Great Depression Begins Chapter 14 Section 1

Economic Crisis Grips Nation President Herbert Hoover’s conservative response to nation’s problems cost him supporters Prosperity of 1920’s ends Severe economic problems take over the nation

Industries in Trouble Railroads, textiles, steel >barely make profit Mining, lumbering >expanded during war Coal sales drop >new energy sources Quick boom industries, now weak – Automobiles – Construction – Consumer goods Housing declines

Farmers International demand for U.S. grain declines after war, prices drop by 40% or more Farmers boost production to sell more, prices drop further Income declines – Farmers default on loans – Rural banks fail Price-supports – govt. buys surplus crops to guarantee prices – Coolidge vetoes bill

Living on Credit Buy now, pay later Easy credit – Consumers pile up large debts – Have trouble paying debts 1920’s – Rich get richer – Poor get poorer 70% of families earn less than minimum for decent standard of living – most can’t afford products

Hoover Takes Nation Election of 1928 – Democrats – Alfred E. Smith 4 x governor of New York – Republican – Herbert Hoover WINS

Dreams of Riches Stock Market Dow Jones Industrial Average 1920’s, stock prices rise steadily, people rush to buy stocks and bonds Engage in speculation – buy on chance of quick profit Buying on margin – pay small percentage of price in cash, borrow the rest

Stock Market Crashes Black Tuesday – Sept, 1929: stock prices peak then fall; investors begin selling – October 29, 1929: BLACK TUESDAY – Shareholders sell frantically, millions of shares have no buyers – People who bought on credit left with huge debts – Others lose most of their savings they have in banks

Financial Collapse Banks and Businesses FAIL Great Depression: economy plummets, unemployment skyrockets Banks crash, people panic and withdraw money – Banks that invested in stock market fails 90,000 businesses go bankrupt 1933—25% of workforce jobless Those with jobs, hours and pay are cut

Worldwide Shockwaves Great Depression limits United States ability to import European goods Hawley-Smoot Tariff Act sets highest protective tariff ever in the U.S. Other countries cannot earn American currency to buy U.S. goods International trade drops Unemployment soars around the world

Causes of Great Depression High tariffs War debts Farm problems Easy credit Income disparity Federal government keeps interest rates low which encouraged borrowing

Hardship and Suffering During Depression Section 2

Cities Shantytowns - settlements consisting of shacks that developed in cities – Later called Hoovervilles Soup kitchens - offer free or low cost food Bread Lines - people line up for food from charities or public agencies African-Americans and Latinos – higher unemployment and lower pay

Rural Areas Most farmers grew their own food if they still had their farms DUST BOWL Area from North Dakota to Texas Great Plains exhaust land through overproduction 1930’s drought, windstorms scatter dust for hundreds of miles many farm families migrate to Pacific coast

Effects on Families MEN: – 300,000 hoboes wander country, railroad cars – No Federal System of direct relief>cash or food from government WOMEN: – Budget, can food, sew clothes – Those who did work, resented by men CHILDREN: – Poor diets, health – Schools shortened or closed completely – Teenagers leave, ride trains searching for work

Social and Psychological Effects 1928 – 1932 suicide rates rise more than 30% Admission to mental hospitals triples Financial security becomes goal Kindness to strangers Develop habit of saving and thriftiness

Hoover Struggles Section 3

Hoover Said economy was sound Said government should foster cooperation People should take care of own families and not depend on government Some experts believe depressions a part of business cycle 1930 Congressional elections go to Democrats – People blame republicans for hardship

Boulder Dam Renamed Hoover Dam – Creates jobs – Provides electricity, flood control, water

Hoover FINALLY takes action Negotiates agreements among private industries to provide public support Backs Federal Farm Board – Govt. buys crops from farmers so prices rise Gets large banks to establish National Credit Corporation Federal Home Loan Bank Act – Lowers mortgage rates Reconstruction Finance Corporation – Emergency fund for business

Bonus Army Veterans go to Washington D.C. to support Patman Bill – Veterans want “bonus money” promised to them after WWI Hoover opposes bill, Senate votes bill down Most vets leave stay Hoover calls in Army to disband veterans Army uses tear gas, many injured Public outraged