THE GREAT DEPRESSION Economic Causes

“False” Prosperity of the 1920’s Industrial production up Increased wealth- LOTS of new millionaires (but no middle class) New businesses & products Low unemployment New investment opportunities Little gov’t. interference

Dangers Below Surface Farmers: overproduction/low prices Industry: overproduction/surplus Unequal wealth (75% live paycheck to paycheck) Poor banking practices ($$$ in market) High tariffs (slow trade) Stock market speculation: “buy on margin”

Warning Bell: Stock Market Crash All summer: prices up (buying “on margin”) Fall: periods of sell-offs October 24th: Largest one day sell off October 28th: “Black Tuesday” the market crashed! Losing $160,000 then = $1.8 million today Millions lost life savings But who’s in the market? Only 2+million

Causes of the Depression Unequal Distribution of wealth Massive Farm Debt Manufacturers decreased production Layoffs! Banks fail due to poor investments and bank runs – deposits are not insured - “It's A Wonderful Life”: bank run (00:21) People lose their life savings Stock Market Crash Results: Mass Unemployment 25% unemployed http://www.youtube.com/watch?v=Wil1ePlT1xs

Unemployment Rate UP: 1929-1943 (25% unemployed)

Other Economic Effects of Depression Reduced hours for many Pay cuts Default on loan: lose homes, cars, etc. 4,000 Banks fail (10 mill. Savings accounts GONE) 26,000 Businesses close Cut back on spending Prices dropped (lose profits): deflation “Ride the rails”: migrants on the move

What Does Hoover Do? Talk confidently Call business, labor & agric. leaders Increase gov’t spending on federal projects Urge state & local gov’t: “spend!” Raise taxes (balance budget) Raise tariffs (Hawley-Smoot Tariff) Moratorium on debts Reconstruction Finance Corp.:

Hoover’s philosophy “Rugged Individualism”: Voluntary cooperation Personal responsibility Greater Federal role: public works projects, Reconstruction Finance Corp. Agricultural Marketing Act (Farm Board makes loans, new cooperatives buy up surplus) POUR – President’s Organization of Unemployment Relief

AMERICANS REACT TO HOOVER Hoover was increasingly unpopular, but he continued to try...  RECONSTRUCTION FINANCE CORPORATION 300 Million to states had power to make emergency loans to banks Hoover would NOT involve himself in any programs of direct gov't aid to individuals -didn't want to erode Americans sense of "RUGGED INDIVIDUALISM"

HOOVERVILLES

Biggest Political Mistake? “Bonus Army March” Incident Bonus Army March: “we want our WW I bonuses now- not in 1945 Camped in D.C. Congress didn’t approve measure…1,000 still camped Hoover: get them out U.S. troops (Geo. Patton/D. MacArthur) Tanks + tear gas + force = “Heartless”

1932 Election: FDR vs. Hoover

Franklin D. Roosevelt (FDR) 32nd President NY Democrat 4 Terms, 1933-1945 Handicapped from Polo President during GD and WWII Gave people hope and confidence during the GD

Hoover & FDR

Nat'l income was 50% of what it had been in 1929 1932 ELECTION 1 out of 4 unemployed… Nat'l income was 50% of what it had been in 1929 Republicans. nominated Hoover  no hope winner by a landslide = FRANKLIN DELANO ROOSEVELT (Dem - N.Y. governor) Inauguration - Extra! Special! Roosevelt Inaugurated 1933/03/05 (1933) (7:43) 21