1. Signs of Trouble in the Economy
Over production of farmers
WWI--Farmers expand production
Farmers extend their credit
End of the War--Farmers further expand their production to keep up with debt
Farm prices drop further
Dust Bowl
Farm income declined 66% from 1920 to 1929

2. Signs of Trouble in the Economy
Proportion of profits going to the workers was too small to create a market
1929--over half the families are too poor to buy necessities, houses or cars
First reduction in production occur in auto and housing industries
Wealth concentrated in the hands of a few

3. Signs of Trouble in the Economy
Massive business inventories
(up 300% from 1928 to 1929)
Over expansion of credit
Installment plan caused overproduction
Consumers spent more than they could afford
Technology forced more layoffs
Lack of diversification
US economy depended heavily on a few industries
construction
automobile
At the end of the 20’s these began to decline
Newer industries couldn’t compensate

4. Signs of Trouble in the Economy
Banking and credit
Small banks tied to agriculture failed due to default
Banking system unprepared for recession
Some larger banks kept inadequate reserves to back risky investments
Federal Reserve Bank only loosely regulate the industry
Elderly lose savings

5. Signs of Trouble in the Economy
International Trade
20’s exports were a major factor in the economy
As European industry and agriculture improved demand decreased for American goods
Smoot Hawley Tariff: 60% tax on imports

6. Signs of Trouble in the Economy
Foreign nations owed American banks $
German and Austrian reparations were to help France and GB pay off loans
US refused to forgive European debts
Greater debts incurred when US made larger loans to European nations
Depression made borrowing difficult
Tariff reduced European imports
Defaults began

7. Stock Market Crash 10/29 Over-speculation in stocks
Over-expansion in some industries
By 1932 stock values were 1/10th of what they were in 1929
The slump continued until summer 1932 when it begins to recover some of its value

8. Psychological effects of the Depression
“The Invisible Scar”
Lack of adequate public relief
Homelessness and hoboes
Hoovervilles
Escapism—more people go to the movies

9. Impact of Depression on Families
Burden on Women
Marriage and birth rate decline
Existing family patterns are exaggerated
Minorities hit the hardest

10. Farming in the Great Depression
Dust Bowl
“Oakies” leave the Midwest for the east and west

11. Hoover and the Great Depression
Rugged individualism
Volunteerism

12. Hoover and the Great Depression
Took more action than any president before him
Revenue Act
RFC
Home Loan Act

13. Hoover and the Great Depression
Bonus Army
WWI vets demand payment of Bonus Bill
Originally to be paid in 1945
Built camps in the city
Hoover ordered their removal
Military led by MacArthur

14. Election of 1932 Hoover blamed for the depression FDR (governor of NY)
Major disagreement: What role should the government play in the recovery