THE GREAT DEPRESSION

CAUSES OF GREAT DEPRESSION 1. Crisis in Farming Sector 2. Unequal Distribution of income 3. Availability of easy credit 4. Tariffs and War Debt 5. Weakened Industries People on a “ bank run ” in 1931

FARMERS FACE PROBLEMS Pre-WWI & during:  Farm production had tripled  Taking out loans to produce more Post WWI  Unable to pay back loans  Banks foreclosing on farms  Produce too much goods  Consumers not buying goods: WHY?

CONSUMER SPENDING Consumers buying less for several reasons 1. Rising prices  Inflation  Weakening of Labor Unions 2. Stagnant Wages  Weakening of Labor Unions 3. Widening Income Gap 4. Overbuying on Credit  Installment Plans/Credit  Effects of advertising

WEAKENED INDUSTRIES Railroad & Steel  Declining with increases of automobiles and end of war Coal  New forms of energy such as hydroelectric, oil, & gas Housing  Hurts job opportunities  Lumber & Construction

STOCK MARKET CRASH Speculation Buying high risk stocks Aiming for a quick profit What is the disadvantage? How does it hurt the economy? Buying on Margin Placing small down payment on stock, and borrowing money to pay rest Hoping stock will improve to pay off loan for stock What is the disadvantage? How does it hurt the economy?

BLACK TUESDAY October 29, million stocks were sold  no one to buy them Effects: of Buying on Margin? on economy?

FINANCIAL COLLAPSE Banks Americans begin to withdraw money By 1933, 11,000 banks had closed as they had invested in stock market Businesses 90,000 businesses went bankrupt Gross National Product (GNP) was cut in 1/2 National Economy Unemployment rose to 25% Global Economy America could not import Hawley-Smoot Tariff (1930)

EFFECTS OF HAWLEY-SMOOT TARIFF Ideal Purpose Raise tariffs to protect American industries & manufactures Similar to Fordney-McCumber Actual Results: 1. Less trading --> World trade decreased 66% 2. Less money exchanged 3. Increase in unemployment

THE DUST BOWL AND THE GREAT DEPRESSION

GREAT DEPRESSION & CITY LIFE Creation of Shantytowns (later called Hoovervilles) Soup Kitchens & Bread lines dominated city living People line up daily for the chance of “ Free coffee & doughnuts ”

“HOOVERVILLES” Result of Hoover’s polices during economic hardships Families would live in boxes, old cars, crates People used newspaper as additional clothing

GREAT DEPRESSION & RURAL LIFE Many farmers turn to tenant farming Result of foreclosed farms One of few ways to make money Causes of Dust Bowl Overgrazing Extreme Heat & Droughts

Watch Dust Bowl Clip

DUST BOWL Courtesy of PBS: American Experience, The Dust Bowl

THE EFFECTS OF THE EARLY GREAT DEPRESSION On: Cities Rural Living Family

HERBERT HOOVER & THE GREAT DEPRESSION 31st President

HOOVER’S STRUGGLES Role of Government Government should help facilitate businesses & workers BUT ONLY WHEN ASKED Government should not intervene or be active Believed in Indirect Relief Rugged Individualism Hoover & many Americans felt one should provide for themselves Americans should not take handouts or charity

HOOVER ’ S STRUGGLES Indirect Relief  Hoover felt government should not intervene  Left “direct relief” to charities Bonus Army  Veterans of WWI marched on Washington for monies due to them  Bonus Army assembled in protest  Hurt Hoover’s image

HOOVER: TOO LITTLE TOO LATE Boulder Dam (Hoover Dam) – 1929 Federal Farm Board (1931) National Credit Corporation (1931) Glass Steagall Banking Act (1932) Federal Home Loan Act  Lowered mortgage rates  Allowed farmers to refinance farms/avoid foreclosure RFC & Trickle Down Economics  Loan money to big corporations and common citizens will benefit

Hoovervilles Bonus Army Veterans of WWI marched on Washington for monies due to them Bonus Army assembled in protest Forcibly removed from camps Hurt Hoover’s image

Break into groups of 2: Each reads a different document Answer the questions below Was the Bonus Army justified in its march on Washington? Do you feel Congress did the appropriate decision in not passing the Bonus Army bill? Do you feel the Bonus Army was mistreated? Explain. Do you think the use of Federal Troops was warranted? Is Hoover’s image correctly portrayed?

LEGACY OF HOOVER He didn’t really cause the Great Depression, but some see his policies as completely ineffective His efforts stem from Republican beliefs Went from what he knew Could he really predict the terrible turn of events? Could he have done anything to help with the Dust Bowl? Loses the 1932 election to FDR Still criticized from not doing something immediately