The Roaring Twenties and the economic crisis c) Life before the Depression.
THE ROARING TWENTIES to the GREAT DEPRESSION
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Transcript of THE ROARING TWENTIES to the GREAT DEPRESSION
THE ROARING TWENTIES to the GREAT DEPRESSION
HERBERT HOOVER
Coolidge chooses not to run again; opens door for Sec. of Commerce HooverDecries socialism with cries of “rugged individualism”
Idea that individuals should help themselves out – gov’t should not be involved in people’s economic lives nor in national economics in general.An orphan & self-made man who worked his way through Stanford
Great administrator, efficient, honest & humanitarian….role during WWI?
President Herbert Hoover, Henry Ford, Thomas Edison, and Harvey Firestone at Edison's 82nd birthday. Ft. Myers, Florida, February 11, 1929.
Herbert Hoover Alfred E. SmithRepublican Democrat“A Dry Country Quaker” “A Wet City Catholic”“Rugged Individualism” “Rum, Romanism & Ruin”
ELECTION OF 1928
Represents rural agrarian interests
Favored Prohibition Radio helped him
(dignified, serious) Slogan: “A chicken in every
pot & two cars in every garage!”
Wins by landslide mainly due to his association with Republican prosperity of the 20s
Represents urban, industrial interests
Favors Prohibition, but admits that he drinks
Radio hurts him (NY accent & too much joking)
Hurt by Republican anti-Catholic smear tactics
Lost, even though he won in all nation’s largest cities
ELECTION OF 1928
HOOVER & DOMESTIC POLICY
AGRICULTURAL MARKETING ACT: Federal Farm Board to lend to farm organizations
seeking to buy, sell & store surpluses But, prices will just keep falling ……
HAWLEY-SMOOT TARIFF, 1930 Highest peacetime tariff in history! Raised
Fordney-McCumber from 40% to almost 60% Backfired – WHY?
Caused foreign trade with U.S. to plummet Caused other nations to raise tariffs Caused U.S. factories to move overseas
Securities (stocks & bonds) tripled in value during the last half of the 1920s.
STOCK MARKET CRASHED ON OCTOBER 29, 1929
KNOWN AS “BLACK TUESDAY”
Marks thebeginning, butnot the causeof the GreatDepression
CAUSES OF THE CRASH: EASY CREDIT!!
Speculation (buying risky stocks – to get rich quick - hoping for a quick profit)
Buying on margin (buying stocks on CREDIT)
CAUSES OF THE CRASH:
GREED INFLATED SENSE
OF PROSPERITY GOVERNMENT’S
LAISSEZ-FAIRE POLICY TOWARDS BUSINESS
Crash Statistics:Approx. 1.5 million Americans in the stock market16 million shares sold on 10/29/29Loss of $30 billion
EFFECTS OF THE CRASH:
MASSIVE UNDEREMPLOYMENT & UNEMPLOYMENT 1930: 4 million jobless 1932: 12 million jobless (25%)
FAILURE OF BANKS Questioning of Laissez-Faire
policies Trend away from materialism &
toward “social consciousness”
Hoover on Government & Business/Economy:
“Rugged Individualism”
Government should help people to help themselves
“Hand-ups” not Hand-outs
CAUSES OF THE GREAT DEPRESSION: Overproduction &
underconsumption Income Disparity
Growing gap between rich & poor since profits from production going back into production, not wages
1% of population hold 34% of country’s savings
1% at $100,000 – 71% at less than $2,500
Abuse of Easy Credit “Installment Plan” Buying stock on margin
High Tariffs & WWI Debts– World Depression
Factories were producing products, however wages for workers were not rising enough for them to buy them.
Too few workers could afford to buy the factory output.
The surplus products could not be sold overseas due to high tariffs and lack of money in Europe.
OVERPRODUCTION & UNDERCONSUMPTION
HOOVER’S RESPONSE Philosophy of “rugged
individualism” The belief that all individuals, or nearly all
individuals, can succeed on their own and that government help for people should be minimal.
Makes him seem unsympathetic/cold Hoovervilles, Hoover blankets, Hoover
flags
Trickle down theory Does believe in using power of gov’t to
stimulate the economy from the top via aid to corporations, public works, etc.
PUBLIC WORKS PROJECTS
Approves $2.25 billion public works program
Most famous project: Boulder Dam –
later called Hoover Dam – on CO River, 1930-36
Reconstruction Finance Corp. 1932 A U.S. government lending corporation – gives
$ to aid business and farm organizations Loan $ to banks and businesses (railroads,
insurance, etc.) & help put people back to work
Effects would trickle down to those on the bottom
Not enough to overcome problems of Depression
BUT, an important bridge between previous laissez-faire policies & the New Deal
BONUS ARMY - May 1932
20,000 WWI Veterans seeking early payment of the bonus due them in 1945
Set up Hoovervilles, demonstrated daily outside Capitol
Senate rejected their demands & Hoover asks “army” to disperse Most go home; Hoover
bought 6,000 train fares But thousands remained
Hoover orders removal “without the use of force” Gen. Douglas MacArthur – tear gas, tanks, machine
guns, bayonets, burns Hooverville Hoover takes full responsibility but …
Hoover-Stimson Doctrine Hoover is Quaker, Pacifist Favors disarmament Japan invades Manchuria, Sept. 1931
What did this violate? China asks League for help / League asks U.S. for help;
Japanese condemned & leave the League League called for embargo of Japan but US refuses
(doesn’t want war with Japan) & instead issues Stimson Doctrine U.S. won’t recognize any territorial acquisitions made by
force Basically, US will be neutral, Japan did nothing to threaten
America & U.S. will not police the world What message did this send to the rest of the world
and leaders such as ….?