THE GREAT DEPRESSION
CAUSES OF GREAT DEPRESSION
1. Crisis in Farming Sector
2. Unequal Distribution of income
3. Availability of easy credit
4. Tariffs and War Debt5. Weakened
IndustriesPeople on a “bank run” in 1931
FARMERS FACE PROBLEMS
Pre-WWI & during: Farm production had tripled Taking out loans to produce more
Post WWI Unable to pay back loans Banks foreclosing on farms Produce too much goods
• Consumers not buying goods: WHY?
CONSUMER SPENDING
Consumers buying less for several reasons1.Rising prices
Inflation Weakening of Labor Unions
2.Stagnant Wages Weakening of Labor Unions
3.Widening Income Gap4.Overbuying on Credit
Installment Plans/Credit Effects of advertising
WEAKENED INDUSTRIES
Railroad & Steel Declining with increases of automobiles and end of war
Coal New forms of energy such as hydroelectric, oil, & gas
Housing Hurts job opportunities Lumber & Construction
STOCK MARKET CRASH
Speculation
Buying high risk stocks
Aiming for a quick profit
What is the disadvantage?
How does it hurt the economy?
Buying on Margin
Placing small down payment on stock, and borrowing money to pay rest
Hoping stock will improve to pay off loan for stock
What is the disadvantage?
How does it hurt the economy?
BLACK TUESDAY
October 29, 1929 16 million stocks were
sold no one to buy them
Effects: of Buying on Margin? on economy?
FINANCIAL COLLAPSE
• Banks• Americans begin to withdraw money• By 1933, 11,000 banks had closed as they
had invested in stock market• Businesses• 90,000 businesses went bankrupt• Gross National Product (GNP) was cut in
1/2• National Economy• Unemployment rose to 25%
• Global Economy• America could not import• Hawley-Smoot Tariff (1930)
EFFECTS OF HAWLEY-SMOOT TARIFF
• Ideal Purpose
• Raise tariffs to protect American industries & manufactures
• Similar to Fordney-McCumber
• Actual Results:
1.Less trading --> World trade decreased 66%
2.Less money exchanged
3.Increase in unemployment
THE DUST BOWL AND THE GREAT DEPRESSION
GREAT DEPRESSION & CITY LIFE
• Creation of Shantytowns (later called Hoovervilles)• Soup Kitchens
& Bread lines dominated city living
People line up daily for the chance of “Free coffee & doughnuts”
“HOOVERVILLES”
• Result of Hoover’s polices during economic hardships• Families would live in boxes, old cars, crates• People used newspaper as additional clothing
GREAT DEPRESSION & RURAL LIFE
• Many farmers turn to tenant farming
• Result of foreclosed farms
• One of few ways to make money
• Causes of Dust Bowl
• Overgrazing
• Extreme Heat & Droughts
• Watch Dust Bowl Clip
DUST BOWL
Courtesy of PBS: American Experience, The Dust Bowl
THE EFFECTS OF THE EARLY GREAT DEPRESSION
• On: • Cities• Rural Living• Family
HERBERT HOOVER & THE GREAT
DEPRESSION•31st President•1928 - 1932
HOOVER’S STRUGGLES
• Role of Government• Government should help facilitate businesses & workers• BUT ONLY WHEN ASKED• Government should not intervene or be active• Believed in Indirect Relief
• Rugged Individualism• Hoover & many Americans felt one should provide for
themselves• Americans should not take handouts or charity
HOOVER’S STRUGGLES
Indirect Relief Hoover felt government should not intervene Left “direct relief” to charities
Bonus Army - 1932 Veterans of WWI marched on Washington for monies due to
them Bonus Army assembled in protest Hurt Hoover’s image
HOOVER: TOO LITTLE TOO LATE
Boulder Dam (Hoover Dam) – 1929 Federal Farm Board (1931) National Credit Corporation (1931) Glass Steagall Banking Act (1932) Federal Home Loan Act - 1932
Lowered mortgage rates Allowed farmers to refinance farms/avoid foreclosure
RFC & Trickle Down Economics - 1932 Loan money to big corporations and common citizens will
benefit
• Hoovervilles• Bonus Army - 1932• Veterans of WWI
marched on Washington for monies due to them• Bonus Army
assembled in protest• Forcibly removed from
camps• Hurt Hoover’s image
• Break into groups of 2: • Each reads a different document• Answer the questions below• Was the Bonus Army justified in its march on Washington?• Do you feel Congress did the appropriate decision in not
passing the Bonus Army bill?• Do you feel the Bonus Army was mistreated? Explain.• Do you think the use of Federal Troops was warranted?• Is Hoover’s image correctly portrayed?
LEGACY OF HOOVER
• He didn’t really cause the Great Depression, but some see his policies as completely ineffective
• His efforts stem from Republican beliefs • Went from what he knew• Could he really predict the terrible turn of events?• Could he have done anything to help with the Dust Bowl?
• Loses the 1932 election to FDR• Still criticized from not doing something immediately