Transcript Great Depression

BIG PICTURE
■ The roaring twenties came to a screeching
halt on October 29, 1929 when the stock
market crashed. Such factors as
overproduction, under consumption, unequal
distribution of wealth, depressed farms, and
stock market speculation plunged the United
States into the Great Depression.
Widespread unemployment followed and had
a variety of social and political impacts on
our nation. When Franklin Roosevelt became
President in 1932, he began initiating a series
of reforms known as the New Deal. These
reforms attempted to resolve issues that had
led to the Depression, as well as provide new
jobs for unemployed Americans. Many of the
institutions established by the New Deal still
exist today.
■FOCUS Questions:
–What factors led to the Great
Depression?
–The text argues it wasn’t caused
by the stock market crash.
What were the causes.
– How did the federal
government respond?
The Great Depression
The Great Crash
■Prelude to the stock market crash
–In 1927, the economy had a
recession but gov’t & business
leaders ignored warning signs
–The Federal Reserve lowered
interest rates for loans to
stimulate the economy, but this
easy credit led speculators to
buy stock “on-the-margin”
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
The Great Crash
■Stock market only had about 3
million active buyers & sellers
■But, the spillover into the greater
economy led to the Great
Depression
The U.S. stock market had only about 3 million
active buyers & sellers but the spillover into the
greater economy led to the Great Depression
Unemployment, 1929-1942
This downward spiral continued for 4 years;
By 1932 unemployment was at 25%
The Great Crash
■Reasons for the depression:
–1) Overproduction of consumer
durable goods & agriculture
–2) The post-war conditions in
Europe
decreased
foreign
trade
Consumers
already owned
durable
& were
not buying more
–3)goods
Unequal
distribution
of
wealth, high consumer debt,
stock market over speculation
led to an overall decrease in
consumer purchase power
In 1929, the total
market debt of
By
U.S.
the1934,
USA was
210%
of the
debt rose
to
value of
265%
of GDP
GDP
In 2005, the value of U.S.
debt was 303% of GDP
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. gov’t offered relief
checks to the unemployed
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”
Employment Agencies &
Relief-Check Lines
Soup Kitchens & Breadlines
Mortgage Foreclosures
These 4 potatoes are Christmas Dinner
Where’s
daddy?
“Hoovervilles” & “Hoover Flags”
■FOCUS Question:
–How did the federal government
respond to the Depression?
Hoover Struggles to
Fight the Depression
(We will watch in class before
this part of the discussion)
Hoover video (8 min)
Hoover and Voluntarism
■President Hoover’s initial response
individualism”
was to “Rugged
reassure
Americans that
prosperity would return
■Hoover rejected bold gov’t action
& called for volunteerism among
charities, local gov’t, & business
■As the depression worsened,
Hoover called for gov’t projects
like the Reconstruction Finance
Corps (RFC) which loaned money
to failing businesses
The Hoover administration initiated job-creation
programs, like building the Hoover Dam
Hoover and Voluntarism
■In 1932, Hoover’s presidency
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
Bonus Army
Douglas
MacArthur
Dwight
Eisenhower
Bank Failures, 1929-1933
The
Dust Bowl
(1931-1939) worsened the
“Okies”
&
“Arkies”
Areas Affected
by
the
Dust
Bowl
drought
effects of the Depression
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 gov’t intervention in the process
Conclusions
■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
gov’t for unprecedented support