THE GREAT DEPRESSION

IMMEDIATE CAUSES  1928 Presidential candidates campaign on continued prosperity Alfred Smith’s campaign sunk by anti-Catholic backlash  Speculation and margin buying drives 1920s bull market Falling stock prices force lender margin calls  October 29, 1929: Black Tuesday market crash Loss of credit, bank losses, stock prices drop drastically Bank runs cause more bank closures  The stock market crash of 1929 was the big hit on a weak system with many problems at its roots

THE STOCK MARKET CRASH

ROOT PROBLEMS  Top 5% of households hold 30% of income 2/3 of American families  Installment plans for expensive goods As demand falls, workers laid off, demand continues to fall  1920s: Banks slowed lending to foreign companies/countries Exports fall as Americans lose jobs  Federal Reserved (FED)did not have safeguards against speculation Mismanaged interest rate levels

WORSENING DEPRESSION  Hobos roam country after being ejected from homes by bailiffs  The Dust Bowl hurts farmers  Art and Entertainment are happy escape for struggling people Movies and radio shows Radio soap operas The Wizard of Oz and Gone With The Wind Literature and Art William Faulkner’s The Sound and the Fury Grant Wood’s American Gothic

PRESIDENT HOOVER RESPONDS  President Hoover’s Laissez-Faire stance does not convince the public American Individualism and private sector responsibility was Hoover’s strategy Can’t raise taxes, can’t lower taxes—Republicans lose Congress in 1930  Hoover asks FED to put more money in circulation, they refuse National Credit Corp. (NCC) fails to expand credit  Congress passes Emergency Relief & Construction Act $1.5 Billion to states for relief (payments to suffering people) $300 Million for public works construction projects  Hunger marches, farmer protests, and the Bonus Army