The Great DepressionThe Great Depression

Chapter 21Chapter 21

Reasons for the Great Depression – DO NOT COPY

• Credit Debt• Loose Reg. of stock market/businesses• European War Debts• Conservative Policies• Overproduction• LED TO…..

– BANK FAILURES– BUSINESS FAILURES– UNEMPLOYMENT

Reason #1:CREDIT

• Americans bought products on installment plans

• 1929 – 6 X’s higher than 1915

• Int. rates low – promote business

• FED. RESERVE tightened credit to slow purchasing => DEFLATION

Reason #2:STOCK MARKET• bull market –upward trend in stock prices

(1920s)• 2% of US invested

– Stock Speculation –buying /selling to make a quick profit• inflated prices of stocks

– Businesses – inaccurate books– margin buying –purchasing stocks with

borrowed money• 10% on a stock/ borrow the rest

STOCK MARKET CONTD

– Black Thursday – Oct. 24, 1929 – Black Tuesday – Oct. 29 ($30 billion

lost)• GE: 1929 - $396;1932 - $34• US Steel: $261 $21

• - it became a bear market

Reason #3: European War Debts

• massive war debts

•Not importing US goods

• Smoot – Hawley Tariff –high tariffs on imported goods

Reason #4: Conservative Policies

• No reg. on businesses– Booming – look away

• Tax Cuts – Trickle Down Theory

• Reduced power of labor unions

• High Protective tariffs

Trickle Down Theory

#5 - Overproduction

• Farmers– Overproduction= Europe stops buying– Debts = losing homes– Suffering in the 1920s– 1st to experience Depression

• Industry– Mass production

Effect #1: BANK FAILURES

• borrowers defaulted on loans

• life savings lost if a bank closed

• BANK RUNS - withdrawal all their money

• -1930-1932 –5,000+ banks failed

Banks – Khan Academy

• Khan Academy - simple banking

Effect #2:Business Failures

• No $ to buy products

• No loans from banks

• layoff employees

• Gross national product – total value of all goods and services produced in year– 1929 - $103 billion– 1933 - $56 billion

BUSINESSES CONT

• - 1930 – 26,000 businesses went bankrupt

• 1931 – 28,285 more

• 1929 – unemployment was 3.2%

• 1932 – it was 23.6 %

Effect #3 - JoblessnessEffect #3 - Joblessness

• 1929 – 1.5 million were unemployed1929 – 1.5 million were unemployed

• 1933 – 15 million1933 – 15 million

• decreased wages or hoursdecreased wages or hours

• AA usually the 1AA usually the 1stst workers to be fired workers to be fired

Election of 1928

Herbert Hoover – Rep.

• Republicans – booming 20s

• Acceptance speech for Rep. ticket: “We in America today are nearer to the final triumph over poverty than ever before in the history of this land... We shall soon with the help of God be in sight of the day when poverty will be banished from this land."

Al Smith

• CATHOLIC• ANTI-PROHIBITION• NYC

Hoover wins – because he is not Catholic

Life in CitiesLife in Cities

• Salvation Army and Red Cross provided relief Salvation Army and Red Cross provided relief to needyto needy

• BreadlinesBreadlines – poor could get soup and bread – poor could get soup and bread • ShantytownsShantytowns - aka “Hoovervilles” - aka “Hoovervilles”

Bonus ArmyBonus Army

• 1932 – 10,000 WWI vets came to D.C.1932 – 10,000 WWI vets came to D.C.• Bonus BillBonus Bill

– Early payment of the pension bonusesEarly payment of the pension bonuses

• Congress rejected the bonus billCongress rejected the bonus bill• 2,000 vets defied order to leave DC2,000 vets defied order to leave DC• Army removed themArmy removed them

– Douglas MacArthurDouglas MacArthur– machine guns, tanks, and tear gasmachine guns, tanks, and tear gas

Election of 1932Election of 1932

• Republicans – HooverRepublicans – Hoover

• Democrats – Franklin D. RooseveltDemocrats – Franklin D. Roosevelt– wealthy, famous familywealthy, famous family– Wife was EleanorWife was Eleanor– VP candidate in 1920VP candidate in 1920– Polio – paralyzed from waist downPolio – paralyzed from waist down– Gov. of NY in 1928Gov. of NY in 1928

ResultsResults

• Roosevelt wonRoosevelt won– 23 million popular votes to 16 mill23 million popular votes to 16 mill– 472 electoral votes to 59472 electoral votes to 59

• Dems - majorities in both houses of Dems - majorities in both houses of CongressCongress