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Chapter 22 The Great Depression Begins Black Tuesday: Oct. 29, 1929 On October 24, the market took a plunge and many investors sold their shares. On October 29 – Black Tuesday – shareholders dumped over 16.4million stocks with many not being able to sell This signaled the start of the Great Depression. Bank and Business Failures Many rushed to the banks to get their money but banks did not have enough money because they invested in the stock market causing many them to close. The Gross National Product – the measure of output of goods and services – was cut from $104 billion to $59 billion. Thousands of industries went bankrupt such as automobiles and railroads. Unemployment went from 3% in 1929 to 25% in 1933. One out of four workers were out of a job. “Cycle of Disaster” – many businesses went bankrupt Businesses cut production Workers suffered from wage cuts and lay offs. Demand for goods fell. People had little or no money to spend. A foreclosure sale in Iowa in the early 1930s when "the bottom fell out of everything." Military police were on hand to keep farmers from disrupting the auction. ca. 1935. World Wide Shock America could not import many goods making it difficult for the US to sell their products. 1930: Hawley-Smoot Tariff Act passed the highest tariff in history to protect against competition. However, it stopped other countries from earning American money to buy our goods making unemployment worse. Congress did not understand that we had become a GLOBAL ECONOMY Hardships & Suffering During the Great Depression Effects on Employment Many people found themselves out of jobs for years African-Americans and Mexican Americans were discriminated against in the workplace and were targets of hostility In 1933, 24 African-Americans were lynched and thousands of Mexican Americans were relocated to Mexico voluntary and others deported Men were not used to being unemployed long-term and about 300,000 became hoboes who wandered the country and slept in boxcars. Effects on Housing Many unemployed people lost their homes. Many homeless lived streets or set up shantytowns Dug through the garbage, went to soup kitchens and breadlines Effects on Farming Decreases in farm prices forced many farmers to lose their farms Farmland was exhausted from overproduction and was hit with drought and wind. This turned the land into the Dust Bowl Many farmers packed up and went west to be tenant farmers and were called Okies Effects on Women The Depression strengthened family ties, but increased tensions Women worked outside the home, but were discriminated and received less money Faced great pressures to provide for themselves and their families Effects on Children Poor diets and lack of money for health care led to rise in health problems Falling tax revenue forced schools to shorten the session and close Teenagers hopped on freight trains to escape the suffering to search for work and see America. They were called Hoover tourists. Many riders were beaten and jailed by freight yard patrolmen. Effects on Emotional Health Many people so demoralized that suicides and admissions to mental institutions rose dramatically Many Americans had to make financial compromises such as seeing doctors or going to college. Primary focus in many American’s lives became achieving financial security. Families helped out other families and developed habits of thriftiness. Hoover Struggles with the Depression Hoover’s Philosophy He believed that the primary function of government was to facilitate cooperation between competing groups. If labor and business were in conflict the government should help negotiate a solution Rugged Individualism - Americans valued individualism and as a result he opposed direct government relief, such as handouts, they should instead help guide relief through private charities Hoover’s initial reaction was caution. He urged companies to not cut wages and not fire employees. He asked unions to not demand higher wages or go on strike. These efforts failed to stop the Depression. Hoover’s Philosophy Hoover’s Philosophy America Responds People living in shantytowns began calling them Hoovervilles and called newspapers they wrapped themselves in Hoover blankets to insult Hoover’s policies. In 1930, the Democrats win control of the House of Representatives Hoover Responds Began a public works project to build Boulder Dam in Nevada to jump start the economy and provide jobs. Later renamed Hoover Dam He passed in 1932 the Reconstruction Finance Corporation (RFC) to give $2 billion to finance banks and other failing businesses. Hoover believed that it would trickle down to provide jobs and improve the economy. However, more businesses failed and the economy worsened. It was too little, too late. Boulder (Hoover ) Dam The Bonus Army Hoover refused to give WWI veterans bonuses Vets marched into Washington, D.C calling themselves the Bonus Army Bonus bill failed to pass and Hoover ordered the Bonus Army to disband Hoover sent in the army who gassed more than 1,000 people and caused a baby’s death. Americans were outraged at Hoover’s action.