Herbert Hoover Republican Pro-Prohibition Alfred E. Smith Democrat Anti-Prohibition

 Calvin Coolidge declined to run for a second term.  Democrats nominated Al Smith (1 st Catholic nominated by a major American party)  Republicans nominated Herbert Hoover The Campaign  “wet’s vs. dry’s”  Smith’s Catholicism was made an issue by Hoover supporters—not Hoover.  Big boost for Republicans= the prosperity of the 1920’s.

 1920’s “ Bull Market ” convinced Americans to invest in stocks.  “ Buying on margin ”- investors could purchase stocks with only a 10% down payment.  If stock prices fell, stockbrokers could issue a “ margin call ”.  Stock Speculation- because of the bull market, many investors bid up the price of stocks without considering the company’s earnings or profit.

 Bull market existed because of so many new customers – it began running out of new customers  Investors started selling  Stockbrokers made margin calls  People began frantically selling stock  Black Tuesday › Prices took the steepest dive  Bull market existed because of so many new customers – it began running out of new customers  Investors started selling  Stockbrokers made margin calls  People began frantically selling stock  Black Tuesday › Prices took the steepest dive Result: the crash undermined the economy’s ability to hold out against other problems

 2 Problems › Loaned money to speculators › Invested deposited money in the stock market  Bank Runs › Depositors began withdrawing all of their money  2 Problems › Loaned money to speculators › Invested deposited money in the stock market  Bank Runs › Depositors began withdrawing all of their money

 Instead of raising interest rates to cut inflation, the FED kept the rates low › Encouraged banks to make risky loans › Led businesses to borrow more to expand  At the last minute – Wrong Time!! › the FED made another mistake by raising interest rates  Instead of raising interest rates to cut inflation, the FED kept the rates low › Encouraged banks to make risky loans › Led businesses to borrow more to expand  At the last minute – Wrong Time!! › the FED made another mistake by raising interest rates

 Income Distribution › Most Americans dependent on installment plans for goods › Debt became high › Cut consumer spending › Production then slowed  Income Distribution › Most Americans dependent on installment plans for goods › Debt became high › Cut consumer spending › Production then slowed  Overproduction- key cause of the Depression. › Technology enabled businesses to produce more › Hawley Smoot Tariff  Highest level ever  Damaged export sales › US banks did not lend to foreigners to buy American goods  Overproduction- key cause of the Depression. › Technology enabled businesses to produce more › Hawley Smoot Tariff  Highest level ever  Damaged export sales › US banks did not lend to foreigners to buy American goods

 Massive Unemployment › 30,000 companies out of business  Soup Kitchens & Bread lines  Shantytowns (aka Hoovervilles) › Communities of homeless  Hobos › Homeless wanderers looking for food, work & shelter

 Term used to describe the Great Plains during the Great Depression  1932 Drought  Winds whipped dust like snow over the crops & livestock  Oakies › Farmers who gave up their farms & headed to California

 Escape through Movies & Radio  Marlene Dietrich & Greta Garbo  Walt Disney – Snow White & Seven Dwarfs  Gone with the Wind  Soap Operas – “Guiding Light” – radio

 Grant Wood – American Gothic  John Steinbeck – Grapes of Wrath  William Faulkner – The Sound & the Fury  Margaret Bourke-White - Photographer

 Hoover was a self- made man (millionaire)  Started poor (orphan) made his way to college.  Believed “rugged individualism” would keep America moving forward.  1930-Organized a series of conferences with business leaders  Business leaders promised to keep businesses open and keep wages stable.  1931-Business leaders broke promises.

 Public Works Projects › Government funded building projects. › How do you pay for it? Raise taxes? Run a budget deficit? › Ultimately, government did not spend enough to create many jobs.

› National Credit Corporation (NCC) IN › Set aside a pool of money to allow troubled banks to keep lending. › Failure—not enough money to handle the massive problems.  Reconstruction Finance Corporation › Set up by Federal government to make loans to banks, railroads & agriculture (1932). › Lent $238 million to 160 banks, 60 railroads, 18 banks. › Did not spend enough

 Relief- money given directly to the poor by the government.  Hoover did not support this idea.  He believed that only state & local governments should do this—not the federal government.  1932—Congress passed “ Emergency Relief and Construction Act ”  Hoover reluctantly signed  1 st time US government supplied direct relief funds.

 Hunger Marches › Led by American Communist Party  Farmers Revolt › Destroyed crops to raise the price  Bonus Marchers › Veteran bonuses from WWI › Veterans marched on Washington = Bonus Army