welcome to lecture number 77 the topic is the Great Depression the theme is work exchange and Technology there's one learning objective and that has explained the causes of the Great Depression and its effects on the economy the first key concept says the United States continued its transition from a rural agricultural economy to an urban industrial economy led by large companies a previous lecture covered how the 1920 census showed that for the first time there were more Americans living in urban areas than in rural areas the agriculture economy up until this point had been aided by the world war one there were soldiers in other countries at war that were willing to buy American food crops the greater demand met higher prices that farmers could charge as soon as the war ended American farmers were no longer feeding people in Europe when demand went down prices also fell so farmers in the 1920s were struggling and not enjoying the same type of prosperity that people in the cities were enjoying another problem that compounded to Farmers woes was over farming and drought in the Great Plains it created conditions for the Dust Bowl seen in the map in the top left Decades of dry farming techniques had exhausted nutrients from the soil combined with a lack of rain turned soil into sand that was swept up through the plains as wind storms picked up the dust and sand it would blow to other parts of the Great Plains and diminish the quality of the soil in those areas this is going to be one of the push factors for white people in the Great Plains begin to move to other areas of the country mainly California Okies were people from Oklahoma who had to move because farming was no longer profitable for them or they had lost their Farm due to the inability to pay their debts the Oakey migration starts in the 1930s when farming conditions compounded with the Great Depression forced Millions to move the photograph on the top right is the most recognizable image from this migration taken by Dorothea Lang it shows a mother caring for her children on their way to California the urban industrial economy of the 1920s was relatively strong even though there were some weaknesses in the foundations of that prosperity the factory system continued through the 1920s made more efficient by the assembly lines and scientific management but it was adding to the wealth Gap so the people who own the factories continue to make more money and the people who were working in the factories were not sharing equally from the economic growth union membership declined in the 1920s they weren't very popular in the laissez-faire environment of the decade American consumers were becoming more comfortable using credit to purchase Goods there was an overabundance of consumer goods and to make them easier to buy producers allowed consumers to buy on installment plans consumers overextended themselves and were having to pay off debts for a long period of time everyone wanted a car everyone went to the washing machine everyone wanted a refrigerator and because there were financing plans to buy those products people took those opportunities to get them now and pay them off over time the U.S government eventually starts to implement protective tariffs to protect Factories at home from competition from abroad it Spurs retaliatory tariffs from other countries European protective tariffs against American Products makes those American Products more expensive abroad which leads to lower sales for American companies a final crack in the economic foundation of the U.S was the stock market the stock market experienced the rise in speculation meaning that people were betting that it would continue to grow Americans were buying equity in companies that were actually bad Investments they paid inflated prices for the stock which created a huge bubble to make matters worse there was an increase in buying on margin this means that investors could put down a small percentage of the price of the stock that they wanted to buy and then a bank would cover the rest of the cost of the purchase the bank would get its money back whenever the person sold the stock through a share of the profits what ends up happening is that the stock market crashes and then everyone who had money tied up in the stock market isn't able to get that money back to repay their loans or meet their Margin Call the next key concept says episodes of credit and Market instability in the early 20th century in particular the Great Depression led to calls for a stronger Financial regulatory system the credit and Market instability refers to the stock market crash which happened on October 29 1929. it's often referred to as Black Tuesday after the stock market crash the banks that had money tied up in the stock market no longer had enough money in their vaults to cover the Savings in the checking accounts of normal customers as consumers became wary that the banks had less money in their vaults or would soon run out of money they ran to the bank to get their money out these are called Bank runs and usually the fear that a bank wasn't liquid or able to meet its daily operations with the money it had on hand was a self-fulfilling prophecy people would literally run to the bank line up outside and try to withdraw all of their money if there was no money in the bank when the person got there all of their savings would be wiped away the Great Depression was spurred by the stock market crash it led to a domino effect of other financial institutions crashing the banking system was one of those even though not all banks in the United States were putting money into the stock market the perception was that most banks in the U.S would fail banks that were relatively solvent those that had enough money in their vaults to cover their daily business still experience Bank runs which caused them to fail it was a self-fulfilling prophecy due to the widespread fear that the bank would fall the U.S reaches 25 unemployment at the worst part of the Great Depression GNP or gross national product goes down 50 percent and about 20 percent of all of the banks in the United States close President Hoover who had been elected in 1928 and was barely seven months into the job was ultimately blamed for the economic suffering Hoover had shown competence in the management of The Food Administration during World War One and the Secretary of Commerce from 1921 to 1928 though nothing could have prepared him for this as a result of his laissez-faire mentality he doesn't really do anything to make the depression or the effects of the depression better until it's too late Shanty towns that popped up across the country were called Hoovervilles people who would turn out the pockets of their pants to show that they had no money inside of them were showing their Hoover Flags people sleeping on the ground with newspaper to cover themselves would be said to be using Hoover blankets and people using cars with the engine taken out and being pulled by a horse would be driving their Hoover wagons the Great Depression and its effect become closely associated with President Hoover even though he didn't really do anything that would have led to the spark of the Great Depression but it was his inaction that gets his name associated with the worst parts of the depression towards the end of his presidency Hoover does something to lessen the effects of the depression it's normally seen as doing too little too late and took President Hoover quite a long time to really do anything about the depression even after there were several large public demonstrations for him to act the bonus Army's March on Washington was composed of World War One veterans asking the government to provide some sort of relief these veterans had been promised a bonus for their service in the army during World War one but it wasn't to be paid out until the late 1930s since the Depression was so bad these veterans got together and marched on Washington to try to convince Congress to pay out the bonuses early and provide some relief for the veterans and their families Hoover actually ordered general Douglas MacArthur to clear the Marchers from the grounds and over 50 of the Marchers died in the struggle the two agencies that the Hoover administration put in place to ease the impact of the depression were the federal Farm board and the Reconstruction Finance Corporation the federal Farm board attempted to stabilize crop prices by holding the crops in government-owned Grain elevators and the Reconstruction Finance Corporation propped up railroads Banks life insurance companies other financial institutions that were at risk of failing The Hope was that if those agencies or those companies continue to do business there would be a multiplying effect or trickle-down effect for everyone who worked or would benefit from those services Franklin Roosevelt was elected in 1932 but he won't be inaugurated until March 1933. his administration responds more directly to the cause of a stronger Financial regulatory system the Emergency Banking Act closed all of the banks in the country and then it allowed the federal government to judge whether a bank was solvent enough to be reopened that means that if the bank did not have enough money in its faults to open its doors the government wouldn't let it reopen if the government gave its approval for each Bank to reopen then people will have confidence and a bank run would be avoided the glass-steagall Act was legislation that prevented Banks from investing money in the stock market or any other risky types of Investments the Securities and Exchange Commission would regulate Wall Street this agency is still active today they make sure that there's no fraud in the stock market and that all companies report full and accurate earnings reports so that the stock market does not resemble a casino the fair labor standards Act and the National Labor Relations Board gets the federal government more involved in the labor issues and in business it implements a minimum wage a maximum amount of working hours and it ends child labor using congress's Interstate Commerce powers from the Constitution the last key concept says during the 1930s policy makers responded to the mass unemployment and social upheavals of the Great Depression by transforming the U.S into a limited welfare state redefining the goals and ideas of modern American liberalism this happens under FDR's presidency one of the things that leads to this new modern welfare state or its creation of the safety net of the Social Security Act Social Security is a national pension system as people work they are taxed and money goes into a trust that trust pays people who are 65 and older every month in proportion to the amount of money that they contributed to the trust the idea is that as workers that are paying into the system now when they retire they'll also have others paying into the trust for them the FDR Administration also adds unemployment compensation when these measures were instituted there was some resistance people thought that it was one step closer towards socialism the country was not too far removed from the Red Scare of the previous decade some saw the federal government as being too pro-union and increasing regulation on business or they criticized his deficit spending for these large programs FDR's programs for getting the country out of the depression are collectively known as the New Deal and it is the topic of the next lecture but for now here's the recap the U.S continued to become more urban the stock market crashed was the Catalyst for the Great Depression President Hoover was largely blamed for the depression for his lack of action after the crash and the policies and programs in FDR's New Deal will build the foundation for a limited welfare states thank you for watching if you would like to watch the next lecture you can click the video link on the screen and if you're looking for more practice to help you on the AP exam you can visit apushlights.com I wish you the very best in all of your studying and look forward to seeing you back in the next lecture