Essential Questions:




*Should people, businesses, and governments be able to buy goods and services using credit?

*When does investment into the stock market, and other ventures, become too risky?

*To what extent should the government be involved in economic practices?

*What is the appropriate role for government in citizens' lives?


*What was the human impact of the Great Depression?


Great Depression - Causes

The time known as the Great Depression is traditionally seen as beginning with the Stock Market Crash of 1929. This event in American & World History was catastrophic! To understand better the importance of the United States role in the world economy, it is important to view the underlying causes. In order to understand the disease, you must look at the symptoms of the patient.

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Symptom #1 - The Plight of the American Farmer-


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Farmers' Problems Graph
Farmers' Problems Reading

Tractors

Plows

Harvester/

Thresher

Combine

Grain

Elevator

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More Modern Grain Elevator

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-

1928 Election Hoover or Smith?

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Republican’s chose Herbert Hoover to run as the next presidential candidate when Calvin Coolidge surprised the country by not running for re-election. Hoover had been a trusted member of Coolidge’s cabinet serving as the Secretary of Commerce but was also an engineer who had consulted all over the world. After World War I, he had directed famine relief and fed millions of European who had been affected by the war. To many Americans, the mild mannered Hoover was a humanitarian but also a man who had made his fortune in business through hard work. Hoover came from a rural Protestant town in Iowa.


His Democratic opponent Al Smith was the total opposite. Smith was the son of Irish Catholic immigrants and had grown up in New York City. During the beginning of this career, he received support from corrupt representative of Tammany Hall political machine( the same organization we studied with Boss Tweed - it would not be totally cleaned up until Mayor Fiorello La Guardia became mayor of NYC 1934). Smith attracted the vote of the “new immigrants” from southern Europe who were predominantly Catholic and had settled in the bigger cities.


The two men couldn’t be more different. Hoover believed in “rugged individualism” a theory that if anyone just worked hard enough, they could be successful. Hoover continued the policy set by Harding and Coolidge to practice a “hands-off” approach to the American economy. Smith on the other hand, wanted to government assistance for farmers and stronger government involvement in business regulations. Smith even advocated for government ownership of some industries like electric power companies.




Symptom #2 - A Bad Case of Consumerism for Durable Goods -

Hoover Vacuum Ad 1920s
Hoover Vacuum Ad 1920s

What is a durable good? How did they pay for them? What is meant by a "consumer culture"? See pp. 632-633.

List examples of durable goods.

Symptom #3 - Get Rich Quick Fever -

How did Americans behave on the eve of disaster?Inside Story
For many people in the 1920s, investing in the stock market was one big joyride. Week after week, month after month, stock prices steadily rose. After a while, it seemed like making money on Wall Street was a sure thing.

With so many fortunes being made, it was easy to ignore the warning signs that began to appear in the fall of 1929. The economy had began to slump. Consumers weren’t buying as much. Products were piling up on factory floors. A handful of experts whispered that trouble lay in store for the stock market.

On Thursday, October 24, 1929, those whispers became reality. By the end of the day, the value of the stocks traded on the New York Stock Exchange had plunged by 9 percent. Years of investment gains—billions of dollars—were wiped out in a few hours.

Major banks and stockbrokers tried to rally the market on Friday. They bought large numbers of stocks, hoping to keep prices from dropping still more. Over the anxious weekend of October 26 and 27, stockbrokers worked quietly to reassure investors. They made phone calls and wrote letters to major investors urging them to buy stocks when the markets reopened on Monday. But nothing could answer the questions on everyone’s minds. On Monday morning, which way would prices go—up or down? Were the good times about to come to an end?

1. What economic warning signs began to appear in the
fall of 1929?

2. Why do you think the economic warning signs
were ignored?

More Americans "playing" the Stock Market. Read pp. 673-674

Write a short summary explaining - How does the Stock Market work?


What does it mean to "Buy on the Margin" p. 675.

Symptoms of Economic Problems


Speculation & the CrashCalm Before Storm.PNG


Symptom #4 - Protective Tariff Syndrome -

Fordney-McCumber Tariff enacted to "protect" American farmers. Smoot-Hawley Tariff was passed in 1930 to ensure that European goods weren't sold cheaper in the US. Did this tactic work? Oh yeah, What is a tariff, anyway?

Tariff Explanation

The Stock Market Crash!
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Overview of Stock Market Crash



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Stock Market Crash
Stock Market Crash 2*likes*


The Crash 1929
Prosperity - Before the Crash
Problems - After the Crash
  • Gross National Product rose 30%
  • Explosive Growth of auto industry
  • Corporate profits swelled
  • Low unemployment
  • Welfare Capitalism
  • Workers purchased new products
  • Stock Market Performance
  • Few People Benefited from the business boom
  • Many people used credit to buy goods
  • Buying fell
  • Stocks sold on the margin
Trading Places - panic on Wall Street



Riding the Rails
Hobo

Riding the Rails Part 1
arked Houses Add comments to the left side of 2 Col Notes - Americans Face Hard Times


Unemployment
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Bank Failures




Bank failures - With the crash of the stock market came a a banking crisis, Americans ran to withdraw their money from banks. Banks were emptied of their cash reserves by these bank runs. However, the problem was even larger due to the fact that many banks had also made loans to stockbrokers who were now broke due to the Stock Market Crash. The banks had to absorb the debts due to their unwise decisions. Even worse, many banks had bought stock in companies that were now bankrupt due to the crash. In 1929, 659 banks failed. By 1932, 5,000 banks had closed.


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How did declining income affect Americans' spending habits?


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Hooverville

Life in a "Hooverville". - Due to dire circumstance of the US economy (see graphs above) many families lost their houses, apartments and were forced out onto the streets. With nowhere else to go, shanty villages like this sprang up all across the United States.More Details - Hoovervillesmore Hoovervilles
GD WeeblySeattle Hoovervilles

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The Dust Bowl

Nature adds insult to injury in the Midwest

Seen below:
"Migrant Mother" by Dorothea Lange
follow the link to learn more about her story here
Dorothea Lange: Migrant Mother California
Dorothea Lange: Migrant Mother California





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Photo Gallery - Dust Bowl

Dust Bowl Map 1934

Dust Bowl Map - DROUGHT CONTINUES UNTIL LATE 1930S!


Woody Guthrie "I Ain't Got No Home in this World Anymore"

1920s-Great Depression Questions

APRIL VACATION - EXTRA CREDIT ASSIGNMENT


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real image FDR Inauguration

Hoover's Presidency - Hoovervilles
Hoover builds the Hoover Dam
Bonus Army
Hoover Dam
Smoot Hawley Voodoo Econ
Hoover's Solutions
Roosevelt's Solutions


Hoover Cartoon #1
Hoover Political Cartoon #2

Interpreting Maps - Compare the maps
  1. Map p. 674 - Election of 1928
  2. Map p. 699 - Election of 1932
What was the mood of the majority of Americans in the election year of 1932? Can you relate this to "Cinderella Man" boxer James Braddock? Or the "Forgotten Man" seen below - painting by Maynard Dixon - 1934. Read the Inside Story:
How did it feel to be a forgotten victim of the Great Depression? Franklin Delano Roosevelt seemed to know. In 1932 Roosevelt was one of several candidates seeking the Democratic presidential nomination. Some critics dismissed him as “an amiable man… without very strong convictions.” But in an April 1932 speech, Roosevelt took a strong stand. He criticized the policies of President Hoover as ineffective and wrongly directed at only the “top of the social and economic structure.” By contrast, Roosevelt pledged to help the “forgotten man at the bottom of the economic pyramid.” Only by helping these people, Roosevelt claimed, would the nation’s economic ills be cured.

Roosevelt’s speech included few specific proposals. Yet that did not seem to matter to the Depression-weary citizens reading his words or watching the newsreels at the movie houses. Here at last was someone who understood the plight of ordinary citizens. He remembered them, he cared about them, and he seemed to understand that their fate was key to the nation’s recovery.

The personal connection Roosevelt established was something few Americans felt they had with Herbert Hoover. It would serve Roosevelt well in the months and years ahead.
How did FDR promise to help American voters? What qualities did FDR posses that attracted voters?
The Forgotten Man Credit: Brigham Young University Museum of Art
The Forgotten Man Credit: Brigham Young University Museum of Art

Inside Story

FDR's Election

Inaugural Speech March 4, 1933
"First of all, let me assure my firm belief that the only thing we have to fear is fear itself--nameless, unreasoning, unjustified, terror which paralyzes needed efforts to convert retreat into advance" "The nation asks for action and action now. We must act and act quickly"

"I can assure you it is safer to keep you money in a reopened bank than under the mattress."
1st Fireside Chat text here

Fireside Chats help Americans regain confidence
Fireside Chats help Americans regain confidence

FDR speaking to America
FDR speaking to America

Roosevelt's fireside chats gave the America people new hope. The broadcasts created the impression that the head of a vast and powerful nation had the people's interests at heart and was working to improve their lives. FDR gave his first fireside chat on March 12, 1933 on the topic of Banking.Link

List of Topics for Fireside Chats

First 100 Days-
Program & Policies of the New Deal put into practice - video here
FDR's First Term
http://home.earthlink.net/~gfeldmeth/chart.newdeal.htmlNew Deal Agencies
WPA in Massachusetts
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Why does everyone look so happy?




Map of TVA today
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agencies chart.jpg

Answer the following questions using the agency chart above;
1. How did Roosevelt deal with the problem of failing banks?
2. How did Roosevelt provide for the elderly population of the U.S.A.?
3. What programs helped the average worker? explain.
4. What programs helped American Citizens own a home?
5. Of the programs listed on the chart, which do you believe are most important today?



Who opposed the New Deal & Why? pp. 704-705

Trouble for the New Deal?


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(see also cartoon on p..704)
New Remedies Cartoon link

Opposition from the courts - Schechter Poultry Company vs. United States 1935The US Supreme Court unanimously invalidated the National Industrial Recovery Act on the grounds that it delegated excessive authority to the president and regulated businesses that operated wholly within individual states.
The NIRA Act was enacted in 1933 was one of the many gov't agencies created by President Roosevelt & passed by the US Congress in the 1st 100 days of being in office. As you recall, it was part of FDR's "Relief, Recovery, & Reform" strategy of ending the Great Depression. FDR followed the philosophy of prominent economic, John Maynard Keynes who believed that the federal gov't should spend money in times of economic crisis so that the flow of money would jumpstart the economy FDR was a follower of Keynesian Economics.

The Schechter Poultry Company was cited by the NRA - National Recovery Administration, the watchdog group employed by the federal govt to enforce federal law in violation of the federal law for minimum wage. In 1935, the Schechter Case was presented to the US Supreme Court who ruled in favor of Schechter. The federal govt had no jurisdiction in the business policies of the Schechter Poultry Farm due to the fact that they had not crossed state lines. In other words, Schetcher Poultry Co was not subject to federal regulations because it's products stayed within the state boundaries of the state of New York.


The next decision to come was the United States v. Butler. This decision struck down the Agricultural Adjustment Act
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In 1936, the US Supreme Court ruled that Congress had violated the Constitution when it levied a tax to pay farmers for cutting back production because it had taken " Money from one group for the benefit of another" In that same session, the Court ruled that under the New Deal the federal govt had gone beyond the limits of constitutional authority and three other New Deal laws were declared unconstitutional. Roosevelt complained that the Supreme Court decisions reflected a "horse and buggy" or an old fashioned definition of what the Constitution allowed.

schechter decisionSupreme Court Decisions



"We Do Our Part" To show they were following NRA codes, business people stamped the symbol on their product and posted it in store windows, on factory doors, and on delivery trucks. Huge parades were held to urge Americans to buy only NRA stamped American made products. Soon the NRA regulations extended from hair cremes, to shoulder pad, to dog leashes. The codes were so imposing that soon businesses began to "work around them". Henry Ford refused to comply with the codes from the beginning. Labor leaders complained that the NRA kept wages too low. The NRA did help to stop the price-cutting and wage-cutting in large industries, but enforcement of the numerous codes became very difficult to enforce.

2nd New Deal

Social Security Act -

  • What does this legislation mean?
  • Who would be affected by this legislation?

Wagner Act (NLRB) p. 711-

  • What does this act say?
  • How did this act change labor relations in the US?
General Motors Strike 1937 - Looks a lot different than previous strikes...Why?
General Motors Strike 1937 - Looks a lot different than previous strikes...Why?





The Growth of Organized Labor
How did the Wagner Act 0f 1935 affect labor unions?? View the picture and discuss the tone/attitude of the movement.

external image medium.JPG?1320777072FDR in 1936re-election

Was the economy much better? Why was he so popular with Americans?


FDR & the US Supreme Court Packing Plan p. 715

Is he threatening the checks & balances of the 3 branches of govt? After reading the Supreme Court Packing Plan, analyze one of the political cartoons.

FDR's Court Packing Plan - 1936
FDR's Court Packing Plan - 1936




US - Economic Recovery -

By early 1937 some of FDR's top advisers believed that many of the New Deal programs to stimulate economic growth could wind down. They believed that the federal gov't should reduce spending public works and employment programs & let the private sector function without federal $$$

"this was the moment............. to strip off the bandages, throw away the crutches, and see if American private enterprise could stand on its own feet"

Henry Morganthau Secretary of Treasury 1937




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Good Timing? - In early 1937, President Roosevelt agreed that the time was right to cut government spending. Congress reduced WPA programs and allocated no funds for new programs. At the same time, some other big things were happening. First, the Federal Reserve Board raised interest rates which hurt the manufacturers who were trying to secure loans and update equipment & assembly lines. This caused the already struggling companies to cut back on production. Second, the new social security taxes on employers and employees kicked in & left less money for business and consumer spending. A combination of reduced government spending & the inability of business to stand up on its own caused another economic recession.


FDR’s New Deal –Was it Successful?


RELIEF
Gave people hope that gov’t would help
when they were really in need
. “Forgotten Man” see p.698 & 729
(FERA – Fed Emergency Relief Agency
– direct aid)
+Relief to truly needy

+People became too dependent on gov’t aid
RECOVERY
Created some temporary agencies to
create work & projects w/ lasting effects
+majority of jobs temporary although some agencies
were long- lasting TVA, SEC
+Many lasting visible projects of New Deal
*Mt. Rushmore
  • Photos of Gr Depression
  • Breakers/ wall – Revere & Winthrop Beach

Many schools, zoos, museums etc…………..
REFORM
Bank Reforms – FDIC

Social Security Act -

Wagner Act –

Fair Labor Standards Act -
+restored confidence in banking so tha
t Americans would use

+taxes collected for the support of the elderly
(had to be 65yrs even though most Americans died at 59
)disabled, unemployed

+Right to collective bargaining w/ to petition employers
for discussion of job problems

+ established a minimum wage (lowest wage an employe
r could legally pay employee per hour) Set work week at
44 hours per week & over time rate at Time & 1 half.


Analysis of New Deal


Great Depression Speakers - Joe & Sal - Visit May 5th 2014 Read below the answers to the questions emailed to our guest speakers - If you have more questions, they are standing by to answer more.

Sal's Words of Wisdom " You should enjoy your life, but you still must learn to handle money. Be frugal and spend money wisely. The Depression taught us to prepare and how not to squander opportunity. Know the value of money and hopefully you will never have to endure the conditions of the Great Depression. Since those times, we have gone through at least 47 recessions, and without a doubt we will have another depression. We cannot emphasize enough the importance of family, friends and education"




The United States had returned to the policy of Isolationism, right? The United States had not joined the League of Nations for fear of entering into entangling alliance that would lead to foreign wars. Look at the diagram & explain it in your own words. Would you consider this as isolationist?