Unit 5 Section 11 The Great Depression

Causes of the Depression Economic prosperity of the 20’s had underlying cracks: Overproduction of goods post war Mining and Lumbering demand falls post war Railroads have trouble competing Overproduction by farms / falling prices Renewed Tariff Uneven distribution of income No banking regulations

Hoover’s Election 1928, Herbert Hoover becomes President Promises “two cars in every garage; two chickens in every pot…” Laissez Faire Republican; steps into seemingly prosperous economy Predicts “end of poverty”

Stock Market Crash Seemed like economy would grow forever Stock prices were over inflated (companies overvalued) Lack of oversight Speculation in the market – buying stocks on chance of quick profit; ignoring risks Buying on margin – buying stock on credit

Stock Market Crash September of ‘29, market finally turns down, panicked selling begins October 29th, 1929 – massive stock sell off. Stock market crashes. “Black Tuesday” Mid November, stocks had lost $30 Billion in value 1

The Depression Begins Panicked Americans make run on banks to withdraw funds… some can’t, as $ was invested in market By 1933, 11,000 banks fail. Unemployment hits 25%. Rural areas hit hardest – foreclosure of farms, environmental disaster of Dust Bowl hits at same time

Lives Devastated Shantytowns emerge as people lose homes – nicknamed “Hoovervilles” Soup kitchens and breadlines provide little relief Women and children, minorities, suffer even more Men search for work, great movement around nation. (Okies and others to California – portrayed in Of Mice and Men) Tremendous psychological effects – suicide, desperation, value of saving and hard work

Iconic Images A California “Okie” family in 1936 Dorothea Lange’s “Migrant Mother” A Chicago soup kitchen, opened by Al Capone

Hoover’s Failures Hoover’s solution was rugged individualism – no direct relief to the people Established RFC – Reconstruction Finance Corp. to loan $ to businesses as ‘trickle down’ theory “Two families in every garage”, Hoovervilles

The Bonus Army 1932, Thousands of World War veterans march on Washington demanding payment for wartime services - Known as “Bonus Army” Because of economic hardship, want payment immediately instead of 1945, agreed upon date Hoover sends in military to break up camp of protestors, violence ensues Bonus Army is gassed, children killed and injured Hoover, already struggling, is ruined politically

Election of 1932 Democrats are almost guaranteed victory Franklin Delano Roosevelt, NY Governor, easily wins Pledges New Deal for American people Democrats take control of Congress (1930) 2

Election of 1932 Hoover remains as lame duck until March – people suffer 20th Amendment passed as result – changes inauguration date FDR must address banking issue quickly 3

1. from http://www.ushistory.org