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The Great Depression 1928-1932
Learning Outcomes:1.Discuss the weaknesses of the
economy in the 1920’s2.Explain how the stock market
crash contributed to the coming of the Great Depression
3.Describe how the Great Depression spread overseas
Key Terms and PeopleHerbert HooverspeculationBlack Tuesdaybusiness cycleGreat DepressionHawley-Smoot Tariff
Prosperity Hides TroublesConsumption went up
Gross national product went up
Stock market went up
Bull market
Optimism Sweeps Hoover to “W”RepublicanRan against Alfred E. Smith—lost because he was Catholic
Problems Plague the Agricultural SectorSummary
During the war there was a high demand of farming good throughout the country. Once the war was over demand for those good went down and sent the rural community spiraling into a depression.
Farmers bought costly equipment to keep up w/ the demand of WWI.
Took on huge debtPost WWI demand
went downRural depression,
natural disastersLived off credit from
month-to-month
Wealth is Distributed UnevenlyWages and disposable
income rose in the 20’s
As wages rose gradually, worker productivity increased astronomically
Rich became richer and workers became less poor—economic problems
Income distribution chart p. 369
The Stock Market CrashesWhat was the
basis for soaring stock prices during the 1920’s?
What happened when investors lost confidence in the stock market?
Too much money was being poured into stock speculation
Black Thursday—nervous investors started to sell stocks
Black Tuesday—16 million shares were sold
The Banks CollapseSummary
After the stock market crashed people became fearful and tried to get their money from banks, but after some flawed policies put in by the gov’t the banks ran out of money.
Frightened depositors feared for their money and tried to withdraw it from their banks
Misguided monetary policy—cut interest rates to stimulate economic growth
The “Fed” discouraged lending—too little money in circulation
Businesses Close & Unemployment RisesCollapse of stock
prices and reduced consumer spending led to business failure
Production cutbacks, maintain price levels, layoffs, and reduced payroll
By 1933, 25% of Americans had lost their jobs
Tariffs Add to WoesThe gov’t moved to
protect American products from foreign competitors
Hawley-Smoot TariffEuropean countries
retaliated and passed tariffs of their own against U.S. goods
Helped destroy international trade
The Depression Goes GlobalCopy diagram on
top of p. 372
European problems of reparation payments, war debt payments, and international imbalance of trade had already created a shaky economic structure
Germany ceased payments—GB/France suspended payments
Review Questions1. Why did many farmers face economic
difficulties during the 1920’s?2. Why did the uneven distribution of
wealth contribute to the economic troubles of the U.S?
3. What problem did the availability of easy credit create?
4. How were the stock market crash and the collapse of the banking system related?
5. How did these events affect the nation’s workers and businesses?
Learning Outcomes1.Discuss how Hoover’s initial
conservative response to the Great Depression failed.
2.Explain the changes in the President’s policies as the crisis continued.
3.Describe how Americans reacted to Hoover’s relief programs.
Key Terms and PeopleLocalism Reconstruction Finance Corporation
trickle-down economicsHoover Dam Bonus ArmyDouglas MacArthur
Cautious Response to Depression FailsSummary
President Hoover attempted to restore the nation’s economy by changing his “hands off” approach through volunteerism and gov’t policies to help kick start the economy and end the depression.
Hoover asked business and industrial leaders to keep employment, wages, and prices at current levels.
Called for gov’t to reduce taxes, lower interest rates, create public-works programs
Requested the rich give to charities
Volunteerism Fails to Bring Relief Relied too much on
voluntary cooperationHoover was cautious to
encourage…not legislate
Volunteerism did NOT work
Localism—no financial or human resources to successfully work
The crisis demanded decisive federal action
Hoover Adopts More Activist PoliciesThe association of the
President’s name w/ suffering and want indicated Americans’ feelings for him
Reconstruction Finance Corporation (RFC)
Trickle-down economicsDid NOT work!Hoover Dam Project—
brought much-needed employment to the SW
Some Urge Radical ChangeSome Americans
thought the answer was to reject capitalism and accept socialism/communism
These ideas were rejected
Americans never lost faith in their country
Bonus Army Marches on WashingtonBonus Army—war
vets seeking bonus Congress had promised them from WWI
Adjusted Compensation Act—provided lump-sum payment to vets
Vets wanted early payment, but Hoover vetoed bill
Hoover Orders the Army OutGeneral Douglas
MacArthur, Dwight Eisenhower, and George Patton
Marchers were tear-gassed and many were badly injured
In 1932, Americans were ready for a change in the Oval Office.