Unit 9: “Prosperity to Depression” Note Packet 9-2 Coach Styles

“Prosperity to Depression”—NP 9-2 There is no simple way to explain the true cause(s) of the Great Depression—economists today still debate which causes were the most important. President Hoover insisted that the major cause of the Great Depression was the worldwide economic disorder that followed World War I. Many economists agreed, pointing to the vast destruction of property during the war and the worldwide dislocation of trade during and after the war.

“Prosperity to Depression”—NP 9-2 Leading economists held varying theories as to the major causes of the Depression: America’s high tariff policies stifled world trade, damaging American business. The excessive borrowing of money by American consumers and investors. Uneven distribution of income in America. Overproduction by American industry. They are argued that high import taxes prevented other countries from selling their goods in the U.S. and thus prevented them from securing the money they needed to buy American imports. For stocks, luxury items, homes, cars—no real credit ratings to base loan applicants on. Who would make this claim? What is the “even distribution of income” by government planners called? SOCIALISM Supply and demand…

“Prosperity to Depression”—NP 9-2 The Depression confronted the Hoover Administration with 2 main emergencies: The widespread misery of the American people. Millions lose their jobs, farms, homes—and increasingly lose faith that things will get better. Some Americans believed Hoover should extend direct relief ($) to the American people—Hoover believed direct relief was the responsibility of the local communities and that the involvement of the federal government would create a huge, inefficient bureaucracy and undermine the self-respect of those receiving it. By April of 1930, 6 ½ million Americans were unemployed and by 1932, the number of unemployed had risen to over 12 million. The collapse of business and agriculture. To this second emergency, Hoover responded more actively.

“Prosperity to Depression”—NP 9-2 In response, the Hoover Administration enacted 4 main measures designed to create jobs and to stimulate the economy. Hoover instructed the Federal Farm Board to purchase agricultural surpluses in an effort to raise falling farm prices. 2. The creation of public works programs (def): Projects built by the government for public use and to provide employment. A major project of the Hoover Administration was the construction of the Boulder Dam (eventually renamed the Hoover Dam) on the Colorado River.

Hoover Dam

“Prosperity to Depression”—NP 9-2 Creation of the Reconstruction Finance Corporation (R.F.C.), designed to lend federal funds to banks and insurance companies to stimulate their business. In July 1932, Congress authorized the Home Loan Bank Act that gave federal funds to banks and mortgage companies to reduce foreclosures on homes and farms. Foreclosure (def): A lender’s retaking of property purchased through borrowed funds, usually from banks or mortgage companies, because the borrower fails to make proper payments.