Chapter 17 The Great Depression

As the fun of the Roaring 20’s was going on, the economy started to go through some changes. RR – cause of trucks, buses - textiles and steel not making much of a profit. Coal wasn’t in as big of a demand cuz of new energy, new houses weren’t being built as much which affects lumber and other related industries.

During war, farms were bumpin’…after war, demand went down. Farmers took out loans to buy mo’ equipment to produce mo’. Farms couldn’t pay so banks took farms Some banks closed cuz they weren’t getting payments from farms. Famers also bought on credit to try to get applicances

Lots of stuff being produced - families buying it on credit – price’s rising – lot’s of debt – production increasing more than wages – rich getting richer. 70% of families - less then $2,500, considered minimum for standard of living

Herbert Hoover In the election of 1928, people voted based off of the republican prosperity of the 20’s and Hoover was easily elected over Democratic candidate Alfred Smith.

Stock Market 1929 – 4 million Americans owned stock Speculation – people began buying stocks and bonds on the chance of a quick profit Buying on the Margin – Paying a small % of a stock’s price as a down payment and borrowing the rest. Laissez-faire

9/3/1929 – stock market peaked and fell 10/24/29 – market went down 10/29/29 – Black Tuesday – The market crashed, people tried to sell but many were stuck w/huge debts…people lost all their savings 3-4 wks later, investors had lost $30 billion. Hoover tried to calm the public but by Nov 13 stock went from 381 to 198.7

The Great Depression – the period from 1929 –1940 w/big unemployment and bad economy. Banks closing – 11k/25k, 90k business went bankrupt, 25% of workforce unemployed (Ford laid off 75k at one factory), gdp was cut in ½ billion to 59 billion The Fed limited $ supply to discourage lending and so there was to little $ in circwhen the stocks crashed

Hawley Smoot Tariff – Highest tariff in U.S. history, supposed to protect farmers + manufactures from foreign comp, instead euro’s couldn’t sell and therefore couldn’t buy U.S. stuff Euro’s raised their tariffs This caused a ripple effect where no one was making $

Hoovervilles/Shantyt owns – People were evicted from their homes and these little towns consisting of made up shacks sprang up.

Soup Kitchens + Breadlines – People went to these to get food which were run by charities. African Americans and Latinos had it worse off…had lower pay and Latinos were told to get out.

Dust bowl – b/c many farms overused their land in the midwest, it was void of trees and became a dust center. Farmers moved West to escape the dust storms and cuz they were evicted from their farms….800k moved…they were called okies Some farmers resorted to tenant farming

Lots of men became hoboes There was no federal system of direct relief – helping out the poor w/food and $ Some cities offered relief but not much.

There was resentment against women b/c people thought they shouldn’t work if men couldn’t + they weren’t seen in breadlines Children ran away on trains around the country, 300,000 kids were out of school cuz schools closed

Hoover Hoover wanted the country to remain up- beat…no worries that all of your $ just went down the drain and you’ll never get out of debt…it will be all good. Voluntarism Gov’s role was to facilitate cooperation between competing groups and interest in society

Rugged Individualism – People should succeed through their own efforts and federal handouts would be disrespectful He told business’s to work together, not layoff people, demand higher wages

Federal Home loan bank act – lowered mortgages and allowed farmers to refinance Reconstruction finance corp – 2 billion to banks, RR, life insurance…trickle down economics – if the gov gives out loans to banks, they’ll loan to business’s and then they’ll make money and give raises He did have the Hoover Dam built and cut taxes

Bonus Army – Veterans wanted $ now instead of 1945 that they had been promised w/ the adjusted compensation act. Congress voted to give them their $ in 1931 but Hoover vetoed it. They marched onDC Hoover had the Bonus Army removed from Washington and it hurt his image