Essential Question

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• Essential Question
• What caused the Great Depression how did the
  federal government respond?

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The Great Depression
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The Great Depression

• The Depression of the 1930s came as a shock to
  Americans
• The consumer revolution led to confidence that
  1920s economic prosperity would continue
• When the stock market crashed in 1929, businesses
  closed millions were unemployed
• Americans began to look to the govt for
  unprecedented support

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The Great Crash

• Prelude to the stock market crash
• In 1927, the economy had a recession but govt
  business leaders ignored warning signs
• The Federal Reserve lowering interest rates for
  loans would stimulate the economy, but this easy
  credit led speculators to buy stock on-the-margin

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The Great Crash

• An initial stock market crash on Oct 24, 1929
  (Black Thursday) led to a catastrophic drop in
  stocks on Oct 29 (Black Tuesday)
• Panicked investors sold stocks, causing stock
  prices to plummet
• Banks lent less money, factories produced less,
  workers were fired or paid less ? consumers had
  less money to spend ? factories businesses
  closed

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Unemployment, 1929-1942
This downward spiral continued for 4 years By
1932 unemployment was at 25
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The Great Crash

• Reasons for the depression
• U.S. factories overproduced consumer durable
  goods
• The post-war conditions in Europe decreased
  foreign trade
• Unequal distribution of wealth, high consumer
  debt, stock market over speculation led to an
  overall decrease in consumer purchase power

Consumers already owned durable goods were not
buying more
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In 1929, the total market debt of the USA was
210 of the value of GDP
By 1934, U.S. debt rose to 265 of GDP
In 2005, the value of U.S. debt was 303 of GDP
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Effects of the Great Depression

• The Depression hit all classes
• Many families lost their homes or farms were
  forced to live in Hoovervilles
• The U.S. saw unprecedented poverty suicide
  rates fathers abandoned their families
  lawlessness ensued
• The U.S. govt offered relief checks to the
  unemployed

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Effects of the Great Depression

• African-Americans who had migrated to North were
  laid off
• Mexican immigrants faced competition
  deportation from angry Americans
• The middle class was hit hard
• Refused relief checks charity
• Many lost their homes
• Health care declined doctor dentist visits
  were luxuries

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Employment Agencies Relief-Check Lines
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Soup Kitchens Breadlines
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Mortgage Foreclosures
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These 4 potatoes are Christmas Dinner
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Wheres daddy?
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Hoovervilles Hoover Flags
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Hoover Struggles to Fight the Depression
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Hoover and Voluntarism

• Hoovers initial response was to reassure
  Americans that prosperity would return
• Hoover rejected bold govt action called for
  volunteerism among charities, local govt,
  business
• As the depression worsened, Hoover called for
  govt projects like the Reconstruction Finance
  Corps (RFC) which loaned money to failing
  businesses

Rugged individualism
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The Hoover administration initiated job-creation
programs, like building the Hoover Dam
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Hoover and Voluntarism

• In 1932, President Hoover suffered two final
  blows
• When 22,000 war veterans marched to the capital
  to demand their WW1 bonus checks early, Hoover
  ordered this Bonus Army to be forcibly removed
• The steady rise of bank failures led to a
  complete collapse of the U.S. banking system

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Bonus Army
Douglas MacArthur
Dwight Eisenhower
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Bank Failures, 1929-1933
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Fighting the Depression

• The inability of Republicans to resolve the
  economic depression opened the door for a
  Democratic takeover in politics
• Once in power, Democrats succeeded in relieving
  some suffering, restored hope, created an
  unprecedented level of govt intervention in the
  process