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