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Chapter 22: The Great Depression Begins

Chapter 22: The Great Depression Begins

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Chapter 22: The Great Depression Begins

Section 1: The Nation’s Sick Economy Economic Troubles on the Horizon

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n the 1920s, most of the Americans were poor so they could not earn a decent living. Moreover, industries struggled and farmers grew more crops than they could sell. Therefore, both consumers and farmers were gradually going deeper into debt. Industries in Trouble The prosperity of the late 1920s was in trouble. The key basic industries, such as railroad, textiles and steel just barely made profit. Railroad lost business to the new transportation: trucks, buses and private automobiles. During wartime, mining and lumbering were strong and in high demand. However, after the war, they were no longer in high demand because of the affect of the war. The new invention of new form of energy, including hydroelectric power, fuel oil, and natural gas made the coal mining making less profit. Farmers Need a Lift After World War I, crops prices declined by 40%. Farmers’ life became more difficult. They tried to make more crops, hoping that they could sell more but the prices even decreased more than before. Farmers who had

Figure 1: Farm equipment is auctioned off in Hastings, Nebraska Chapter 22: The Great Depression Begins

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Chapter 22: The Great Depression Begins gone into debt, could not be able to pay off their loans. Many farmers lost their farms and their properties were seized as payment for the debt. Auctions were held to regain some of the bank’s losses. Congress passed the McNaryHaugen bill in order to help farmers and called for federal price – supports. However, President Hoover vetoed the bill twice and said that: “Farmers have never made money. I don’t believe we can do much about it”.

Figure 2: Evacuation Sale Consumers have less money to spend The farmers’ income decreased so it caused that they were buying less because of the rising prices, low wages and unbalance distribution of income. Production expanded faster than wages, widened the gap of rich and poor. Living on Credit Many Americans were buying on credit. They only paid monthly payments, which included interest charges. People who engaged in credits left with huge debts and they started to eliminate their spending. Uneven Distribution of Income The rich people got richer and the poor people got poorer. Many people did not have money to buy up-to-date products. 70% of the nation’s families had no saving money.They earned less than $2,500 per year.

Figure 3: Uneven Income Distribution, 1929 Chapter 22: The Great Depression Begins

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Chapter 22: The Great Depression Begins

Hoover Takes the Nation

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ven though the economy was going down, the election of 1928 took place in an “appearance of prosperity” circumstance. Republican Herbert Hoover and Democrat Alfred E. Smith were two candidates that involved in this election. The Election of 1928 Hoover was a mining engineer from Iowa who had never run for public office. Smith was a outstanding politician who had experienced four times as a governor of New York. However, lots of Americans believed that Hoover would bring them to “the final triumph over poverty than ever before”. Most of them favored Republican leadership. As a result, it was an overwhelming victory for Hoover.

Figure 4: Herbert Hoover’s Quote

Figure 5: The Election of 1928’s Map

Chapter 22: The Great Depression Begins

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Chapter 22: The Great Depression Begins Dreams of Riches in the Stock Market At that time, many people still could not recognize the economic’ weaknesses and they thought that the market would never drop. Therefore, the stock market was stand for the symbol of prosperity. At that time, Dow Jones Industrial Average was mostly used as a system that measures the wealth of stock markets. At the beginning of 1920s, stock prices were sharply increasing. People then began to take advantage of it and they rushed to buy stocks and bonds than ever before. Several investors were really wealthy. However, there were still some people who were hoping to become richer through owning stocks. Moreover, many people were engaged in speculation and buying on margin. Those rising prices did not actually indicate the company’s wealth. Furthermore, if the value of stocks declined, people would not be able to pay off their loans.

Figure 6: Stock Market Before and After Black Tuesday’s Graph The Stock Market Crashes In September of 1929, stock prices peaked and then it dropped. This had threatened lots of investors and the stock market had yet nearly come to the end. On October 29, 1929 – now known as Black Tuesday, shareholders created a huge sell-off with no buyers. A number of 16.4 million of stocks had crashed. People who bought stocks on credits were left with huge debts and others lost most of their savings.

Figure 7: The Black Tuesday Journal Chapter 22: The Great Depression Begins

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Chapter 22: The Great Depression Begins Bank and Business Failures The stock market crash is considered as a beginning of the Great Depression and the collapse of American economy. Many people were panicked by the crash and they withdrew their money from the banks. However, they could not get their money back because banks were closed and failed after investing into stock market. Moreover, the government did not protect bank accounts so that millions of people lost their savings. Between 1929 and 1932, the gross national product (GNP) was dramatically decreased (from $104 billion to $59 billion). There were about 90,000 businesses that went bankrupt. Millions of people had lost their jobs. Those with jobs faced pay cuts and reduced hours.

Figure 8: People were waiting for the bank to open so that they could withdraw their money

Chapter 22: The Great Depression Begins

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Chapter 22: The Great Depression Begins Worldwide Shock Waves Great Depression was a global event and it also affected other countries’ economy around the world. Unemployment rate was soared and several European countries had to suffer through high war debts. It also limited American from importing European goods. In 1930, Congress passed the Hawley – Smoot Tariff Act in order to restrain American from involving in foreign competition. However, this act didn’t help anything. In contrast, it provoked a wave of foreign retaliatory and world trade got worse and failed for more than 40 percent. Figure 9: Trade Wars Causes of the Great Depression Great Depression was the worst economic crisis in the U.S history and there were several factors which played a role in causing this serious problem such as: reduction of foreign markets, farm problems, income disparity and depend mostly on credit and having no awareness of risks. Finally, the government eliminated the crisis by keeping the interest rates low so that it would make easier for company

Figure 10: Depression Indicators Chapter 22: The Great Depression Begins

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Chapter 22: The Great Depression Begins

Section 2: Hardship and Suffering During the Depression The Depression Devastates People’s Lives

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nemployed rate was soared during the Great Depression. However, it also brought hardships, hunger and sickness to people’s life. Depression in city: During the great depression period, people in the cities had a hard time dealing with the depression. People lost their jobs, they were abandoning from their home and most of them were homeless. Homeless people had to live in a very hard condition, they junked together in boxes and search garbage for foods. Homeless people built up place to stay from old abandon cars or they used carton boxes and tin woods, form small, little towns called shantytowns. Because people were have to suffer for food, charity organizations were established. They opened soup kitchens, which offering low cost food. And a very common charity food provide place at that time called breadline, lines of people waiting to receive food provide by charitable organization or public agencies. At the same time, African Americans and Latinos were suffered with jobless, they had to compete with whites for Figure 11: Two men were searching for food jobs and they got really low wages. And in country side thousands of them lost their land but their land their lives are still better than whose were living at the city because they could plant their own crops to feed their family.

Chapter 22: The Great Depression Begins

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Chapter 22: The Great Depression Begins

Figure 12: Things that happened on the street during the Great Depression The Dust Bowl: Decades ago, wheat was the best selling crop and it was really expensive. So farmers tried to purchase more lands just to plant wheat for sell. But in 1930,farmers’ crops where all made crop. So the number of wheat were overload and the price of wheat went down. Farmers started to abandon there farmland. Plowing had removed the thick layer of prairie grasses on top, but no one recover it. Years later, the land got exhausted and no longer suitable for farming anymore. And when there’s not enough plants and grass to hold the soil. In 1934- 1936, natural disasters spread throughout the United States. In 1934, a windstorm came and blew away the topsoil to the South central cities, it destroyed the land there and the air got polluted and unsuitable to live there anymore. People had to migrate to the West. This event was call the Figure 13: Dust Storm near Beaver, Oklahoma Dust Bowl.

Chapter 22: The Great Depression Begins

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Chapter 22: The Great Depression Begins

Figure 14: The Dust Bowl’s Map :

Effect on American Family During the Great Depression, American family was affected in many circumstances. American believed in traditional values and family unity. When money was tights, they stayed and entertained at home, as playing board games. However, many farmers lost their homes and lands. Weekly payment was $2.39 per family Unemployment One of the most events in the Great Depression is unemployment. Businesses and factories had to close their doors because nobody buys their products. In additions, the government could not hep these businesses to pay their debts, so the employees left out where they worked. Not only men were unemployed, Figure 15: Dorothea Lange's –Migrant Mother Chapter 22: The Great Depression Begins

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Chapter 22: The Great Depression Begins but also women lost their job. There were approximately 12, 830,000 people who were unemployed in United States. Men walked in the street to seeking for job. Between 1929 and 1933, wage income for workers who were luckily able to keep their jobs fell almost 43%. Because federal government did not pay cash and provide food to the poor; about 300,000 transients wandered the country and sleeping under the bridges.

Figure 16: Unemployment’s Chart during Great Depression

Figure 17: People who were unemployed and tried to look for a job at Employment Agency

American Women and Children Suffered Their Hardships. Child-welfare programs were shut down. 2,600 schools were closed and 300,000 students were out of school. They canned food and sewed clothes. Some women worked outside though these jobs were low-paid. This led to their resentment. Married women were refused to be hired as teachers.Teenagers looked for a way out of poverty by hopping aboard America’s freight trains. Many parents could not raise their children, so they gave them to people who are able to take care for them.

Chapter 22: The Great Depression Begins

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Chapter 22: The Great Depression Begins

Figure 18: Girls of Lincoln Bench School study their reading lesson Social and Psychological Effects During the Great Depression, suicide rate increased 30% as normal times because people could not endure the hunger and illnesses. Adults stopped going to doctor because they could not afford it. Young people gave up their dreams. People showed their kindness to their neighbor and they also gave food to the needy.

Figure 20: Suicide Death by Ages’ Chart Chapter 22: The Great Depression Begins

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Chapter 22: The Great Depression Begins

Section 3: Hoover Struggles with the Depression Hoover Tries to Reassure the Nation

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fter the stock market crash in October 1929, President Hoover declared “Any lack of confidence in the economic future….is foolish”. In his view, Americans should remain optimistic and carry on their job as normal. Americans believed depressions were normal part of business, after periods of growth would come periods of depression. Hoover’s philosophy: President Hoover believed that one of government’s chief roles was to cooperate between competing groups and interests. If business and labor were in conflict, government should step in and take action. Americans valued “rugged individualism” – people should succeed through their own effort. They should take care of themselves rather than waiting for the government to bail them out. Hoover believed a vast federal bureaucracy for needy people would be too expensive, this response frustrated poor Americans. Hoover takes cautious steps: Soon after the stock market crashed, President Hoover called together other professionals to try and find solutions for the economics’ crisis. He asked employers not to cut wages or fire Figure 21: “Hoover Prosperity” workers. He also asked labor leaders not to go on strike. He created organizations to generate contributions to the poor. But none of his actions made a difference, the economy was still shrinking, and unemployment was rising. Most companies went out of business, public kitchens were a common sight, and shantytowns grew everywhere. Chapter 22: The Great Depression Begins

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Chapter 22: The Great Depression Begins

Figure 22: Public Soup Kitchen Breadline Boulder Dam: One of Hoover's projects actually made a difference. Boulder Dam (later called Hoover Dam) was Hoover's idea to minimize federal intervention. Hoover proposed to finance the dam's construction by using profits from the sales of electric power the dam would generate. By the time the project was approved by Congress, Hoover had been elected as President. Boulder Dam is the world's tallest dam and second largest (726 ft. height, 1224 ft. long). Besides providing electricity and controlling flooding, it also provided regular water supply for California's enormous agricultural economy.

Figure 23: The Boulder Dam Chapter 22: The Great Depression Begins

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Chapter 22: The Great Depression Begins Democrats win in 1930 Congressional Elections: Due to the declined of the economic, many people turned against Hoover and the Republicans. In the 1930 Congressional Elections, the Democrats took advantage and win more seats in the Congress. As a result, the Republicans lost control of the House of Representatives. Many Americans expressed their anger of the Depression in numerous ways: some farmers burnt their crops and spilled milk on the highway rather than selling at a low price. Many refused to work on their farm and some blocked roads to prevent food from getting to the markets. When Hoover became President, he promised “A chicken in every pot” but couldn't keep his promise. People began calling shantytowns “Hoovervilles”, newspaper they wrapped around themselves “Hoover blankets”, empty pockets turned inside out were “Hoover flags”. Many also called Hoover a cold, heartless leader. Despite criticism, Hoover refused to support federal welfare for the people.

Figure 24: Democratic New Year’s Eve Cheer Chapter 22: The Great Depression Begins

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Chapter 22: The Great Depression Begins

Hoover Takes Action

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n Hoover’s view, Boulder Dam was a model of how the government could encourage cooperation. He tried to relieve the depression by negotiating agreements with small companies. For example: he backed the creation of the Federal Farm Board, an organization of farm cooperatives, intending to raise crop prices. He also persuaded banks to establish the National Credit Corporation, which loaned money to small banks to prevent them from bankruptcy. Direct Intervention: By late 1931, many people began to realize that these attempts had failed to turn the economy around. In 1932, Hoover signed into law the Federal Home Loan Bank Act, which lowered mortgages rates for homeowners and allowed farmers to refinance their loans. Hoover’s most ambitious effort was the Reconstruction Finance Corporation (RFC) , which authorized $2 billion for emergency financing for banks, insurance companies, railroads and large businesses. Many critics argued that the program only benefits the companies and the poor still needed direct help. In the first 5 months, the RFC loaned more than $805 million to businesses but failures continued.

Gassing the Bonus Army In 1932, between 10,000 and 20,000 WWI veterans arrived in Washington D.C and they called themselves the Bonus Army. The Bonus Army came to the capital to support the Patman Bill, which authorized the government to pay a bonus to WWI veterans who had not been paid enough during the war. Congress approved this bonus in 1924, which only agreed to pay in 1945 in the form of cash and life insurance. But Congressman Wright Patman believed that the money, average $500 per soldier should be paid immediately. President Hoover opposed it however he provided Chapter 22: The Great Depression Begins Figure 25: The Bonus Army

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Chapter 22: The Great Depression Begins them shantytown and food supplies. On June 17, the Senate voted down the Patman Bill. Hoover ordered the Bonus Army to leave. Most did, but nearly 2000 remained until their bonus was paid. Worried that the remaining group could become violent, President Hoover decided the Bonus Army should be disbanded. On July 28, 1000 soldiers came to force the veterans out. The group of soldiers gassed more than 1000 people, killing an 11-month-old baby and blinded an 8-year-old boy. Two people were shot and many were injured. Many Americans were outraged by how the President treated the veterans. This event caused President’s Hoover’s reputation and image.

Conclusion During the 1920s, because of many reasons and Americans viewed stock market as a symbol of prosperity, lots of Americans rushed into buy stocks without foreseeing the high risks. On October 29th, 1929 many shareholders sold their stocks but without any buyers. Many were left with debts and it pulled the economy down. That time was called the Great Depression. Great Depression brought hardships, hunger and sickness to several people. Moreover, unemployment rates were soared. In 1934, the Dust Bowl came along and swept away many houses. As a result, families lost their home so that they migrate to the West. President Herbert Hoover tried many ways but none was successful. Moreover, his image was damaged by his order of gassing the Bonus Army. He later become one of the worst presidents in US history.

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Chapter 22: The Great Depression Begins

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Chapter 22: The Great Depression Begins 

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The Great Depression