THE GREAT DEPRESSION

IMMEDIATE CAUSES

1928 Presidential candidates campaign on continued

prosperity• Alfred Smith’s campaign sunk by anti-Catholic backlash

Speculation and margin buying drives 1920s bull market• Falling stock prices force lender margin calls

October 29, 1929: Black Tuesday market crash• Loss of credit, bank losses, stock prices drop drastically• Bank runs cause more bank closures

The stock market crash of 1929 was the big hit on a weak

system with many problems at its roots

THE STOCK MARKET CRASH

ROOT PROBLEMS

Top 5% of households hold 30% of income• 2/3 of American families

Installment plans for expensive goods• As demand falls, workers laid off, demand continues to fall

1920s: Banks slowed lending to foreign companies/countries• Exports fall as Americans lose jobs

Federal Reserved (FED)did not have safeguards against

speculation• Mismanaged interest rate levels

WORSENING DEPRESSION

Hobos roam country after being ejected from homes by

bailiffs

The Dust Bowl hurts farmers

Art and Entertainment are happy escape for struggling people• Movies and radio shows

• Radio soap operas• The Wizard of Oz and Gone With The Wind

• Literature and Art• William Faulkner’s The Sound and the Fury• Grant Wood’s American Gothic

PRESIDENT HOOVER RESPONDS

President Hoover’s Laissez-Faire stance does not convince the public• American Individualism and private sector responsibility was Hoover’s

strategy• Can’t raise taxes, can’t lower taxes—Republicans lose Congress in 1930

Hoover asks FED to put more money in circulation, they refuse• National Credit Corp. (NCC) fails to expand credit

Congress passes Emergency Relief & Construction Act• $1.5 Billion to states for relief (payments to suffering people)• $300 Million for public works construction projects

Hunger marches, farmer protests, and the Bonus Army