1. THE GREAT DEPRESSION
Economic Causes

2. “False” Prosperity of the 1920’s
Industrial production up
Increased wealth- LOTS of new millionaires (but no middle class)
New businesses & products
Low unemployment
New investment opportunities
Little gov’t. interference

3. Dangers Below Surface Farmers: overproduction/low prices
Industry: overproduction/surplus
Unequal wealth (75% live paycheck to paycheck)
Poor banking practices ($$$ in market)
High tariffs (slow trade)
Stock market speculation: “buy on margin”

4. Warning Bell: Stock Market Crash
All summer: prices up (buying “on margin”)
Fall: periods of sell-offs
October 24th: Largest one day sell off
October 28th: “Black Tuesday” the market crashed!
Losing $160,000 then = $1.8 million today
Millions lost life savings
But who’s in the market? Only 2+million

5. Causes of the Depression
Unequal Distribution of wealth
Massive Farm Debt
Manufacturers decreased production
Layoffs!
Banks fail due to poor investments and bank runs – deposits are not insured - “It's A Wonderful Life”: bank run (00:21)
People lose their life savings
Stock Market Crash
Results:
Mass Unemployment
25% unemployed

6. Unemployment Rate UP: 1929-1943 (25% unemployed)

7. Other Economic Effects of Depression
Reduced hours for many
Pay cuts
Default on loan: lose homes, cars, etc.
4,000 Banks fail (10 mill. Savings accounts GONE)
26,000 Businesses close
Cut back on spending
Prices dropped (lose profits): deflation
“Ride the rails”: migrants on the move

11. What Does Hoover Do? Talk confidently
Call business, labor & agric. leaders
Increase gov’t spending on federal projects
Urge state & local gov’t: “spend!”
Raise taxes (balance budget)
Raise tariffs (Hawley-Smoot Tariff)
Moratorium on debts
Reconstruction Finance Corp.:

12. Hoover’s philosophy “Rugged Individualism”: Voluntary cooperation
Personal responsibility
Greater Federal role:
public works projects,
Reconstruction Finance Corp.
Agricultural Marketing Act (Farm Board makes loans, new cooperatives buy up surplus)
POUR – President’s Organization of Unemployment Relief

13. AMERICANS REACT TO HOOVER
Hoover was increasingly unpopular, but he continued to try...  RECONSTRUCTION FINANCE CORPORATION
300 Million to states
had power to make emergency loans to banks
Hoover would NOT involve himself in any programs of direct gov't aid to individuals -didn't want to erode Americans sense of "RUGGED INDIVIDUALISM"

14. HOOVERVILLES

15. Biggest Political Mistake? “Bonus Army March” Incident
Bonus Army March: “we want our WW I bonuses now- not in 1945
Camped in D.C.
Congress didn’t approve measure…1,000 still camped
Hoover: get them out
U.S. troops (Geo. Patton/D. MacArthur)
Tanks + tear gas + force = “Heartless”

17. 1932 Election: FDR vs. Hoover

18. Franklin D. Roosevelt (FDR)
32nd President NY
Democrat
4 Terms,
Handicapped from Polo
President during GD and WWII
Gave people hope and confidence during the GD

19. Hoover & FDR

20. Nat'l income was 50% of what it had been in 1929
1932 ELECTION
1 out of 4 unemployed…
Nat'l income was 50% of what it had been in 1929
Republicans. nominated Hoover  no hope
winner by a landslide = FRANKLIN DELANO ROOSEVELT (Dem - N.Y. governor)
Inauguration - Extra! Special! Roosevelt Inaugurated 1933/03/05 (1933) (7:43) 21