THE CAUSES OF THE GREAT DEPRESSION How the booming 20s became a huge bust!

Harding in Office  Republican elected in 1920  “return to normalcy”  time in office far from normal  promoted laissez-faire  surrounded himself with the Ohio Gang  poker buddies greedy and drunk (spoils system)  looking to get rich off the government

Teapot Dome Scandal  Secretary of the Interior, Albert B. Fall.  federal oil reserves at Elk Hills, CA and Teapot Dome, WY  leased private companies in return for bribes  oil was for naval use  Fall went to jail…1 st Cabinet member to go to jail  Harding died in office before scandal could touch him

Silent Cal (Calvin Coolidge) in Office  Republican – takes over following Harding’s death in 1923, elected 1924  trust in business  laissez-faire approach  had honest people working for him  economy was booming…but not for long “The man who builds a factory, builds a temple” “The business of America is business!”

A Bull Market (rising stock prices)  Republican rule (Harding & Coolidge)  America was prospering  no one could see what was about to happen  there were signs  Another Republican, Herbert Hoover, gets elected in 1928  another laissez-faire guy  …..things are looking good but are they??? “A chicken in every pot and a car in every garage.”

Early Signs of the Great Depression  new technologies  increased output  wages remain low to buy goods  too many goods  not enough consumers  farmers amounting large debt  huge gap between rich and poor  middle class basically non-existent  fewer consumers when products overflowing OVERPRODUCTIONDISTRIBUTION OF WEALTH

More Causes  buying things with small down payments  then pay the rest in monthly payments  used to buy consumer goods like cars, washing machines, and refrigerators  buying stock on credit  small down payment  pay the rest in monthly payments  PROBLEM: value of stocks go up and down INSTALLMENT PLANBUYING ON MARGIN

And More Causes  buying stock using credit  hope stock prices would rise  PROBLEM: if they didn’t people could loose everything  before 20s  no money no buy  debt = fear  buying on credit was a new idea  now everybody was doing it SPECULATIONEASY CREDIT

The Boom is a Bust  For a month  stock prices had fallen  too many people selling stocks  only makes the problem worse  Black Tuesday: October 29, 1929  sparked the Great Depression  people rush to sell their stocks  called the Great Crash  people lost their fortunes in hours

The Great Depression   Economy was ruined  Businesses close  Extremely high unemployment  fewer goods bought  People run to the banks  withdraw their money  banks don’t have all the money on hand  led to bank failures/closings  People lose EVERYTHING

Hawley-Smoot Tariff  Hoover tried to help  Tariff raised taxes on foreign imports  American products cheaper  Foreign companies raise taxes on American goods  Now can’t sell in America or other countries  BACKFIRE (failure)

Life During the Great Depression  People lost EVERYTHING:  Jobs  Homes  life savings due to bank closings  confidence in Government  hope of achieving the “American Dream”  their pride

Charity  Soup Kitchens  Bread lines  provided free food to families but was limited

“Hoovervilles”  places where many homeless people grouped together in shantytowns (makeshift tents or lean-tos)  named after President Hoover  felt he was doing nothing to take care of the problem (homelessness) or them  covered up with newspapers (Hooverblankets)  turned their pockets inside out known as Hoover flags

“Hoovervilles”

The Dust Bowl (Great Plains Region)  environment a struggle from beginning  not enough rain, over-farming  1932 drought  caused soil to turn to dust  wind storms created dust storms ~ Dust Bowl  refugees, “Okies,” (regardless of what state they came from) left their farms for California for a new start

When he leaves the Dust Bowl, he will be called an “Okie”!

Plight of the Farmer  John Steinbeck’s Grapes of Wrath  family facing hard times in CA  Photojournalists, Walker Evans and Dorthea Lange  hardship and determination  leads to demands for better housing & sanitation of migrant workers

Hoover’s Band-Aid  promoted rugged individualism not direct relief  people take care of themselves rather than the government  BIG problem, little Band-Aid… tried to fix it  tried to get businesses to keep employees, wages and prices at stable levels  reduced taxes on people to encourage spending  asked the wealthy to be more charitable  none of this worked (too laissez-faire)

Hoover Disappoints  started to give money to companies to restart production…didn’t work  built the Hoover Dam to create construction jobs

Bonus Army (The Nail in Hoovers Coffin)  WWI veterans promised a bonus check to be paid in 1945  depression hit (1932), need money NOW  Hoover vetoed a bill to give them their money early  they march to Washington and set up a “Hooverville”  Hoover had General MacArthur remove veterans  given one hour to pack up and get out  tear gas was used on stragglers  not Hoovers intentions but ruined his reputation

“No Pay, All Stay”