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Signs of Trouble in the Economy

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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


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