Contents Section 1: - Economic Troubles on the Horizon - Hoover Takes the Nation - The Stock Market Crashes - Financial Collapse
Section 2: - The Depression Devastates Peopleâ€™s Lives - The Effect on the American Economy
Section 3: - Hoover tries to Reassure the Nation - Hoover Takes Action - Gassing the Bonus Army
THE GREAT DEPRESSION BEGINS SECTION 1 : Economic Troubles on the Horizon Industries in Trouble A lot of industries got hit strongly after the WWI which was giving them huge profits. Railroads, textiles and steel industry couldn’t make much profit after the war as no more supplies are moved as much as war time and they didn’t make as much weapons. Mining and lumbering, expanded during wartime had no more high demand just as other industries. Coal mining industry decreased hugely with new resources: hydroelectric, fuel, natural gas. Construction, automobiles, consumer goods and other industries related fell dramatically. Farmers need a lift Farmers were in a huge trauma as well. They loaned money during WWI and farmed as crop demand was high during war, but demand fell sharply after war, and had to face 40% decrease in crops’ price. Farmers produced more crops in hope of selling more, but resulted more depressed prices. As a side effect to this, banks start to fall with unpaid loan from farmers. As the situation becomes a serious problem, Congress helps with McNary-Haugen bill: federal pricesupports for wheat, corn, cotton and tobacco, where government buys products and sells abroad.
Consumers had less to spend Life was worse for the consumers. Products’ costs go up fast compare to their wages, and earnings were unpredictable. Great depression widened the gap between rich and poor. Living on credit Life seemed to get better with the new credit system. Large number of consumers bought products by credit, which is an arrangement that says consumers agree to buy now and pay later. However, debts got bigger in fast rate as they couldn’t pay back on time that consumers couldn’t afford to buy products anymore. Uneven Distribution of Income Gap between rich and poor were enormous. Rich people got incredibly rich, poor people couldn’t even afford their housing and food. Half of the homes in a city couldn’t afford electricity or furnace for heat, 70% of family earned $2,500 a year, but even if you earned double that money, they couldn’t afford most of household furniture.
The nation’s sick economy: Hoover takes the nation: 1. The election of 1918 Herbert Hoover wanted to against Democrat of Alfred E. Smith. Americans wanted a republican leader led them back to prosperity and Hoover was a mining engineer with no experience he didn’t run for any public office. Smith serves 4 terms as a governor of New York. Herbert Hoover has major advantage and people believe him when he declared so Herbert Hoover won the election.
2. Dreams of riches in the Stock Market People put more hope in stock market. Dow Jones industries Average is the most widely used barometer of the stock markets health. They count base on stock prices of 30 representatives in large group of trading in New York Stock Exchange. American bought stock and began with bull market it’s time of stock price began. Speculation is buying stocks and they wait for a quick profit without thinking of the risk they will take. Buying on margin means people borrow money from government and buy stock and if the value of stocks go down people who bought on margin have had no way to pay all the loans so the government let them do it to make the economic goes on.
The Stock Market Crashes On October 24, market is falling down and stock prices began to fall down. October 29, known as Black Tuesday shareholders are all mess up and trying to sell all the stock before the price go even lower. More worse most of people who had bought stock on credit they stuck with a huge debt. By midNovember investors had lost $30 billion finally all the panic had gone.
Financial collapse The collapse of the economy made the depression more severe. After the crash of stock market, banks and business failures, people panicked and withdrew their money from banks. but some couldn't get their money because the banks had invested it in stock market. The government did not protect people bank accounts, so millions of people lost their saving bank accounts. In 1929, 600 banks closed. 1933, 11000 of the nation's 25000 banks had failed. The Great Depression also has an effect on businesses .Between 1929 and 1932, the national product - such as goods and services - was cut nearly a half, decrease from $104 billion to $59 billion. 90000 business people, railroad companies and prosperous automobile were failed completely. Millions of workers lost their jobs, unemployment increase from 3% to 25% in 5 years. People who kept their jobs faced paycuts and reduced hours. Luckily, before the crash, some speculators had sold off their stocks and made money, such as Joseph P. Kennedy -the father of future president John F. Kennedy.
Worldwide shock waves: Europe was also gripped by the Great Depression. They tried to recover their countries from the ravages of WWI faced high war debts. Germany had to pay money to compensate the Allies for the damages Germany had caused. The Great Depression made Americaâ€™s ability to import European goods difficult to Americans products and manufacture abroad. 1930, Hawley-Smoot Tariff Act was passed. The act established the highest protective tariff in US history; it protects Americans farmers and manufacturers. But in the other hand, it had some opposite effects. The tariff prevented other countries from earning American currency to buy American goods, it also made unemployment worse in industries that could no longer export goods to Europe. After a few years, world trade had fallen more than 40%. Causes of the Great Depression: Some factors that led to falling demand for consumer goods were, first of all, tariffs and war debts policies that cut down the foreign market for American goods. Then there were crisis in the farm sector, the availability of easy credit, an unequal distribution of income, and the government kept interest rates low, following companies and individuals borrow money easily and build up large debts. On November 1929, president Hoover encouraged Americans to remain confident about economy. At last, the depression in American was better.
SECTION 2: The depression in the cities The depression brought a lot of consequences to people’s lives, such as homelessness ( slept in parks , wrapping themselves by newspaper ), hardship, hunger to millions, lost their jobs.....Soup kitchens – offering free or low-cost food. Bread Lines – the lines of people waiting to receive food provided from charitable organizations or public agencies. Conditions were very difficult. Unemployment were higher, they were the lowest paid. 24 African Americans died because of discrimination. Even though many Latinos had been born in America, Whites still demanded that they had to be deported or expelled from the country. Most of Mexican decent relocated to Mexico by the late 1930s. Others were deported by the government The Depression in rural areas: Life is here was hard, but it still have one advantage : most farmers could grow food for their own families. With falling process and rising debt, many farmers lost their land. Between 1929 and 1932, 400,000 farms were lost through foreclosure. Farmers changed into tenant farming and barely scraped out a living. The Dust Bowl: The drought in the early 1930s devastating on the Great Plains. Farmers used tractors to break up the grassland and plant millions of acres of new farmland. Plowing had removed the thick protective layer of prairie grasses. The grasslands became unsuitable for farming.
When the drought and wind began, little grass and few trees were left to hold the soil down. Wind destroyed the topsoil , sand and grit underneath. One windstorm in 1934 picked up millions of ton of dust from the plains and carried it East Coast cities. The region that was the hardest hit ( Kansas, Oklahoma, Texas, New Mexico, Colorado ) came to be known as Dust Bowl. Farmers and sharecroppers left their land behind. They packed up their families and belongings following Route 66 to California. Okies ( migrants ) worked as farmhands. By the end of the 1930s, hundreds of thousands of farm families had migrated to California and other Pacific Coast states.
Effects on the American family Men in the streets During the great depression, there was huge unemployed population. Unemployed men went on the streets looking for jobs, and they were called as hobos and this number was around 1/3 of non-farmer labors. Their tragic conditions could go on for years and some discouraged men abandoned their family. There was no federal system of direct relief â€“ provided food or cash from government on poor until later on. New York gave $2.39 a week per family, and this was a generous payment compare to the economic situation at the time.
Women struggling to survive Some people think that women were less sufferers of great depression, however, women did their very best to help their family to survive. They canned food, sewed clothes and saved as much money as possible to help their family as much as possible. They had more difficulties finding jobs. Women had to face resentments when they worked outside home as many men thought that women shouldnâ€™t be working when even men are unemployed. These ideas resulted some cities refused to have married women as school teachers.
Children suffer hardships Poor diets and lack of money had led children into serious health problems such as malnutrition or rickets. And as they didnâ€™t even have money to eat, they went to work rather than going to school. Eventually, 2600 schools closed and more than 300,000 students were out of school. Thousands of teenagers got on train, looking for jobs (teenage hobos). It was too dangerous since many accidents happened, and teenagers got killed and injured. Social and psychological effects Many people became very weak and lost their will to live on, so that suicide rate went up more than 30% between 1928 and 1932. Continuous hunger and poverty shaped some people to be obsessive about the wealth and set their life to focus only on not being poor again.
SECTION 3 : Hoover tries to reassure the nation: After the great depression, President Herbert Hoover tried to reassure American the nationâ€™s economy on sound footing .He declared Americans to remain optimistic and to go about their business as usual. Moreover, some experts believed was to do nothing and let the economy fix itself. However, Herbert felt that the government could play a limited role in helping to solve the problem. He believed that if business and labor were in a conflict, government should step in and help them find a solution. Thus, Hoover opposed any form of federal welfare or direct relief to the needy. He called together key leaders in the fields of business, banking, and labor. However, none of these steps made much of a difference. A year after crash the economy was still shrinking and unemployment was still raising.
Boulder dam Year earlier when Hoover served as secretary of commerce, his earliest proposed initiatives was the construction of a dam on the Colorado River.
Democrat win in 1930 congressional elections When the economic went down, the political tide turned again Hoover and Republicans. Americans grew more and more frustrated by the depression, they expressed their anger in a number of ways. Despite public criticism, Hoover continued to hold firm to his principles. At last, he attempts to relieve the depression for example: he backed the creation of Federal Farm board. Thus Hoover tried to prop up the banking system by establish the national credit corporation. In 1932, Hoover signed into law the Federal home loan bank act which allowed farmed refinancing their farm loans.
Gassing the bonus army In 1932 10,000 and 20,000 WWI veteran and families arrived in Washington D.C, they called themselves the Bonus army. Nervous that the angry group could become violent, Hoover decided Bonus army should be disbanded. Most Americans were stunned and outraged at the governmentâ€™s treatment of the veterans
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