The Great Depression

9. 04 The Great Depression A. Heading: * Address (imaginary) * City, State (imaginary) * Date (Month, Day, Year in the 1930s) B. Greeting: Dear ________: C. Body Your letter should focus on the following aspects of your life: * Paragraph 1: In the introduction to your letter, identify two causes of the Great Depression. Utilize the web sites in the Resource section. Explain how the Great Depression has affected you and your family. Use specific details from the web sites (For example, how did Black Tuesday affect your family or relatives? What is your standard of living? * Paragraph 2: a. Describe your family. Who are your brothers, sisters, relatives? What do your parents and relatives do for a living? b. Choose one of your relatives that has a job set up by FDR's New Deal. (For example, an uncle might be employed by the WPA). Choose a specific program within the New Deal—do not simply reference the New Deal in general. Describe the job with details. What is the purpose of th e organization? * Paragraph 3: c. Describe your school, classes, and teachers. Who are your friends? . Describe the town where you live. Who are your neighbors? Describe important celebrations, events, and people. Where do you like to hang out or play? * Paragraph 4: e. What is happening in the nation politically and economically? Look carefully at the date of your letter. Include specific details from the resources. f. What is happening in the nation's culture? Tell about music, radio programs, movies, sports. (Minimum of two specific details from the timeline according to the date of your letter. ) * Paragraph 5: a. What are your dreams for the future? b. What do you think the world will be like? c. How do you think the events of the Great Depression will affect you? | 76 Fort Street Johnston, West Virginia January 15, 1936 Dear Home Owner, My name is Frank Rollins and one day you will find this letter in my old house as part of a time capsule to be opened in the year 2007. It will hopefully help you and others understand what life is like for the people living through the tough economic times of today and hopefully will help you appreciate the many things that you may have. It will help you understand that standards of living can change very rapidly in times of economic turmoil and that what was once taken for granted can just as easily slip through your hands as if it wasn’t there. It will also hopefully help you understand just how quickly things change. Most importantly, I hope this letter helps you appreciate that the people in your lives are so much more important than the things. I am writing this letter as one final activity in this wonderful home where we have lived for 12 years. I am 33 years old, married to a beautiful woman, and we share 5 children between the ages of 5 and 11. We bought this house as our first home and thought that we would live here to raise all of our children. It is a wonderful neighborhood and the people here are friendly and kind. We have made friends that we will have for life and our children have too. Today is a very sad day for my entire family and for the friends that we have made. Unfortunately, we have to move because we can no longer afford to pay for the house that we treasure so much. Times are tough in this country and although we thought we would make it, things have changed. I was once the manager of the town’s bank and I made a very good living. We have been able to live in this affluent white collar neighborhood, be part of the country club and send our kids to private school where they were around other kids with the same standard of living. I worked hard to earn the wage that I did and I moved up the ladder in a meticulous manner so that I could maintain stability and growth. I wanted to provide my wife and children with the best that life has to offer and I was successful until October 29th, 1929, Black Tuesday. That was a day that changed my future and my destiny. It was the day that the stock market crashed and that people lost much of what they had. It was the day that caused panic for everyone, but bank managers in particular were in a predicament that was not too pleasant. Money just seemed to disappear and everyone blamed us. What they didn’t understand is that a bank is a business and somehow we had to pay our bills too. We had lent money and lent money and lent money and now, as people couldn’t pay it back, we were really in a pickle. It was a tough day followed by a rougher few years. I saw people’s houses be taken from them and people were just crushed. I was not able to help because the bank didn’t have any more money to lend. Roosevelt had placed a temporary close on banks to figure out who could legitimately stay open and who had to close for good. My bank stayed open for a while, but the time came 3 months ago when the doors had to close. You see, what happened is that people got really comfortable spending their money and other people’s money. Borrowing started, lots of borrowing, and people no longer lived with debt. It became a way of life. Then, people wanted more and more stuff. This was all in the 1920’s by the way when all of these new things were being manufactured and people were in awe of the new technology. As people bought it, more stuff was made until there was too much stuff on the store shelves. People had started to smarten up a little bit and they stopped buying. Production continued and the businesses were paying the price for that over production. When businesses have to pay, they cut costs somewhere else. In this case, it was in laborers. So people got laid off and were now out of work. The whole thing spiraled out of control and devastated the entire country. At the time, Hoover was our President and although he gets blamed for a lot of this stuff, it wasn’t really him who was to blame. He could have been more alert to what was happening I guess, but it was hard for anyone to see. He lost the election last year when Roosevelt was brought in with the promise of the New Deal. The New Deal is the promise for everything to be put back together financially in the country. It is the promise for jobs and for businesses to get back on their feet and for the country to become prosperous again. Will it work? It is hard to say becuae we are in the beginning phases of it. Roosevelt is definitely doing what he can to help the American people though. He has puts programs in place that are funded by the federal government that will insure that another Black Tuesday doesn’t happen. He has the FDIC which insures people’s banks deposits, the Works Progress Administration to offer jobs building new highways, the Social Security Administration to help people who are elderly or retired and about 12 other programs beyond that. They are all there to offer education, work and insurance that people’s money is safe. I think it will be several years before we know what will come of all of this but we will keep our fingers crossed that things get better. I will actually benefit from Roosevelt’s new deal as I begin my job as a highway builder next week. It will not provide the private school education that my kids are used to, or the continuation at the country club, but it would be unfair if it did. It is not the government’s job to provide me with anything but I am really happy that it will help me provide food to my family. Right now, every little bit helps. I look at this opportunity as a way to appreciate what I had and to look forward to gaining it back one day. I will do that as things get better and people get more in touch with the realities of what they have. It will be a while before banks are trusted and there are some people who still hold me personally accountable for their losses. That is the worst feeling in the world because I pride myself on honesty and integrity. The highway building will be a good respite and a way for me to get in better touch with what I will do in the future. My children will begin in the public school on Monday too. It will be the beginning of our new life with all kinds of changing happening next week. They will go to a one room school instead of a school where each grade is separated. Their teacher seems so nice though and I think they will benefit from their time learning together instead of apart. They will go from 8am til 12 pm and return home for lunch and to do their homework, chores and play. What my wife and I have stressed to them is how lucky we are to have each other, good health, and grandparents who have a home big enough for all of us to stay in. There are many less fortunate than us who don’t have a place to go and they don’t have food to put on their table. That is the ultimate tragedy really, isn’t it? We will still have a radio to listen to and we will continue to dance the way that we used to at night after listen to Roosevelt’s fireside chat. We dance in hope that the promises he is making will come true and we dance to celebrate life. Some nights we listen to the baseball games and root for Babe Ruth. He is the ultimate baseball of all time. We also read together so that our minds can keep growing and as a way to entertain ourselves. Sometimes we act out the stories in our family just for fun. One of my daughters has a flare for the dramatic and she loves to be an actress. She loved going to the movies when we could afford it, and I can’t wait to be able to take her again when times are a little better. The other kids like to play baseball in the yard with the kids in neighborhood, climbing trees and swimming at the country club. I suppose we will have to go to the river to swim for the time being and the new experience will be a great one for all of us. What I want you to know as you read this letter is that times are tough and in history, people should be aware of how tough times are for some people and how they got that way. I hope that you cherish the people in your life more than the things that you can have and that you make sensible choices when spending money that you have worked hard for. I believe that people should try to live without debt for the trivial things in life. Clothing, cars and things of that nature should be paid for without using someone else’s money. I understand that houses are very expensive and that in normal circumstances people must borrow money for them and that one expense is the only one that should leave you owing someone else money. There will temptations in life and pressures from others to spend money you don’t have, but I beg of you not to do it. I am giving up my home tomorrow and I am thankful the most for the wife and children. The things we have accumulated are only reminders of how I could have saved that money and been paying for my home right now. Be grateful for health and cherish the smiles that you see as people pass you by. Maybe one day, I will rebuy this old home of ours, and maybe it will be one of my grandkids who opens this time capsule letter. That would be the ultimate gift, but for now, I can only hope that the people who move in here enjoy it as much as we did and that they have good fortune and prosperity. And 70 years from now, in 2007, I hope that all of Roosevelt’s new programs have worked and that we, in the worst of financial times, have made it right for future generations. Change is not a bad thing, it lays the groundwork for new and better times. Best wishes to you and your family. I hope that you enjoy our home as much as we did. Sincerely, Frank Rollins The Great Depression 9. 04 The Great Depression A. Heading: * Address (imaginary) * City, State (imaginary) * Date (Month, Day, Year in the 1930s) B. Greeting: Dear ________: C. Body Your letter should focus on the following aspects of your life: * Paragraph 1: In the introduction to your letter, identify two causes of the Great Depression. Utilize the web sites in the Resource section. Explain how the Great Depression has affected you and your family. Use specific details from the web sites (For example, how did Black Tuesday affect your family or relatives? What is your standard of living? * Paragraph 2: a. Describe your family. Who are your brothers, sisters, relatives? What do your parents and relatives do for a living? b. Choose one of your relatives that has a job set up by FDR's New Deal. (For example, an uncle might be employed by the WPA). Choose a specific program within the New Deal—do not simply reference the New Deal in general. Describe the job with details. What is the purpose of th e organization? * Paragraph 3: c. Describe your school, classes, and teachers. Who are your friends? . Describe the town where you live. Who are your neighbors? Describe important celebrations, events, and people. Where do you like to hang out or play? * Paragraph 4: e. What is happening in the nation politically and economically? Look carefully at the date of your letter. Include specific details from the resources. f. What is happening in the nation's culture? Tell about music, radio programs, movies, sports. (Minimum of two specific details from the timeline according to the date of your letter. ) * Paragraph 5: a. What are your dreams for the future? b. What do you think the world will be like? c. How do you think the events of the Great Depression will affect you? | 76 Fort Street Johnston, West Virginia January 15, 1936 Dear Home Owner, My name is Frank Rollins and one day you will find this letter in my old house as part of a time capsule to be opened in the year 2007. It will hopefully help you and others understand what life is like for the people living through the tough economic times of today and hopefully will help you appreciate the many things that you may have. It will help you understand that standards of living can change very rapidly in times of economic turmoil and that what was once taken for granted can just as easily slip through your hands as if it wasn’t there. It will also hopefully help you understand just how quickly things change. Most importantly, I hope this letter helps you appreciate that the people in your lives are so much more important than the things. I am writing this letter as one final activity in this wonderful home where we have lived for 12 years. I am 33 years old, married to a beautiful woman, and we share 5 children between the ages of 5 and 11. We bought this house as our first home and thought that we would live here to raise all of our children. It is a wonderful neighborhood and the people here are friendly and kind. We have made friends that we will have for life and our children have too. Today is a very sad day for my entire family and for the friends that we have made. Unfortunately, we have to move because we can no longer afford to pay for the house that we treasure so much. Times are tough in this country and although we thought we would make it, things have changed. I was once the manager of the town’s bank and I made a very good living. We have been able to live in this affluent white collar neighborhood, be part of the country club and send our kids to private school where they were around other kids with the same standard of living. I worked hard to earn the wage that I did and I moved up the ladder in a meticulous manner so that I could maintain stability and growth. I wanted to provide my wife and children with the best that life has to offer and I was successful until October 29th, 1929, Black Tuesday. That was a day that changed my future and my destiny. It was the day that the stock market crashed and that people lost much of what they had. It was the day that caused panic for everyone, but bank managers in particular were in a predicament that was not too pleasant. Money just seemed to disappear and everyone blamed us. What they didn’t understand is that a bank is a business and somehow we had to pay our bills too. We had lent money and lent money and lent money and now, as people couldn’t pay it back, we were really in a pickle. It was a tough day followed by a rougher few years. I saw people’s houses be taken from them and people were just crushed. I was not able to help because the bank didn’t have any more money to lend. Roosevelt had placed a temporary close on banks to figure out who could legitimately stay open and who had to close for good. My bank stayed open for a while, but the time came 3 months ago when the doors had to close. You see, what happened is that people got really comfortable spending their money and other people’s money. Borrowing started, lots of borrowing, and people no longer lived with debt. It became a way of life. Then, people wanted more and more stuff. This was all in the 1920’s by the way when all of these new things were being manufactured and people were in awe of the new technology. As people bought it, more stuff was made until there was too much stuff on the store shelves. People had started to smarten up a little bit and they stopped buying. Production continued and the businesses were paying the price for that over production. When businesses have to pay, they cut costs somewhere else. In this case, it was in laborers. So people got laid off and were now out of work. The whole thing spiraled out of control and devastated the entire country. At the time, Hoover was our President and although he gets blamed for a lot of this stuff, it wasn’t really him who was to blame. He could have been more alert to what was happening I guess, but it was hard for anyone to see. He lost the election last year when Roosevelt was brought in with the promise of the New Deal. The New Deal is the promise for everything to be put back together financially in the country. It is the promise for jobs and for businesses to get back on their feet and for the country to become prosperous again. Will it work? It is hard to say becuae we are in the beginning phases of it. Roosevelt is definitely doing what he can to help the American people though. He has puts programs in place that are funded by the federal government that will insure that another Black Tuesday doesn’t happen. He has the FDIC which insures people’s banks deposits, the Works Progress Administration to offer jobs building new highways, the Social Security Administration to help people who are elderly or retired and about 12 other programs beyond that. They are all there to offer education, work and insurance that people’s money is safe. I think it will be several years before we know what will come of all of this but we will keep our fingers crossed that things get better. I will actually benefit from Roosevelt’s new deal as I begin my job as a highway builder next week. It will not provide the private school education that my kids are used to, or the continuation at the country club, but it would be unfair if it did. It is not the government’s job to provide me with anything but I am really happy that it will help me provide food to my family. Right now, every little bit helps. I look at this opportunity as a way to appreciate what I had and to look forward to gaining it back one day. I will do that as things get better and people get more in touch with the realities of what they have. It will be a while before banks are trusted and there are some people who still hold me personally accountable for their losses. That is the worst feeling in the world because I pride myself on honesty and integrity. The highway building will be a good respite and a way for me to get in better touch with what I will do in the future. My children will begin in the public school on Monday too. It will be the beginning of our new life with all kinds of changing happening next week. They will go to a one room school instead of a school where each grade is separated. Their teacher seems so nice though and I think they will benefit from their time learning together instead of apart. They will go from 8am til 12 pm and return home for lunch and to do their homework, chores and play. What my wife and I have stressed to them is how lucky we are to have each other, good health, and grandparents who have a home big enough for all of us to stay in. There are many less fortunate than us who don’t have a place to go and they don’t have food to put on their table. That is the ultimate tragedy really, isn’t it? We will still have a radio to listen to and we will continue to dance the way that we used to at night after listen to Roosevelt’s fireside chat. We dance in hope that the promises he is making will come true and we dance to celebrate life. Some nights we listen to the baseball games and root for Babe Ruth. He is the ultimate baseball of all time. We also read together so that our minds can keep growing and as a way to entertain ourselves. Sometimes we act out the stories in our family just for fun. One of my daughters has a flare for the dramatic and she loves to be an actress. She loved going to the movies when we could afford it, and I can’t wait to be able to take her again when times are a little better. The other kids like to play baseball in the yard with the kids in neighborhood, climbing trees and swimming at the country club. I suppose we will have to go to the river to swim for the time being and the new experience will be a great one for all of us. What I want you to know as you read this letter is that times are tough and in history, people should be aware of how tough times are for some people and how they got that way. I hope that you cherish the people in your life more than the things that you can have and that you make sensible choices when spending money that you have worked hard for. I believe that people should try to live without debt for the trivial things in life. Clothing, cars and things of that nature should be paid for without using someone else’s money. I understand that houses are very expensive and that in normal circumstances people must borrow money for them and that one expense is the only one that should leave you owing someone else money. There will temptations in life and pressures from others to spend money you don’t have, but I beg of you not to do it. I am giving up my home tomorrow and I am thankful the most for the wife and children. The things we have accumulated are only reminders of how I could have saved that money and been paying for my home right now. Be grateful for health and cherish the smiles that you see as people pass you by. Maybe one day, I will rebuy this old home of ours, and maybe it will be one of my grandkids who opens this time capsule letter. That would be the ultimate gift, but for now, I can only hope that the people who move in here enjoy it as much as we did and that they have good fortune and prosperity. And 70 years from now, in 2007, I hope that all of Roosevelt’s new programs have worked and that we, in the worst of financial times, have made it right for future generations. Change is not a bad thing, it lays the groundwork for new and better times. Best wishes to you and your family. I hope that you enjoy our home as much as we did. Sincerely, Frank Rollins The Great Depression The Great Depression was caused by not just one event, but by a combination of factors that led to the Great Depression. These included the stock market crash of 1929, the failures of nine thousand banks, drought conditions in the Mississippi valley, also known as the Great Dust Bowl, in 1930 and American economic policies with Europe, including the Smoot-Hawley Tariff in 1930, which reduces trade with Europe and contributed to an overall reduction in purchasing of durable goods. The stock market crash of 1929 was the event that sparked everything off. On September 3, 1929, the Dow Jones Industrial Average reached a high of 381.2, a record high at the time.At the end of the market day on Thursday, October 24, the market was at 299.5, this was a twenty one percent drop in just under two months. In November of the same year, the Dow Jones Industrial Average was at 199. By the time 1932 was over, the market had lost over ninety percent of its value. Banks, at the time, were also largely unregulated and often loaned out more money than they had on hand. Brokerage firms would lend out none dollars for every dollar, their investors had deposited. This was called buying on a margin. When the market failed, these loans were called in and the investors had no way to pay.This was worsened when many loans could not be collected on and depositors demanded their money back. There was no such thing as the FDIC back then, and the banks depositors lost their entire savings when a bank failed. The dollar was also decreasing in value while the debit people had stayed the same. This caused banks to decrease lending, which in turn, disrupted businesses, causing job losses as these businesses failed as well. It was a vicious cycle made worse by runs on the banks. Bank runs are when people rush to withdraw their money from banks for fear of losing it if the bank was in financial trouble. When people were unemployed and fearful of the banks, they tried to withdraw money that simply w as not there.The Decline in the Supply of MoneyAs we have discussed, a chain of events led to the great depression one of those was a decline in the money supply. The table below will help understand better the status of the money supply before and after the great depression years. (Watkins, 2013) M1= The sum of currency in circulation and the level of demand deposits M2- The sum of M1 plus time depositsThe Money Supply and Consumer Price Index (CPI) Before and During the Great Depression Years Demand Currency Consumer M2 M1 Deposits in circulation Price Index YEAR ($bill) ($bill) ($bill) ($bill) (1947-49 =100) 1926 43.7 26.2 22.2 4.891927 44.7 26.1 22.1 4.85 74.2 1928 46.4 26.4 22.5 4.80 73.3 1929 46.6 26.6 22.7 4.75 73.3 1930 45.7 25.8 22.0 4.52 71.4 1931 42.7 24.1 20.0 4.82 65.0 1932 36.1 21.1 16.2 5.70 58.4 1933 32.2 19.9 14.8 5.72 55.3 1934 34.4 21.9 17.2 5.37 57.2 1935 39.1 25.9 21.1 5.57 58.7 1936 43.5 29.6 24.3 6.24 59.3 1937 45.7 30.9 25.3 6.45 61.4 1938 45.5 30.5 25.0 6.46 60.3 1939 49.3 34.2 28.1 7.05 59.4 1940 55.2 39.7 32.0 7.85 59.9 1941 62.5 46.5 38.1 9.61 62.9 1942 71.2 55.4 43.8 12.38Political DebateDuring the Great Depression, the political parties had some heated debates between each other to try and solve the crisis. Essentially the debates among parties during the great depression are not unlike the fiscal debates that have gone on since the parties’ inception. Fiscally conservative and liberal parties both have good points and have both been proven successful in the pas t. The problem is that both theories have also shown examples of failure. FDR originally took a fiscally conservative approach during the recession but soon adopted a new strategy.In April 1938 he took advice from Harry Hopkins and other advisers who believed that government spending on  relief and public works would revive the economy, even if it produced larger deficits. The idea was that the depression was the product of under-consumption and that giving consumers more money (â€Å"priming the pump†) would stimulate consumer spending and fix the economy’s recession. FDR asked Congress for a $5 billion relief program, which passed in the spring and summer of 1938. But it didn’t really have an effect because although this was an aggressive approach to the recession, it was still too conservative. The amount of $5 billion was too little to provide the necessary stimulus.