The Great Depression Begins
Republican/Conservative Ascendancy Warren Harding 1921-1923 “A Return to Normalcy” Calvin Coolidge 1923-1929 “The Business of America is Business”
Election of 1928 Herbert Hoover- elected president in ’28. Self-made millionaire. Worked in Harding and Coolidge govt. Continues conservative policies. Great administrator, poor politician.
What should government’s role be?
How was the economy doing in the Roaring Twenties? Wages were higher. Working hours shorter. Unemployment was low. Businesses turned in record profits each year. Stock prices soared to record highs. America became the richest nation in the world. But…..
There were Warning Signs… Uneven prosperity Buying on Credit Playing the stock market: Speculation Buying on margin Overproduction Farmers’ Depression begins in 1919
The Stock Market Crashes After the Dow Jones Industrial Average peaked at 381 in September, stock prices began to fall on October 24, 1929… By the end of the November 1929, $25 billion in stock value had been lost.
How did people lose millions in the Great Crash? Stock prices—September 3rd, 1929 Radio Corporation of America (RCA): 505 Montgomery Ward: 466 Stock prices—November 13th, 1929 Radio Corporation of America (RCA): 28 Montgomery Ward: 49
The Stock Market Crash
The Crash (Eventually) Effects Millions Great Depression: economic decline that lasted from 1929-1941. Ripple Effect: Workers: 12 million people jobless by ’32. Banks Close: unpaid farm loans ruined rural banks; city banks out of cash. Impact on the World: U.S. investments in other countries stop.
‘BANK RUNS’: American Union Bank, New York City (1931)
Bank Failures in the Great Depression
What gives money its value?
American Legion Employment Bureau, Los Angeles (1930)
Major Causes of the Great Depression Stock Market Crash Overproduction on farms and in factories WWI Speculation and Installment Buying Drought in the Midwest Federal Reserve Policies: “tight” money supply & interest rate flux. Hawley-Smoot Tariff
Dust Storm approaching Washington, DC, March 21, 1935.
The Great Depression Begins
Hoover Gets the Blame “Hoover Flags”: out-turned pockets “Hoovervilles”: shanty-town villages for homeless “Hoover Blankets”: newspapers that people covered up with
What was Hoover’s plan to help? Believed it was a ‘state’ and ‘local’ problem, not a ‘federal’ one. Believed that “handouts” would crush the American spirit. Reconstruction Finance Corporation-- loans to banks and businesses. Public Works Projects— men hired to build roads, bridges, dams, etc. Hawley-Smoot Tariff– high taxes on imported goods (backfires!). Millions to help farmers in the Dust Bowl. Too little, too late…
Hoover’s Final Mistake Bonus Army: 15,000 WWI veterans march on Washington asking for ‘bonus money’. Congress refuses to pay; the army is sent to force the veterans out. Hoover blamed for brutal attack on the veterans.
Welcome to Hooverville