The Great Depression Section 1

An Economy in Trouble The 1920’s were prosperous for Americans, but not everybody Farmers were hit especially hard because they produced more than they could sell Less than 1% of the population controlled the nation’s resources.

The Stock Market Crash By August 1929, some investors began to sell their stocks People saw this and began to sell their stocks as well, driving stock prices down (herd mentality) Stock prices continued to fall as people in a panic tried to get rid of them in reaction

Crash (Continued) “Black Tuesday” October 29, Stocks become worthless and people desperately tried to get rid of them Prices fell even more because no one wanted to buy worthless stock People who were millionaires suddenly lost everything overnight

Why did this happen? Overproduction- farms and factories made more goods than the American public could buy Weakness in the banking system- banks gave out loans to people who weren’t able to pay them off

It just gets worse Business relies on money from investors. Many investors were ruined in the Stock Market crash so they had no money to give businesses Businesses declare bankruptcy Unemployment skyrockets

It just gets worse (cont’d) Many people lose their homes Unemployed people would try to sell apples or shined shoes for money People drift from town to town looking for work (riding the rails)

Hoover Responds Hoover cared about the unemployed and people facing hard times, but believed the government shouldn’t interfere too much Believed that businesses could bring the economy back Called on private charities to help; such as churches.

Hoover (cont’d) Many churches set up soup kitchens to feed people Realizing that the problem would not fix itself, Hoover began instituting public works programs Reconstruction Finance Corporation- loaned money to banks to keep them in business

Too little, too late Despite doing more than any President to that point to reverse an economic crisis, the effort had little effect. Many people blamed Hoover for not doing enough Hoovervilles-name given to the shacks where the homeless lived

The Bonus Army After WWI, Congress had voted to pay the veterans a bonus in 1945 The conditions of the Depression caused the veterans to march to Washington to demand the bonus The Senate rejects the bill that would allow the bonus to be paid

Bonus Army (cont’d) Police try to force the veterans (who made a tent camp along the Potomac river) to leave Veterans refuse and battle police Hoover sends in the army to remove the veterans by force Hoover loses whatever support he had left among the American people