The Beginnings of the Great Depression

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The Beginnings of the Great Depression

• Chapter 17

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Did you know?

• The Great Depression was a global event.
  Throughout the world, many businesses and banks
  closed. Unemployment rates throughout the world
  soared.

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I. The Election of 1928

• The Candidates
• Republicans nominated Herbert Hoover, former head
  of the Food Administration during WWI. He was a
  Quaker, and promised a continuation of the 1920s
  prosperity
• Democrats nominated Alfred E. Smith, the 4-time
  governor or New York and the first Roman Catholic
  nominated for president
• Religion, Prohibition, and the economy became
  major issues. Hoover won.

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II. The Long Bull Market

• The stock market is a system for buying/selling
  shares in a company.
• The prosperity of the 1920s caused many to invest
  heavily in stocks
• As prices went higher, many bought on margin
  (making a small down-payment pay the rest later)
• When the prices fell, lenders issued margin
  calls, demanding immediate repayment.

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III. The Great Crash

• By late 1929, a lack of new investors caused
  stock prices to drop margin calls caused many
  to sell their stocks, leading to Black Tuesday
  Oct. 29, 1929.
• The stock market lost between 10 15 billion
  that day
• It DID NOT cause the Great Depression directly,
  but it did undermine the economys ability to
  recover.

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III. The Great Crash continued

• The crash weakened the nations banks, causing
  many to close.
• Government did not yet insure bank deposits, so
  if a bank closed, anyone with money in that bank
  lost their savings
• Resulted in Bank Runs

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IV. The Roots of the Great Depression

• Efficient machinery led to overproduction,
  Americans could not buy all of the new stuff.
• Uneven distribution of wealth The top 5 of the
  population held 30 of the nations wealth
  thats a lot!
• Over 2/3 of the nations families earned less
  than 2,500 per year.

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IV. Roots continued

• Low consumption workers wages did not increase
  enough to keep up with the quick production of
  goods. As sales decreased, workers were laid
  off. Chain reaction.
• Many Americans bought on the installment plan
  (paying off debts in small increments.
• Hawley-Smoot Tariffs raised tax on imports, so
  foreign nations raised tariffs on us. Hurt the
  economy.
• Instead of raising interest rates, Federal
  Reserve lowered them, so people continued to
  practice speculation.

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V. The Depression Worsens

• By 1933, thousands were out of work.
• The unemployed relied on soup kitchens and bread
  lines set up by charities
• Many were evicted or forclosed on for non-payment
• Those who lost their homes lived in shantytowns
  called Hoovervilles, showing who they blamed
  for the nations troubles.

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V. The Depression Worsens continued

• Many hobos (homeless Americans who wandered
  looking or a better life) traveled on Railroads
  seeking opportunity.
• As crop prices dropped in the 20s, Many farmers
  left their fields fallow the Drought of 1932
  led to the Dust Bowl.
• Those who lost their farms often traveled to
  California as migrant labor.

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VI. The Dust Bowl

• The most famous work of literature of the time
  was The Grapes of Wrath by John Steinbeck.
• It described a family, the Joads, who lost their
  farm and traveled to California. It wasnt any
  better there.

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VI. Promoting Recovery

• In an effort to promote economic recovery, Hoover
  received a pledge from industry to keep factories
  open and stop cutting wages. The pledges failed
• Hoover increased public works government
  financed building projects. Asked the nations
  mayors and governors to increase spending
  Feared deficit spending spending more than came
  in.

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VI. Promoting Recovery continued

• Americans blamed the Republicans. In midterm
  congressional election of 1930, Republicans lost
  49 seats and lost their majority in the House.

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VII. Pumping Money into the Economy

• Hoover tried to persuade the Fed. Reserve to
  increase currency in circulation would not.
• Hoover set up the National Credit Corporation
  (NCC), which created a pool of money to rescue
  banks, but not enough to help.
• In 1932, set up the Reconstruction Finance
  Corporation to make loans to banks, railroads,
  and agricultural institutions. Too cautious, so
  economy continued to decline.

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VIII. In an Angry Mood

• By 1931, discontentment led to violence.
  Looting, rallies, and hunger marches began.
• Between 1930 and 1934, creditors forclosed on
  almost 1 million farms. Some farmers destroyed
  their crops hoping to drive up prices.

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VIII. Angry Mood continued

• In 1924 Congress had enacted a 1000 bonus to be
  paid to veterans in 1945.
• But, they needed it now. In 1932, the Bonus
  Army marched to Washington to lobby Congress to
  give it to them early.
• They were run out by the US army under General
  Douglas MacArthur, by Hoovers orders. Several
  died as a result

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