The Great Depression

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The Great Depression
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11.6 ANALYZE THE CAUSES OF THE GREAT DEPRESSION
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Causes of the Great Depression

• Outdated industries loss of jobs/
• Unequal distribution of income Low Wages
• Farming crisis Low crop prices
• Overbuying on credit less to spend

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TROUBLED INDUSTRIES

• RAILROADS
• NEW FORMS OF TRANSPORTATION
• CARS, TRUCKS, BUSES
• TEXTILES
• FOREIGN COMPETITION
• CHINA, JAPAN, INDIA, LATIN AM.

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• COAL
• New forms of energy
• Hydroelectric, oil, natural gas

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AGRICULTURE

• WWI DEMAND FOR CROPS SOARED
• FARMERS TAKE LOANS TO PLANT MORE CROPS
• AFTER WAR DEMAND FALLS
• CROP PRICES DROP BY MORE THAN 50

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• TO COMPENSATE FOR FALLING PRICES FARMERS INCR.
  PRODUCTION TO HOPEFULLY SELL MORE
• ONLY DEPRESSED PRICES FURTHER

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• FARMERS HAD DIFFICULTY PAYING OFF LOANS
• MANY LOST FARMS
• FARMERS CAUSE MANY RURAL BANKS TO FAIL

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PRICE SUPPORTS

• McNary-Haugen bill
• FEDERAL GOVT. WOULD PAY CERTAIN PRICE AT OR ABOVE
  MARKET VALUE

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• GOVT BUYS SURPLUS CROPS
• AT PRICES ABOVE MARKET VALUE
• GOVT. SELLS CROPS ON WORLD MARKET FOR LOWER PRICE

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• TO MAKE UP FOR LOST GOVT. TAX ON FOOD SALES
• PASSES COST PF FARM PROGRAM TO CONSUMER

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• CONGRESS PASSES BILL TWICE 1927-28
• COOLIDGE (R) VETOED
• FARMERS HAVE NEVER MADE . I DONT BELIEVE WE
  CAN DO MUCH ABOUT IT.

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CONSUMERS

• LATE 20s BUYING LESS
• LOW WAGES, RISING PRICES, OVERBUYING ON CREDIT

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BUYING ON CREDIT

• BUY NOW PAY LATER
• LARGE CONSUMER DEBT
• CUT BACK ON SPENDING
• MANY COULD NOT PAY DEBT

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Unequal distribution of income

• 20s HALF FAMILIES EARNED LESS THAN 1500 YEARLY
• MINIMUM FOR DECENT LIVING
• AVERAGE MAN/WOMAN BOUGHT NEW OUTFIT ONCE A YEAR

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• ONLY 50 OF HOMES HAD ELECTRICITY HEAT
• 1/10 HAD REFRIGERATOR
• MANY DID NOT HAVE TO BUY CONSUMER GOODS

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• FALLING DEMAND FOR CONSUMER GOODS
• LAYOFF WORKERS
• LESS TO BUY GOODS
• MORE LAYOFFS

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• 85,000 BUSINESSES WENT BANKRUPT
• MILLIONS OF WORKERS LOST JOBS
• 25 UNEMPLOYMENT
• 1 /4 AMERICANS LOST JOB
• 13 MILLION 1933

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• FED GOVT. CONTIBUTED BY KEEPING
• LOW INTEREST RATES
• EASY TO BORROW MONEY
• HUGE DEBT

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WORLD WIDE SHOCKWAVES
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Symptoms of the Depression

• Plummeting consumer retail prices
• Plummeting industrial production
• Massive unemployment (25)
• Business failures
• Family bankruptcies
• Bank foreclosures

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What does President Hoover do?

• The fundamental business of the of the country
  is on a sound and prosperous basis.

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Republican Insensitivity

• It will purge the rottenness out of the system.
  High costs of living and high living will come
  down. People will work harder, live a more moral
  life. Values will adjusted, and enterprising
  people will pick up the wrecks from the less
  competent people.

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Hoovers Ignorance/Insensitivity

• Our people are providing against distress from
  unemployment in true American fashion by
  magnificent response to public appeal and by
  action of the local governments.

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Hoovers Failure

• Hoover vetoed many measures of Congress that
  would have instituted relief to the poor.

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Presidents Organization for Unemployment Relief

• Chairman Walter Gifford asked local groups to
  raise money for the unemployed.

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Hoovers Plan for Economic Recovery

• The plan was centered on restoring confidence in
  business.
• Reconstruction Finance Corporation (Government
  credit to businesses)

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Hoovers Conservatism Injures The Masses

• July 1932 the Democratic-controlled Congress
  passed the Emergency Relief Act.
• The law provided 300 million in federal money
  to subsidize state relief funds.
• Hoover grudgingly signed the law but only
  released 30 million to the fund.

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Election of 1932