Transcript The Great Depression - Harrison High School

Photograph by Dorothea Lange
 Business
Cycle:
• Low demand for goods
• Low prices
• Low profits
• Layoffs and rising unemployment
• Lower incomes
• Reduced consumer buying power
 http://www.history.com/videos/1929-
stock-market-crash
 http://www.history.com/videos/bankingcrisis-hits-america
 Hoover
replaces
Coolidge
• To continue
Republican prosperity
of the 1920’s
• Stock market growing,
unemployment below
4%
 The
Economy
• Continued to grow
from 1925 until 1929
• Stock values grew
from $27 billion in
1925 to $87 billion in
October, 1929

Uneven Prosperity
• Rich getting richer (very
small % controlled
wealth & couldn’t
purchase enough to
stimulate economy)
Illusion of Prosperity
 Credit purchases
increase (installment
plans)
 Intense investment in
the Stock Market (“Get
rich quick” schemes)

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
Overproduction
Under-consumption
Too many goods, too little
demand
Wages not rising
Wages too low to buy
goods
Banks made unsound loans
International trade
declined after WWI
• Loss of wartime markets



Government limited money
supply
Farm prices drop after WWI
Faced foreclosures

Stock Market
• Speculators bid up stock
•
•
•
•
prices
Stocks overvalued
Stocks bought “On
Margin”…investors only
paid a fraction of the full
stock price
Selling panic, but no
buyers
Share prices fell & loan
“Margins” came due
Black Thursday – The
Dow Jones began to fall
 *Black Tuesday
(10/29/29)
 Investors raced to sell
in order to get their
money out of the Stock
Market
 Investors hit first, but
the Great Depression
soon followed (19291941)


Economic Cycle
• People Lose Jobs 
Can’t Buy Goods 
Profits Fall  Businesses
Close

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Millions lost their jobs
Banks failed – People lost their life’s investments
Businesses failed. Restaurants (as well as many other
“service” industries) closed
Bottom of the economic ladder hit the hardest
Farmers devastated… The Dust Bowl worsened their
situation
• Bad farming practices coupled with drought
Children suffered most
Lack of education, malnutrition
Divorce, suicide
 Hoover’s efforts
• Asked businesses to freeze wages… later failed
•
•
•
•
•
•
when workers’ pay was cut
Passed the HAWLEY-SMOOT TARIFF
Raised the cost of foreign goods so people would
buy American
Backfired. Europe raised their tariffs and
international trade slowed
Hoover would not give aid directly to the people
Instead, Hoover insisted on providing relief to
businesses hoping it will create jobs.
RFC – Reconstruction Finance Corporation – loans to
businesses, “trickle down” economics (didn’t work)

The Bonus Army
• 20,000 World War I Veterans
 Hoover’s
Grew
Unpopularity
• People lived in
shantytowns they called
“Hoovervilles”
• People slept under
newspapers they called
“Hoover Blankets”
• People turned their
pockets inside-out and
called them “Hoover
Flags”
marched on Washington
• They wanted immediate
payment of a pension that
was promised to them for
1945
• Military called in to control
crowd (McArthur, Patton,
Eisenhower)
 Battle
between those who believed in
government help and those who didn’t
 Franklin Delano Roosevelt (Dem) wins
easily
 A “New Deal” for America
 Provides direct relief
 Relief, Recovery, Reform
 Helped by wife, Eleanor Roosevelt
 http://www.history.com/shows/americathe-story-of-us/videos/the-great-depression