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THE GREAT DEPRESSION BEGINS

Photos by photographer Dorothea Lange

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SECTION 1: THE NATION’S SICK ECONOMY

Agriculture
Railroads
Textiles
Steel
Mining
Lumber
Automobiles
Housing
Consumer goods

As the 1920s advanced, serious problems threatened the economy while

Important industries struggled, including:

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FARMERS STRUGGLE

No industry suffered as much as agriculture
During World War I European demand for American crops soared
After the war demand plummeted
Farmers increased production sending prices further downward

Photo by Dorothea Lange

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CONSUMER SPENDING DOWN

By the late 1920s, American consumers were buying less
Rising prices, stagnant wages and overbuying on credit were to blame
Most people did not have the money to buy the flood of goods factories produced

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GAP BETWEEN RICH & POOR

The gap between rich and poor widened
The wealthiest 1% saw their income rise 75%
The rest of the population saw an increase of only 9%
More than 70% of American families earned less than $2500 per year

Photo by Dorothea Lange

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HOOVER WINS 1928 ELECTION

Republican Herbert Hoover ran against Democrat Alfred E. Smith in the 1928 election
Hoover emphasized years of prosperity under Republican administrations
Hoover won an overwhelming victory

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Young Hoover supporter in 1928

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THE STOCK MARKET

By 1929, many Americans were invested in the Stock Market
The Stock Market had become the most visible symbol of a prosperous American economy
The Dow Jones Industrial Average was the barometer of the Stock Market’s worth
The Dow is a measure based on the price of 30 large firms

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STOCK PRICES RISE THROUGH THE 1920s

Through most of the 1920s, stock prices rose steadily
The Dow reached a high in 1929 of 381 points (300 points higher than 1924)
By 1929, 4 million Americans owned stocks

New York Stock Exchange

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SEEDS OF TROUBLE

By the late 1920s, problems with the economy emerged
Speculation: Too many Americans were engaged in speculation – buying stocks & bonds hoping for a quick profit
Margin: Americans were buying “on margin” – paying a small percentage of a stock’s price as a down payment and borrowing the rest

The Stock Market’s bubble was about to break

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THE 1929 CRASH

In September the Stock Market had some unusual up & down movements
On October 24, the market took a plunge . . .the worst was yet to come
On October 29, now known as Black Tuesday, the bottom fell out
16.4 million shares were sold that day – prices plummeted
People who had bought on margin (credit) were stuck with huge debts

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By mid-November, investors had lost about $30 billion

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THE GREAT DEPRESSION

The Stock Market crash signaled the beginning of the Great Depression
The Great Depression is generally defined as the period from 1929 – 1940 in which the economy plummeted and unemployment skyrocketed
The crash alone did not cause the Great Depression, but it hastened its arrival

Alabama family, 1938 Photo by Walter Evans

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FINANCIAL COLLAPSE

After the crash, many Americans panicked and withdrew their money from banks
Banks had invested in the Stock Market and lost money
In 1929- 600 banks fail
By 1933 – 11,000 of the 25,000 banks nationwide had collapsed

Bank run 1929, Los Angeles

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GNP DROPS, UNEMPLOYMENT SOARS

Between 1928-1932, the U.S. Gross National Product (GNP) – the total output of a nation’s goods & services – fell nearly 50% from $104 billion to $59 billion
90,000 businesses went bankrupt
Unemployment leaped from 3% in 1929 to 25% in 1933

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HAWLEY-SMOOT TARIFF

The U.S. was not the only country gripped by the Great Depression
Much of Europe suffered throughout the 1920s
In 1930, Congress passed the toughest tariff in U.S. history called the Hawley- Smoot Tariff
It was meant to protect U.S. industry yet had the opposite effect
Other countries enacted their own tariffs and soon world trade fell 40%

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CAUSES OF THE GREAT DEPRESSION

Tariffs & war debt policies
U.S. demand low, despite factories producing more
Farm sector crisis
Easy credit
Unequal distribution of income

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SECTION 2: HARDSHIPS DURING DEPRESSION

The Great Depression brought hardship, homelessness, and hunger to millions
Across the country, people lost their jobs, and their homes
Some built makeshifts shacks out of scrap material
Before long whole shantytowns (sometimes called Hoovervilles in mock reference to the president) sprung up

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SOUP KITCHENS

One of the common features of urban areas during the era were soup kitchens and bread lines
Soup kitchens and bread lines offered free or low-cost food for people

Unemployed men wait in line for food – this particular soup kitchen was sponsored by Al Capone

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CONDITIONS FOR MINORITIES

Conditions for African Americans and Latinos were especially difficult
Unemployment was the highest among minorities and their pay was the lowest
Increased violence (24 lynchings in 1933 alone) marred the 1930s
Many Mexicans were “encouraged” to return to their homeland

As conditions deteriorated, violence against blacks increased

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RURAL LIFE DURING THE DEPRESSION

While the Depression was difficult for everyone, farmers did have one advantage; they could grow food for their families
Thousands of farmers, however, lost their land
Many turned to tenant farming and barely scraped out a living

Between 1929-1932 almost ½ million farmers lost their land

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THE DUST BOWL

A severe drought gripped the Great Plains in the early 1930s
Wind scattered the topsoil, exposing sand and grit
The resulting dust traveled hundreds of miles
One storm in 1934 picked up millions of tons of dust from the Plains an carried it to the East Coast

Kansas Farmer, 1933

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Dust storm approaching Stratford, Texas - 1934

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Storm approaching Elkhart, Kansas in 1937

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Dust buried cars and wagons in South Dakota in 1936

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HARDEST HIT REGIONS

Kansas, Oklahoma, Texas, New Mexico, and Colorado were the hardest hit regions during the Dust Bowl
Many farmers migrated to California and other Pacific Coast states

Boy covers his mouth to avoid dust, 1935

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Photographer Dorothea Lange captures a family headed west to escape the dust storms

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HOBOES TRAVEL AMERICA

The 1930s created the term “hoboes” to describe poor drifters
300,000 transients – or hoboes – hitched rides around the country on trains and slept under bridges (thousands were teenagers)
Injuries and death was common on railroad property; over 50,000 people were hurt or killed

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EFFECTS OF DEPRESSION

Suicide rate rose more than 30% between 1928-1932
Alcoholism rose sharply in urban areas
Three times as many people were admitted to state mental hospitals as in normal times
Many people showed great kindness to strangers
Additionally, many people developed habits of savings & thriftiness

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SECTION 3: HOOVER STRUGGLES WITH THE DEPRESSION

After the stock market crash, President Hoover tried to reassure Americans
He said, “Any lack of confidence in the economic future . . . Is foolish”
He recommended business as usual

Herbert Hoover

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HOOVER’S PHILOSOPHY

Hoover was not quick to react to the depression
He believed in “rugged individualism” – the idea that people succeed through their own efforts
People should take care of themselves, not depend on governmental hand-outs
He said people should “pull themselves up by their bootstraps”

Hoover believed it was the individuals job to take care of themselves, not the governments

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HOOVER’S SUCCESSFUL DAM PROJECT

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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Any dam questions?

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HOOVER TAKES ACTION: TOO LITTLE TOO LATE

Hoover gradually softened his position on government intervention in the economy
He created the Federal Farm Board to help farmers
He also created the National Credit Organization that helped smaller banks
His Federal Home Loan Bank Act and Reconstruction Finance Corp were two measures enacted to protect people’s homes and businesses

Hoover’s flurry of activity came too late to save the economy or his job

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BONUS ARMY

A 1932 incident further damaged Hoover’s image
That spring about 15,000 World War I vets arrived in Washington to support a proposed bill
The Patman Bill would have authorized Congress to pay a bonus to WWI vets immediately
The bonus was scheduled to be paid in 1945 --- The Army vets wanted it NOW

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BONUS ARMY TURNED DOWN

Hoover called the Bonus marchers, “Communists and criminals”
On June 17, 1932 the Senate voted down the Putnam Bill

Thousands of Bonus Army soldiers protest – Spring 1932

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BONUS MARCHERS CLASH WITH SOLDIERS

Hoover told the Bonus marchers to go home– most did
2,000 refused to leave
Hoover sent a force of 1,000 soldiers under the command of General Douglas MacArthur and his aide Dwight Eisenhower

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AMERICANS SHOCKED AT TREATMENT OF WWI VETS

MacArthur’s 12^th infantry gassed more than 1,000 marchers, including an 11-month old baby, who died
Two vets were shot and scores injured
Americans were outraged and once again, Hoover’s image suffered