man/stealing-sausage
http://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promise
http://www.wingclips.com/movie-clips/cinderella-man/asking-for-money
http://www.wingclips.com/movie-clips/cinderella-man/im-stuffedhttp://www.wingclips.com/movie-clips/cinderella-man/im-stuffedhttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/asking-for-moneyhttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/breaking-my-promisehttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/stealing-sausagehttp://www.wingclips.com/movie-clips/cinderella-man/im-stuffedhttp://www.wingclips.com/movie-clips/cinderella-man/im-stuffedhttp://www.wingclips.com/movie-clips/cinderella-man/im-stuffedhttp://www.wingclips.com/movie-clips/cinderella-man/im-stuffedhttp://www.wingclips.com/movie-clips/cinderella-man/im-stuffedhttp://www.wingclips.com/movie-clips/cinderella-man/im-stuffedhttp://www.wingclips.com/movie-clips/cinderella-man/im-stuffed7/29/2019 1930s/Great Depression
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President Hoovers Actions
Public worksprograms
800 buildings 37,000 miles ofroads
Boulder Dam Project
ReconstructionFinance Corporation
Authorized $1.2 Billion to loan to banks,financial institutions, and businesses
Federal Home Loan Bank Act of 1932
Lowered mortgage rates and let farmers refinance toavoid foreclosure.
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The Peoples Response
Bonus Army
WWI Vets to getinsurance (bonus)payout in 1945
Want pay NOW (1932)
March on D.C.
Bill Fails
Occupy D.C. Gen MacArthur and 1,000
troops clear the city
3 dead
Th P l R
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The Peoples Response
Hoovervilles
Hoover Flags
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Farm Problems
Severe Drought GripsMidwest for a decade
Topsoil begins to becarried off by wind
Poor Plowingtechniques
Failed crops mean noroots to hold soil
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Dust Bowl
1930s Dust Bowl
North Dakota to Texas
Massive Dust storms
Lost topsoil = Nothing will grow
Farmers suffer
Eventual Solution:
Plant grass and trees
Cycle crops
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Dust Storms
Dust Pneumonia
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Okies
Frustrated Farmers Leave Midwest Head to California the Promised
Land?
Route 66
No jobs when get there - UNWANTED
The Grapes of Wrath
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Depression Entertainment
Writers and Singers Express Loss and
Struggle
John Steinbeck (Grapes of Wrath)
Woody Guthrie
Oklahoma singersings about common mansstruggle
People Want Escape!
- Swing Music
- Radio Serials
- Movies (80 million tickets a week)
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Franklin Delano Roosevelt
Former Gov. of NY
Enacted Programs tohelp individual Citizens
Wins 1932 Election in
Landslide Dems take WH and both
houses of Congress
The Hundred Days 1st 100 days in office
Implement New Deal
!
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New DealBanks are Back!
Bank Holiday
Stop runs on banks
Emergency Banking ReliefAct
Govt examines banks If solvent allowed to
reopen
Restore Confidence
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Banking Act of 1933
Federal Deposit InsuranceCorporation (FDIC)
Insure deposits up to $5,000($250,000 today)
Take away fear of losingmoney!
Depository banks can no
longer invest in securities(or sell them)
Known as Glass-SteagallAct
Existed until 1999
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Fireside Chats
Weekly RadioAddresses
Reassurance Restore trust
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Brain Trust
Presidential Cabinet andAdvisors
Differing beliefs and viewpoints
Cabinet members and leaders ofindustry
Frances Perkins
Sec. of Labor
First Woman Cabinet Member
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Black Cabinet
FDR Consults African-AmericanLeaders
Informal group of advisors manyappointed to New Deal Agency posts
47 total
Mary McLeod Bethune
Noted educator and founder of FLschool
Later appointed to NYA (National YouthAdministration) post
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The New Deal Alphabet Soup government Goal: Lower 25% Unemployment Rate
See chart on handout
CWA 4 million jobs building roads andairports
CCC single men get jobs planting trees
& improving parksin rural work camps TVA build dams and hydroelectric
power in Tennessee River Valley
FCA refinanced farm mortgages
AAA stabilized prices for farm products(limit production)
NIRA - Eliminate unfair competition setminimum wage
Short-term solution
N D l C i i
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New Deal Critics
1. New Deal Goes TOO FAR:
Huge expansion of government
Give the president too much authority
Like a Dictator
New govt spending = over-taxation
Who:
American Liberty League Business Leaders
Conservative Politicians
H P f G J b ?
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How to Pay for Govt Jobs?
Bottom rate also increases 400% - 1% to 4%
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How to Pay for Govt Jobs?
In addition to federal income taxes:
Corporate taxes up
Estate taxes up
State and Local taxes up
Employment taxes up
Modern economists agree that these taxincreases made problems worse by furthershrinking demand
Less household $$ = less buying of goods(http://www.econlib.org/library/Enc/GreatDepression.html)
N D l C iti
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New Deal Critics
2. New Deal Doesnt Go FAR ENOUGH:
Senator Huey Long (Louisiana)
Tax the Rich to Pay the Poor $5,000each year
Overtly Socialist (Share the wealth)
Fr. Charles Coughlin
Radio Broadcasts with huge audience
New Deal too business oriented
not enough for help for people
Wants nationalization of industry
2nd Ne Deal Programs
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2nd New Deal Programs
Social Security Act:
1st
Govt program to directly provide forfinancial security of citizens.
Funded via taxes on employers andemployees
Wagner Act (Natl Labor Relations Act)
Created after NIRA struck down
Secures collective bargaining rights
NLRB to oversee union activities
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Clashes with Supreme Court
Supreme Court Strikes Down Key New DealLegislation as Unconstitutional
AAA limits on farm output
NIRA minimum wage provisions
In all, 11 of 16 New Deal Programs that werechallenged were struck down
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Clashes with Supreme Court
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Clashes with Supreme Court
Supreme Court Strikes Down Key New Deal Legislation as
Unconstitutional
AAA limits on farm output
NIRA minimum wage provisions
Roosevelt proposes Judicial Procedures Reform Act
Appoint a new Justice for each one over 70 yrs old
court packing to gain approval for his programs
Separation of Powers issues
REJECTED by Democratic Congress
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Prohibition Repealed
December 1933
21st Amendment
Violation of personal
liberty
Revenue source
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Lasting Effects
New Deal Did Not End Great Depression
Depression lasted until WWII required massive production forwar effort
Did Give Hope and Help to Citizens
Resulted in Large Expansion of Role of Federal Govt inOur Lives
Social Security and FDIC still exist
Role of govt in our lives has continued to grow, evenafter Depression ended.
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