Aim: Where do we assign blame for the Great Depression? Key Terms: Real Estate/Stock Market Speculation Bonus Army Buying on Margin Rugged Individualism Stock Market Crash “Pump Priming” vs. “Trickling Down” Norris-La Guardia Anti-Injunction Act in 1932 Essential Questions: What contributed to the economic downfall causing the Great Depression? Did Hoover make logical arguments for his policy choices? Can social programs save capitalism? (Ah, the irony!)
Causes of the Great Depression Overproduction Real Estate Speculation Buying on Credit Stock Market Speculation, Buying on margin - Crash of 1929 Hoover’s ‘Trickle Down’ Economics Norris-LaGuardia Anti Injunction Act Reconstruction Finance Corporation (RFC) Bonus Army
Overproduction Sales were good, companies expected sales to get even better. So they overproduced! New techniques & machines made production more efficient. This replaced workers who were no longer needed. Trouble came when sales began to slow down: More workers needed to be laid off, they couldn’t purchase the goods produced in such large quantities. Led to even more unemployment because the companies were losing money on surplus products (supply high, demand low, price goes down).
Stock Market Speculation Buying stock when the price is low and selling it when the price rises in hopes of getting rich quick! When stock market crashed, many Americans were left with worthless stock. The government did little to stop people from investing in worthless stocks! They failed to regulate banks that were investing depositors’ money in worthless stocks.
When everyone wants their money all at the same time, a problem comes up (The Crash—Black Tuesday and Thursday).
The Crash-Black Tuesday and Thursday What were people doing on this day? When was it finally over? October 24, 1929- Black Tuesday Hundreds of people began widely selling their stocks-Panic October 29, 1929-Black Thursday
Streets the day the NY stock market crashed
A crowd gathers outside New York’s American Union Bank during a bank run in 1931.
FDR “Priming the Pump” VS HOOVER “Trickle Down” GOV’T Creates programs to give people jobs Everyone has more $ More $ = People buy more goods More investment in business Businesses build more factories New Factories = New Jobs Business making more $, which fixes the economy. Government gives money to business. Businesses build more factories New Factories = More Jobs Increased Production Everyone has more money People can buy more items and fix the economy.
Bonus Army The World War Adjusted Compensation Act of 1924 had awarded WW1 veterans bonuses in the form of certificates they could not redeem until 1945. The principal demand of the Bonus Army was the immediate cash payment of their certificates.