Great Depression and Its Causes

Stock Market Crash August 1929-Recession October 1929-Market Crashes

Statistics

Causes Illusion of prosperity Overproduction Buying items on credit Overproduction Unequal Distribution of Wealth 99% of population –9% increase income Top 1% saw 75% increase Monetary Policy Federal Reserve-policy-decline in money supply—fall in interest rates Gold Standard Agricultural Sector 41% decline Bank Weakness in 20s Speculation on Wall Street Buying Stock on Margin

4 Problems with Hoover 1. Once economy collapses, Hoover gets the blame. 2. Hoover is a millionaire – resented by suffering people for that 3. The Problems during the Great Depression are so bad. 4. His policies during his presidency are ineffective

1. Smoot Hawley Tariff Extremely High Tariff Hoover waned to raise tariff higher to protect US goods Analyze Outcome: 1. Raises the cost of goods 2. The tariff was one of the Causes of the Depression!

2. Presidential Optimism Hoover gave speeches in which he said this is a temporary problem and encouraged people to be positive thinkers Analyze Outcome: 1. Not really solving anything, could be thought of as a liar if things don’t work out. 2. Angered People b/c he is a millionaire! - Cardboard box homes  Hoovervilles - Newspaper blankets  Hoover Blanket - Pant Pocket turned out  Hoover Flag

3. Taxes Belief was if he Cut taxes  people will have more $ to spend Analyze Outcome: 1. People have no money to begin with to be taxed, so less taxes does not matter 2. LESS GOVERNMENT SPENDING!!! 3. People may hoard $, not spend it

4. Plead with Big Business Hoover begged Employers to rehire, open up factories Analyze Outcome: - Businesses can’t sell  can’t pay employees  can’t rehire b/c there is no work to be done

5. State and Local Government Should Get Involved State and Local Government should find solutions, help people in a rough state Analyze Outcome: - Federal Government maintains it is not part of its responsibility - No Money to use b/c Hoover cut taxes

6. Charity Ask Americans to be Charitable Give $ to charity, loan to neighbors, invite troubled neighbors to dinner Analyze Outcome: - This is only a Temporary Solution - Gap between wealthy and poor is so big, wealthy could not give enough to help!

7. Reconstruction Finance Corporation (R.F.C.) Program established in 1932 that gave Fed government loans to banks and business to help them re-adjust Analyze Outcome: Good idea, but waits to long and does not go far enough in Federal Aid

Election of 1932 Hoover (R) vs. Franklin D. Roosevelt (D) In the end, Hoover had the impossible task of defending failed policies and strategies. Instead of campaigning, Hoover spent time begging Roosevelt to not do anything too radical. Hoover was afraid FDR would undo the nation’s chance for recovery if he was too radical.

Election of 1932 Election of 1932 Candidates Party Electoral Vote Popular Vote FDR Democratic 472 22,821,857 Herbert C. Hoover Republican 59 15,761,845 Norman M. Thomas Socialist 881,951 William Z. Foster Communist 102,785