THE GREAT DEPRESSION1929-1940S

Election of 1928-Hoover elected-won in a landslide

Enters in during a time of prosperity: 1920s experienced a strong bull market (stock prices are rising)

Consumer culture of the 20s=credit/debt

Highly popular in the beginning

PRESIDENT HOOVER

What factors contribute to an economic downswing in an economy?

How might you represent this downswing in a visual diagram?

CAUSES OF THE DEPRESSION

1. Overproduction-WWI, mechanization of industry2. Under-consumption3. Uneven distribution of wealth-wages rose little; top

5% received 33% of the income(2007: Top 1% 42.7%, next 19% 50.3%, Bottom 80% 7%)

CAUSES OF THE DEPRESSION

4. Rising debt/lending issues5. Govt. policies-Hawley-Smoot tariff-raised prices on

foreign goods (Reason? Negative consequence?)6. Global economic problems-had become more

interdependent with one another; debts, reparations, etc. leads to further troubles and loss of overseas trade with the U.S.

CAUSES OF THE DEPRESSION-CONT.

7. Stock market speculationinvestment (promises satisfactory returns) vs. speculation (unsure of return)

8. “Buying stocks on margin”-many contributed as little as 10% down; 1/3 did9. Stock Market Crash-Oct. 29, 1929-”Black Tuesday”-

16 million shares sold, over $30 billion lost

CAUSES OF THE DEPRESSION-CONT.

Between 1929-1933-85,000 businesses close-400,000 farms foreclosed on-6,000 banks fail (1/4 of all

banks)-GDP fell almost 50% (1929-

1932: $81 bil l ion to $41 bil l ion)

-Unemployment: 16 mill ion (1/3 of pop.) Hardest hit

-Minorities (Unemployment often 60%)

-Women (3/4 ban women from teaching)

-Teenagers

EFFECTS

Hoovervilles-dev. Outside cities; communities of tents and shacks

Civil unrest-Bonus Army (1932)Group of WWI veterans march on D.C., demanding early payment of a war bonus to be paid in 1945; Vets camped out anddemanded they would stay until paid; Hooversent in troops under Douglas MacArthur; theyused tear gas and tanks, removed the protestersand burnt the camps; 1 dead; outraged the

peopleBreadlines

EFFECTS

Dust Bowl: over-farming and climateTook loose soil and spread it across the nation; took

topsoil awayHuge dust stormsFarms were abandoned by the thousandsOkies left the south and mid-west to settle in the

West, such as in California

OTHER MAJOR EVENTS

Some govt. action was needed to pull the U.S. econ. out“rugged individualism”-self-reliance; individuals can

succeed on their own with some govt. assistanceSome tax breaks; asked churches to deal with charity$800 million pushed toward public works

-Boulder/Hoover Dam later named to honor himTries to stabilize prices by holding surplus farm products

in storage=not enough for continued overproductionEmergency loans to stabilize key businesses (ex. rr’s,

banks)trickle-down economics-could “trickle down” to smaller businesses and bring recovery

“lame duck” president-powerless to cope with the Dep.

HOOVER’S RESPONSE

1932-worst year of the DepressionFDR elected in election of 19323 R’s: relief, recovery, and reformCreated a series of federal programs known as the

New Deal (govt. role in the economy increased)

FDR