The Great Depression. Defining Depression What is an economic depression?
Causes of the Great Depression Industry: Some industries were less competitive Farming: Farmers...
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Transcript of Causes of the Great Depression Industry: Some industries were less competitive Farming: Farmers...
Causes of the Great Depression• Industry: Some industries were less
competitive• Farming: Farmers produced more than they
could sell• Easy credit: Many went into debt buying
goods on the installment plan • Income: Rich got richer while the poor got
poorer
A New PresidentThe Election of 1928
Democrats RepublicansAlfred E. Smith Herbert HooverGovernor of New York Sec. of CommerceWitty / Outgoing Formal / Reserved
Hoover Wins
Risky Business
• Many Americans practiced speculation & buying on margin• Speculation – very risky• Buying on margin – only
paying for part of the stock
Stock Market CrashesOctober 29,
1929• Stock prices
dropped• Investors
started selling all their stocks
• Wall Street lost $30 billion in one month
Financial Collapse Many Americans lost
EVERYTHING in the crash
After the Crash Americans panicked & tried
to withdraw their money from the bank
The banks ran out of money and closed
People lost their savings
After the Crash, Continued
• 85,000 businesses went bankrupt
• 1 out of every 4 people were unemployed
• People who kept their jobs had cut hours and less wages
Hawley – Smoot Tariff Act
• Highest tariff in US History• Designed to protect farmers
and manufacturers from foreign competition• Backfired – foreign countries
couldn’t afford to buy American goods
Questions over Section 1Fill in the following graphic organizer:
Depression in the Cities
Many people were evicted from their homes and lived on the street or in shantytowns
Charities provided food in soup kitchens and bread lines
Minorities & the Depression• African Americans and
Latinos had the highest unemployment rates
• Racial violence increased – there were 24 lynchings in 1933
• Many demanded that Latinos be deported to Mexico
• Some left voluntarily while others were deported
Depression in Rural Areas Some farmers were able to
grow enough food to feed their families
Over 400,000 farms were foreclosed due to unpaid debts
Many turned to tenant farming but were VERY poor
Thousands left their land and went to California
The Dust BowlFarmers overused land Grasslands became unsuitable for farmingDrought and winds blew the soil away
Men & the Depression• Men could not provide for their
families• 2 million men abandoned their
families and wandered the country
Relief?•The government did not offer direct relief •Some charities gave a weekly payment of $2.39 for a family
Women and Children• Women sewed
clothes and canned food
• Managed household budgets
• Worked outside the home
• Many women were too ashamed to admit their hardship
Problems• Poor diets and lack of money
for health care led to health problems for many children–Malnutrition–Rickets–Pellagra
Social and Psychological Effects
• Suicide rates rose by 30%• People developed habits
of thriftiness• People gave up on dreams
Positive Effects of the Depression
• People showed kindness to strangers• Gave food, clothing and a
place to stay for the needy• Shared resources and helped
each other out
Answer the following questions
• What were positive effects of the depression?
• What were negative effects of the depression?
Hoover’s Philosophy
• Tried to reassure Americans that the economy was on strong footing.
• Felt the gov. should play a limited role in helping to solve the economy’s problems.
• Gov. role to encourage & facilitate cooperation.
• Direct relief efforts not support them finacially.
Hoover takes Cautious Steps
• Cautious approach to the depression– Asked employers not to cut wages or layoff
workers– Asked labor leaders not to demand higher
wages or go on strike.– Created a special organization to help
private charities generate contributions for the poor.
• None of these steps made much of a difference.
Boulder Dam
• Hoover dam was approved to be built in 1928. Boulder Dam
• World’s tallest dam & second largest dam
Democrats Win in 1930 Congressional Elections
• Political tide turned• Republicans lost control of the House of
Representatives & only remained in control by only 1 vote in Senate.
• Farmers burned crops rather than sell at a loss.
• Declared a “farm holiday” – refused to work in fields.
• Calling Shantytowns “Hoovervilles”– Hoover blankets– Hoover Flags
Hoover Backs Cooperatives
• Attempts to relieve the depression involved negotiating agreements among private entities reflecting his belief in small gov.
• Tried to prop up banking system by establishing the National Credit Corporation.– Loaned money to smaller banks
Direct Intervention
• Appealed to Congress to pass a series of measures to reform banking.– Provide mortgage relief– Funnel more money into business investment– Federal Home Loan Bank Act – lowered
mortgage rates & allowed farmers credit– Glass – Steagall Act – separated investment
from commercial banking– Reconstruction Finance Corporation –
authorized $2 billion for emergency financing for banks
Patman Bill Denied
• 10,000-20,000 WWI veterans went to Washington D.C. – Bonus Army
• Patman Bill authorized the gov. to pay a bonus to WWI veterans.
• Was supposed to be paid out in 1945• Wright Patman believed money
should be paid immediately.• Hoover opposed legislation• Called on Bonus Army to leave -
refused
Hoover Disbands the Bonus Army
• Hoover called for the infantry to gas 1,000 people who were injured.
• Most Americans were stunned & outraged at the government’s treatment of veterans.
Hoover’s Response
Review Questions1. Why was Hoover reluctant to help people during the
Depression?2. What types of action did Hoover take to remedy the
effects of the Depression?3. What measures did Hoover take and what results did
he achieve to help the economy?4. Why did Hoover use to force against World War I
veterans?5. What was the Patman Bill and what happened when it
failed in the Senate?6. What happened to the Bonus Army?7. How did the treatment of the Bonus Army affect
President Hoover?