The Great DepressionHopelessness, Hoboes, and Hoover

Life Before the G.D.

• Roaring Twenties• Fun• Youthful Excitement

• Post-War Prosperity• During/After WWI, American Economy Grows

• Industry & Trade• Consumer Products• Farmers not doing well – why?

• No End In Sight for Economic “Boom”

• Stock Market Increases Steadily throughout ’20s

The Illusion of Wealth

• During ’20s, an Illusion of Wealth exists• WHY?

• 3 Reasons• War Debts

• Loaned $ to get paid $

• Uneven Distribution of Wealth• 2% of pop. controlled 70% of Wealth• What does this mean for economy?

• Buying on Margin/Credit• Stock Market Value is not accurate

A Crash is Coming

• 1920-1929: Stock Market quadruples• 1920: 318 million shares

traded• 1929: 1 Billion shares

traded

• More people begin to Invest• Buy On Margin

• Federal Reserve attempts to limit margin buying – but it is too late

Black Tuesday

• Sept 3, 1929: Market at Highest Point• Sales of manufactured goods decreased

• Rumors: Big investors are about to leave market

• Thurs, Oct 24, 1929: Rumors lead people to sell stocks…Prices drop….more sell…panic begins• Bankers step in to buy up stock, crisis avoided

• Tues, Oct 29, 1929: PANIC – 16 million shares of stock are dumped• Market drops $16 Billion (Today’s $ = $180

Billion)

CAUSES OF GREAT

DEPRESSION

Buying On Margin

Stock Market Crash of 1929

Bank Panics Farm FailuresHawley-Smoot

Tariff

The Depression Begins

• Because of Margin Buying, many people lose their savings

• Bank Panics• Banks Close, people lose

everything

• As Depression starts, economy cycles downward

• Nearly 3 million Americans lose their jobs• Unemployment rises to

25%

People Lose Jobs

People can’t Afford

to buy things

Businesses Fail

Hard Times Ahead

• No Jobs = No Money = No Home

• “Hoovervilles” spring up • Horrible Conditions

• Hoboes• Travel around

country looking for work

• Breadlines• Charities & Soup

Kitchens

The Dust Bowl

• Farmers already struggling during ’20s

• 1931: Severe Drought in Great Plains

• Poor agricultural practices • Dust Bowl

• Dirt blown as far as New York

• Many Farmers Leave • 2.5 Million • Migrant Workers go to

California• Called “Okies”

Who is Herbert Hoover?

• 1928: Hoover very popular

• Hoover = brilliant economist • Shared Views of Harding

& Coolidge• BIG BUSINESS, SMALL

GOVERNMENT• “Rugged Individualism”

• Helping poor is insulting to them

• Not the Government’s Role

• Associative State• Businesses & Gov’t will

voluntarily cooperate• Hoover Dam

Hoover to the Rescue?

• Hoover’s $ Background is his downfall• “G.D. is a natural cycle & will fix itself”

• Urges “Voluntary Cooperation”• NO DIRECT AID TO POOR• 1932: $2 Billion in direct loans to

businesses• Reconstruction Finance Corp. (RFC)• Expansion of Federal Government’s role

Down with Hoover!

• Hawley-Smoot Tariff• Disaster• Incredibly high tariff, = Europe passes high tariff

= no trade • By 1934: Trade down 2/3 from 1929

• Bonus March• WWI Vets want Bonuses• Set up Hooverville in Washington DC• Hoover orders US Army to break it up• Burns Hooverville to ground & uses tear gas• Looks terrible for Hoover

• Election of 1932: FDR wins in a landslide