The great depression

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The great depression

• Chapter 21

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Endless growth of the 20s

• During the 20s, Americans experience what was
  thought to be endless prosperity
• Republican Presidents provide small government to
  allow business to grow
• Good times continue and allow Herbert Hoover to
  win the White House in 1929

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Herbert Hoover

• Orphan born in Iowa
• Graduated from Stanford
• Successful Businessman
• a chicken in every pot, a car in every garage.

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Causes of the Depression

• Prosperity Hides Troubles
• Problems plague Agriculture
• Wealth is Distributed Unevenly
• Easy Credit Hides Problems
• The Stock Market Crashes

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Problems with Farmers

• 25 of the Workforce
• Large Demand for crops during WWI caused the
  purchase of more land and equipment
• War ends, so does the demand
• Farmers continue to produce a high supply of
  crops even with a lower demand
• Debt grows exponentially, Farmers struggle to pay
  bills every month

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Uneven Wealth

• Between 1923 and 1929 worker productivity grew
  faster than wages
• Output per person hour grew 32 while wages grew
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• Corporate profits grew 65
• Rich become richer, industrial workers became
  less poor
• 60 of families earn 2,000 per year
• A small portion (24,000 families) earn 100,000
• The wealthy few did not buy enough products to
  keep the economy booming

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Easy Credit Hides Problems

• By 1929, 80 of radios and 60 of cars were
  purchased on credit or installment buying
• Stock bought on Credit
• Different from the days when people would wait to
  have cash to purchase, fear of debt
• Economy implosion exposes problems with credit
  system

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The Stock Market Crashes

• Too much money was invested in stock market in
  1929
• Market sputters and falls on September 3, 1929
• October 23rd, investors believed the boom was
  over, confidence lost
• October 24th, Black Thursday
• GE stock once at 400 a share sold at 283
• October 29th, Black Tuesday
• Bottom falls out, 16 million shares sold,
  Billions of dollars lost

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The Great Depression Begins

• The Banks Collapse
• Businesses close, unemployment rises
• The Depression hits worldwide

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The Banks Collapse

• Banks are the first institution to feel the
  effects of depression
• As stocks collapse, Americans attempt to retrieve
  any hard money they have
• runs on banks cause closers
• 1929, 641 commercial banks close

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Businesses close, unemployment grows

• Stock market collapse reduced consumer spending
  business closings and growth of unemployment
• Henry Ford sends 75,000 to the unemployment line
  in 1931
• 1933, unemployment rate 25
• Business owners believe they must cut payroll and
  production in order to keep prices the same

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The Depression goes Global

• Hawley-Smoot Tariff
• Raises taxes on foreign imports to the point
  where they cannot compete with American prices
• War debt payments still hinder European economy.
  United States cuts off international loans
  causing European businesses to collapse as well

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What Caused the Great Depression? (Economists)

• Milton Friedman
• Stock market collapse combined with run on the
  banks and lack of money in circulation
• John Maynard Keynes
• Lack of Government interference
• Government should have spent more money in order
  to keep people employed

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Urban Americans Face Hard Times

• More Americans search for jobs and food
• Lost jobs and savings forces Americans to sell
  homes and property in order to eat.
• Those that dont own homes, get evicted when they
  cant pay rent
• Growth of Hoovervilles
• Makeshift shantytowns of tents and shacks built
  on public land and vacant lots

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Rural America is Devastated

• Commodity Prices plunge, Farmers lose their farms
• Between 1930 and 1934 nearly 1 million farmers
  lost their farms
• Some stay on as tenant farmers
• Great Plains becomes a Dust Bowl
• Depression causes Migration
• Growth of Okies (dust bowl refugees)
• 800,000 people leave great plains

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Few Americans Escape Hard Times

• Breadwinners feel they let their families down
• Men slip into depression over lost status
• Some men desert their families
• Children dropped out of school
• Those who kept their jobs feared losing it, and
  felt responsible for those family members now
  unemployed
• Minorities suffer greatly
• Last hired, first fired

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Questions

• What do you think a possible solution to the
  skyrocketing unemployment would have been?
• How did the arrival of Okies affect the towns
  and cities they arrived in?
• Who or what did Americans blame for their
  troubles in the early 1930s?

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Hoovers failed Response

• Cautious Response to Depression fails
• Hoover viewed the upswings and downswings of
  business cycles as natural
• Government should take a hands off approach
• Depressions were like storms, unavoidable but
  strong businesses would survive
• Hoover turns to volunteerism
• Asks businesses to keep employment, wages, and
  prices current
• Government would reduce taxes and lower interest
  rates

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Hoovers Volunteerism

• Ideas were sound, but relied too much on
  volunteer cooperation
• People looked after the best interest of the
  individual, not the nation
• Businesses cut employees, farmers raise
  production
• Localism fails because towns and states lacked
  the resources to combat the depression

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Hoover gets Active

• Growth of Hoovervilles, Hoover wagons (trucks
  pulled by horses) , Hoover Heaters (campfires) ,
  and Hoover houses (cardboard boxes) convinces
  Hoover to use the federal government to combat
  the Depression

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Hoover gets Active

• Creation of Reconstruction Finance Corporation
  (RFC) in 1932
• Gave more than 1 billion dollars to railroads and
  large businesses.
• Lent money to banks in order to produce more
  loans to the public
• Creation of Trickle-down economics

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RFC failures and success

• Failure
• Businesses and banks failed to let the money
  trickle-down
• Success
• Creation of the Boulder Dam in 1930 (Hoover Dam)
• Brought much needed employment to the Southwest

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Americans Protest Hoover

• The Bonus Army marches on Washington
• WWI veterans seeking the bonus congress promised
  them 1945
• Congress passes bill to allow for early payment,
  Hoover vetoed bill
• In protest Veteran groups consisting of 20,000
  men, march to Washington in 1932
• Hoover orders Bonus Army out

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MacArthur Seals Hoovers Fate

• MacArthur takes Hoovers order to clear Bonus
  Army out too far
• 1,000 marchers are tear gassed
• Many vets were badly injured
• WWI vet camps were burned to the ground
• Photographs of harsh treatment of WWI vets ends
  Hoovers political future

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Key Questions

• How did Hoovers views on government influence
  his response to the Depression?
• How did MacArthurs tactics on the Bonus Army
  affect Hoovers political future?