From Prosperity to Crisis

1920-1939

Roaring 20s

Great Depression

New Deal

Isolationismrefusing to get involved in other nations’ disputes

The Red ScareAnti-communism hysteriaUS government conducted raids against

radicals accused of plotting against the government

Thousands were arrested and deportedSacco & Vanzetti—2 Italian immigrants were

convicted of committing murder during a robbery to obtain funds for an anarchist revolution; they were found guilty and executed

Rise in Nativism

• Dislike of foreigners that led to immigration restrictions in the early 1920s

• African Americans from the South migrated to Northern cities after WWI created racial tension

• The KKK revived itself and was hostile toward African-Americans, immigrants, Catholics and Jews

Causes of Economic Growth and Prosperity

• Wages and employment opportunities increased

• Business profits and production soared

• Republicans in the White House supported laissez-faire policies, which called for minimal government interference in business activities

Warren Harding

Calvin Coolidge

Herbert Hoover

Policies Favoring Business• High Protective Tariffs

to keep out foreign-goods and protect domestic manufacturers

• Lower Taxes on the Wealthy and Corporationstax burden shifted to the average wage earner

• Lax Enforcement of Antitrust Lawsa large number of mergers took place

The Rise of New Industries

• Growth in the use of automobiles spurred the steel, glass and rubber industries

• Mobility caused a growth in suburbs

• School buses allowed students in remote areas to attend school regularly

• Farmers replace animals with tractors

• Electric based—appliances, vacuums, refrigerators, radios, and motion pictures

More Efficient Production Techniques

• Henry Ford introduced the assembly line

• Used standardized parts

• In 1925—one car was produced every 10 seconds

Mass Consumption & Speculation

• Advertising stimulated demand

• Retailers developed programs for installment purchases and buying on credit

• New industries and mass markets helped fuel a speculative boom on the stock market

Cultural Values of the 1920s

The 1920s also saw the emergence of new values. Greater mobility and material comfort had a significant impact on social patterns and cultural values. Many groups, especially women, the young, and African Americans, felt a new sense of power and freedom. Others felt threatened and sought to preserve traditional values.

Prohibition• Protestant reformers

often saw liquor as the cause of poverty, crime, and the breakdown of family.

• 18th Amendment (1919)—banned the sale of alcoholic drinks

Prohibition• Americans refused to

accept the ban• The demand for illegal

liquor helped stimulate the growth of organized crime, instead of lowering crime.

• 21st Amendment—repealed the 18th Amendment

Scopes “Monkey” Trial• 1924—twelve states passed a law

forbidding the teaching of Darwin’s theory of evolution

• 1925—John Scopes, biology teacher, was tried and convicted for teaching evolution

• William Jennings Bryan assisted the prosecution

• Clarence Darrow defended Scopes

Darrow, trial attorney was accused of murder in the Haymarket Affair and defended labor leaders in the Pullman Strike

Bryan, Democratic candidate for President three times, advocated reforms like women’s suffrage and believed in the literal interpretation of the Bibile

Restrictions on Immigration

• Immigration Acts of 1921, 1924, 1929 established quotas for each nationality

• Great Britain, Ireland and Germany were allowed the greatest number of immigrants

• “New Immigrants” were severely limited (Italians and Eastern European)

• Asian immigrants were stopped

“Lost Generation”

• Youth challenged traditions

• Zany fads—flagpole sitting and marathon dancing

• Flappers wore short skirts and danced the Charleston

Women• Appliances reduce household work

• Go to college

• Worked outside the home

• More assertive

• Began to smoke and drink in public

• Rejected restrictive clothing for skirts above the knees and wore their hair short

• Unchaperoned dates

Harlem Renaissance• Jazz Age—reflected the greater importance

of African-American music

• Great Migration—African-Americans moved North to work in cities

• Awakening of African-American culture

Louis Armstrong

Langston Hughes

Marcus Garvey

Stressed racial unity through self-help and encouraged African-Americans to set up their own shops and businesses

Popular Heroes

Babe Ruth Jack Dempsey

Charles Lindbergh• 1st to fly across the

Atlantic Ocean

• In the Spirit of St. Louis

• Helped the aviation industry boom

The Great Depression1929-1940

Economies historically pass through good and bad periods that usually repeat themselves.

The bad times are called depressions, characterized by falling prices, business failures and high unemployment.

Causes of The Great Depression• Overproduction—

companies produced more than consumers could buy

• Uneven distribution of income—farmers, minorities and workers faced hard times

• Stock Market Frenzy—people bought stock causing the prices to go up and bought on margin (promising to pay for it later)

Causes of The Great Depression

• Real Estate Speculation—people hoping to get rich quick

• Shaky Banking & Debt—government didn’t regulate; bankers invested depositors’ money in unsound investments

• Consumer Debt—consumers bought more on credit than they could afford

Stock Market CrashOctober 29, 1929

• As stock prices fell, people tried to sell of their holdings, driving stock prices still lower.

• The Stock Market Crash, in combination with the long-term factors, brought about the Great Depression.

Effects of Stock Market Crash

• Corporations could not raise funds.

• People could not repay loans or rents• Leading to bank failures that

• Wiped out people’s life savings

• No one had $$ to buy goods so prices fall

• Causing factories to close and lay off workers

Vicious downward spiral

Decline in Worldwide Trade

• High US tariffs made it hard for Europeans to sell their products and repay war debt

• When the stock market crashed, US banks recalled their loans.

• US raised their tariffs to their highest• Other countries did the same bringing world

trade to a halt, which prolonged and deepen the Great Depression

The Dust Bowl, 1936

• Since the 1870s, farmers had been tilling the Great Plains and tapping underground water supplies.

• A series of droughts in the 1930s dried up crops and topsoil.

• Heavy winds carried the dust away in huge clouds that darkened the sky turning the Great Plains into a giant “Dust Bowl”

• Farmers in Oklahoma and elsewhere abandoned their land and moved to California (Route 66)

President Herbert Hoover

• Rejected demands for the government to pay the unemployed and needy

• Felt private organizations should provide emergency relief

• Believed that when prices fell low enough, people would start buying again

• “too little too late”—he lowered income taxes, increased spending, bought surplus farm crops

Hoovervilles

Franklin D. RooseveltThe New Deal, 1932

• It ended the long-held view that government and economy should be separate.

• It permanently increased the size and power of the federal government and made it responsible for managing the nation’s economy

New DealRelief, R & R

• Relief measures were short-term actions to tide people over.

• Gave emergency jobs• Civilian Conservation Corps (CCC) 1933

paid people to plant trees and clean up forests and parks

• Works Progress Administration (WPA) 1935hired artists and workers

New DealR, Recovery & R

• Wanted to restore the economy by increasing incentives to produce and by rebuilding people’s purchasing power.

• National Recovery Administration (NRA) 1933 asked businesses to voluntarily follow set prices, production limits and a minimum wage. Supreme Court found unconstitutional.

• Agricultural Adjustment Act 1938 raised farm prices b/c government bought surplus to store till prices went up

New DealR, R & Reform

• Aimed to fix defects in the structure of the nation’s economy to ensure that such a depression would never hit again

• Federal Deposit Insurances Corporation (FDIC) 1933—insured banks so that people would not lose their savings if a bank failed

New DealReform

• Securities and Exchange Commission (SEC) 1934—oversee the operations of the stock market to prevent fraud and guard against another stock market collapse

• Social Security Act 1935—unemployment and old age pensions

• Tennessee Valley Authority (TVA) 1933—built a series of dams to control flooding and provide low cost hydro-electric power.

FDR• His efforts to

combat the Depression made him very popular

• Re-elected in 1936

• Re-elected in 1940 (broke tradition of 2 term president)

• Re-elected in 1944

Impact of New Deal

• Provided Relief

• Strengthened Infrastructure—building roads, dams, bridges

• Changed Role of Government—smooth running of economy

• Restored faith in banks

• Social Security—”safety net”

FDR tried to Pack the Courts with judges that wouldn’t find his reforms unconstitutional.