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THE GREAT DEPRESSION
IMMEDIATE CAUSES
1928 Presidential candidates campaign on continued
prosperity• Alfred Smith’s campaign sunk by anti-Catholic backlash
Speculation and margin buying drives 1920s bull market• Falling stock prices force lender margin calls
October 29, 1929: Black Tuesday market crash• Loss of credit, bank losses, stock prices drop drastically• Bank runs cause more bank closures
The stock market crash of 1929 was the big hit on a weak
system with many problems at its roots
THE STOCK MARKET CRASH
ROOT PROBLEMS
Top 5% of households hold 30% of income• 2/3 of American families
Installment plans for expensive goods• As demand falls, workers laid off, demand continues to fall
1920s: Banks slowed lending to foreign companies/countries• Exports fall as Americans lose jobs
Federal Reserved (FED)did not have safeguards against
speculation• Mismanaged interest rate levels
WORSENING DEPRESSION
Hobos roam country after being ejected from homes by
bailiffs
The Dust Bowl hurts farmers
Art and Entertainment are happy escape for struggling people• Movies and radio shows
• Radio soap operas• The Wizard of Oz and Gone With The Wind
• Literature and Art• William Faulkner’s The Sound and the Fury• Grant Wood’s American Gothic
PRESIDENT HOOVER RESPONDS
President Hoover’s Laissez-Faire stance does not convince the public• American Individualism and private sector responsibility was Hoover’s
strategy• Can’t raise taxes, can’t lower taxes—Republicans lose Congress in 1930
Hoover asks FED to put more money in circulation, they refuse• National Credit Corp. (NCC) fails to expand credit
Congress passes Emergency Relief & Construction Act• $1.5 Billion to states for relief (payments to suffering people)• $300 Million for public works construction projects
Hunger marches, farmer protests, and the Bonus Army