The Great Depression Chapter 24

Hard Times The economic depression that occurred in the 1930s was more than financial The psychological impact was called the “invisible scar” Stock Market cracs WAS NOT the cause of the Great Depression Buying on the margins (loans) allowed more people to “afford” stocks Corporations with spending money would lend money to stockbrokers rather than re-invest in their own companies for new technologies, etc. Why is this a problem?

Hard Times Many assume that the stock market crash occurred over a few days Not true—the “crash” had been at least a month in the making It doesn’t hit bottom until July 1932, falling 89% from the Sept. 3, 1929 record As the stock market became shaky, so did the credit market Because the loans were backed by the stock itself, as the value decreased, the borrower had to pay the difference Half the value of stocks was lost in a matter of 10 weeks In late Oct. Hoover stated that the country was on a “sound and prosperous basis”

Hard Times Overproduction was the key cause of the depression As more agricultural and industrial companies had been urged to make more, consumers were buying less Wages rose 8% between 23 and 29 while worker output rose 32% An unequal distribution of wealth also contributed to the oncoming depression 80% of the nations families didn’t have any savings

Hard Times The crash caused investors, businesses, and the wealthy to lose confidence Manufactures decreased production and laid off workers With higher unemployment, fewer people could buy goods and thus companies lost more money, which meant more layoffs Banks began to fail as people began withdrawing the money (banks were not insured at the time) 5000 bank failures occurred between

Hard Times There is no such thing as “unemployment benefits” during this time By M people were without jobs (33% unemployment rate)

Hard Times Men, especially 35-55, found it more difficult to cope with Women could get jobs easier because they were paid less Local efforts to help were not sustainable Money, resources, and staff could not deal with the 50% unemployment rate in some areas Warmer areas like FL and CA could not deal with the jobless migrants seeking employment By 1931 Los Angeles was seeing new arrivals at a rate of 1200 per day

Hard Times Hoover seemed to ignore the severity of the issue by claiming that the local communities could handle it The President’s Organization for Unemployment Relief (POUR) was led by Walter S. Gifford who urged fundraising at the local level FDR’s administration created federal aid in the form of welfare, etc? Has it been a disservice?

Hard Times Hoover believed that business confidence was the key He created the Reconstruction Finance Corporation (RFC) Government credit would be available for bank, RRs, insurance, and other businesses In 1932 Congress passed the Emergency Relief Act allowing $300M to go to states who needed additional funds Only $30M had been given out by Dec Only a small portion went towards public works

Hard Times By 1932, protests were occurring across the country Farmers created the Farmers’ Holiday Association—refused to sell goods until prices rose Thousands marched on Ford River Rouge Factory in Detroit—police killed 4 The “Bonus Army” marched on D.C. to demand that the WWI bonus of $1k be paid in cash now instead of in the form of a matured bond in 1945 The Senate refused to pass a bill The remaining soldiers were removed by MacArthur’s men providing a sad image for the heroes of 1918

Hard Times It is easy to see why Hoover didn’t get reelected FDR’s acceptance speech for the Democratic candidacy was “I pledge you, I pledge myself to a new deal for the American people.” During the campaign, FDR called for addressing underconsumption and redistributing wealth