The Great Depression Causes and Hoover

October 29, 1929 the US stock market crashed. October 29, 1929 the US stock market crashed. Known as “Black Tuesday”. Known as “Black Tuesday”. Wall Street marked the beginning of the Great Depression, but did not cause it. Wall Street marked the beginning of the Great Depression, but did not cause it.

Causes

Distribution of Wealth Unequal distribution of wealth. Unequal distribution of wealth. 0.1% of the richest Americans had as much total income as the bottom 42%. 0.1% of the richest Americans had as much total income as the bottom 42%. Half the nation lived below the subsistence level. Half the nation lived below the subsistence level. Not enough purchasing power to keep the economy going. Not enough purchasing power to keep the economy going.

Oligopolies Oligopolies dominated American industry Oligopolies dominated American industry Led to “administered prices”. Led to “administered prices”. Kept prices artificially high Kept prices artificially high Did not rely on supply and demand. Did not rely on supply and demand.

Agriculture, Industry and Banks Suffered from overproduction Suffered from overproduction Prices were declining and farmers had heavy debt. Prices were declining and farmers had heavy debt. Coal and textile industries suffered the same. Coal and textile industries suffered the same. Banks were poorly managed and regulated. Banks were poorly managed and regulated.

Foreign Trade US crash caused panic in Europe US crash caused panic in Europe Great Depression became global Great Depression became global European nations defaulted on loans European nations defaulted on loans European nations stopped purchasing American goods. European nations stopped purchasing American goods. US exports fell by 70% from US exports fell by 70% from

Federal Government Didn’t enforce antitrust laws. Didn’t enforce antitrust laws. Encouraged oligopolies and high prices Encouraged oligopolies and high prices Failed to regulate banks and the stock market. Failed to regulate banks and the stock market. Reduced taxes on the wealthiest Reduced taxes on the wealthiest Opposed labor unions which kept workers wages and purchasing power low Opposed labor unions which kept workers wages and purchasing power low No affective agricultural policy No affective agricultural policy High tarrifs discouraged foreign trade High tarrifs discouraged foreign trade

Hoover

Volunteerism Hoover believed voluntary, private action would solve the Depression. Hoover believed voluntary, private action would solve the Depression. Did not want federal intervention Did not want federal intervention Asked business leaders to maintain employment and wage levels Asked business leaders to maintain employment and wage levels Business leaders couldn’t do it. Business leaders couldn’t do it. Felt charities, through private donations, should help the needy. Felt charities, through private donations, should help the needy. Believed the economy would naturally right itself. Believed the economy would naturally right itself.

Hoover’s Approach As the economy worsened, Hoover began to take some action. As the economy worsened, Hoover began to take some action. Congress cut taxes to increase consumer buying power. Congress cut taxes to increase consumer buying power. Increased public works budget to create jobs. Increased public works budget to create jobs. Reconstruction Finance Corporation lend funds to banks, insurance companies and railroads. Reconstruction Finance Corporation lend funds to banks, insurance companies and railroads. Hoover was seen as indifferent to the peoples’ suffering. Hoover was seen as indifferent to the peoples’ suffering.

Bonus Army

1932, veterans of WWI demanded payments of service bonuses that weren’t due until , veterans of WWI demanded payments of service bonuses that weren’t due until Hoover refused to meet with them Hoover refused to meet with them 10,000 veterans created a shantytown at the edge of Washington. 10,000 veterans created a shantytown at the edge of Washington.

Response General Douglas MacArthur led cavalry, infantry and tanks against the “bonus army”. (July 28, 1932) General Douglas MacArthur led cavalry, infantry and tanks against the “bonus army”. (July 28, 1932) The shantytown was burned down and several veterans died. The shantytown was burned down and several veterans died.

Election of 1932

With no hope for victory, Republicans renominated Hoover With no hope for victory, Republicans renominated Hoover Democrats nominated Franklin D. Roosevelt. Democrats nominated Franklin D. Roosevelt. In 1932, the Democratic and Republican platforms differed very little. In 1932, the Democratic and Republican platforms differed very little. FDR knew he would win just because Hoover wouldn’t. FDR knew he would win just because Hoover wouldn’t.