The Great Depression 1928 1932 Causes of the

The Great Depression 1928 -1932

Causes of the Great Depression • American farmers did not share in the prosperity of the 1920’s. There were surpluses of crops. The farmers were in debt. • There was uneven distribution of wealth. Very few people held the majority of the wealth, the rest of the country was just getting by or buying on credit.

Causes of the Great Depression • The stock market crash marked the beginning of the Great Depression • Prices of stock dropped sharply • People had borrowed money to buy stocks (buying on the margin) • As stock prices fell people rushed to cash in their stocks causing the price to drop even lower.

Causes of the Great Depression • October 24, 1929 Black Thursday, On Octber 29 th Black Tuesday the bottom fell out of the stock market. Many stock speculators lost everything. • This Great Crash was a hallmark of the business cycle. Bust follows booms.

The Banks collapse • The stock market crash led to a chain of events that quickened the collapse of the American economy, • There was a “run” on the banks and many banks closed. People all tried to get their money out at once and the bank did not have the money on hand.

Businesses cut back on Production • Business leaders believed that cutbacks in production and laying off workers would save their companies. The higher the unemployment rate the lower the consumer spending. Causing businesses to lower production even more.

Tariffs • Hawley-Smoot Tariff raised the prices on foreign imports. Other nations retaliated and raised the price on their imports. American manufacturers and farmers faced closed markets for their goods. The ripple effect of the Smoot-Hawley tariff helped destroy international trade.

Global depression • • • Hawley Smoot tariff Reparations payments War debt payments Imbalance of trade Created a shaky economic structure in Europe Germany stopped making reparation paymemts

Global depression cont. • The United States agreed to suspend France and Britain”s war debt payments. The international economy had been funded by American loans. The crises in the United States slowed down loans to other countries. They experienced the same cycle of business failures, bank collapses, and high unemployment as the United States.

What caused the Great Depression? • Historians and economist still debate over the causes of the depression. One economist Milton Friedman believed there was not enough money in circulation after the stock market crash and bank failures. Others point to poor decisions made by the Government.

Americans face hard times • The Great Depression touched every American because they either experienced hardship or knew someone that did. • Unemployment soared to 24. 9%, while millions of Americans kept their jobs their wages were cut and their hours were longer.

Americans face hardship continued • Many people lost their jobs and their homes. People ate smaller meals, water replaced milk and meat was scarce. • Bread lines formed where people lined up to get handouts from charities or public agencies. • The Depression was also used to describe a state of mind as millions sunk into despair.

Americans face hardship cont. • In cities and towns across the nation, Americans faced a terrible plight. The numbers of unemployed, homeless, and hopeless continued to rise. • In rural America (farms) conditions were sometimes worse. Farmers had been suffering before the Great Depression and lost their farms during the depression.

Americans face hardship cont. • Many farmers moved and travelled about the country looking for work. The amount paid for farm products was simply not enough to allow the farmer to continue farming. • In protest of falling prices, the Sioux City Milk producers association dumped 1, 000 gallons of milk on the road outside the city.

Americans face hardship cont. • Many people lived in makeshift shantytowns called Hoovervilles, after president Hoover. Some even slept on subways trains and park benches. Newspapers used as blankets were called Hoover blankets. If you turned your pant pockets inside out it was called Hoover flags.

The Great Plains becomes a dustbowl. • A drought in the Great Plains added to the farmers problems • As farmers plowed under the grasses of the Great Plains to plant wheat there was nothing to hold down the topsoil. The combination of drought, loose topsoil and wind caused huge dust storms, these gigantic clouds of dirt and dust could rise to 8, 000 feet.

The Great Plains becomes a dustbowl • Most of the dust storms started in the southern Great Plains and moved from west to east. The plains region of Texas, Oklahoma, Kansas, New Mexico and Colorado were affectted this region came to be known as the Dust Bowl. • Many farm faimilies caught up in the Dust Bowl had no choice but to migrate out of the area. These migrants were called Okies regardless of their states of origin.

The Dust Bowl • Some 800, 000 people migrated out of the Great Plains area and headed to Washington, California or cities in the Northeast or Midwest. • As a result of migration rural states lost population while states with large cities gained population.

American family life suffers • For some men the loss of a job brought about shame and despair they felt they were losing status in the family. Women tried to find jobs as maids to make ends meet. Many children quit school and some ran away from home. Some families clung together and others broke apart due to the stress of the depression.

Minorities Suffer Hardship • The poorest of the poor, often minorities with no financial resources were hit especially hard. African Americans were the last hired and first fired. Unemployment for African Americans hovered around 50% nearly double the national rate.

Minorities suffer hardship cont. • Mexican Americans as well faced fierce job competition from the migrant workers. They often faced discrimination when looking for work. • Some whites in the southwest tried to repatriate or force Mexican American workers to return to Mexico. Hundreds of thousands of people of Mexican ancestry were pushed out of the country. Even so many more remained.

Hoover’s Response Fails • President Hoover did not cause the depression, and he did try to solve the problem but failed to turn the economy around. • At first Hoover felt the government should not interfere in the economy. • Policy of volunteerism where business and industrial leaders would keep employment prices and wages at current levels.

Hoover’s Response Fails • At the same time he called for government to reduce taxes, lower interest rates, and create a public works program. • The plan was to put more money into the hands of individuals and business to encourage more production and consumption • Finally Hoover requested that the wealthy give more money to charity. The idea is that the US would join forces to combat the depression.

Hoover’s Response Fails • Volunteerism did not work most people continued to work for their own best interest instead of the country as a whole. • Hoover had also asked the States and local governments to provide more jobs and relief measures. (Localism) • However towns and states simply did not have enough resources to combat the depression.

Hoover’s Response fails • When Hoover decided to intervene in the depression he used Trickle down theory as the basis of his policy • RFC Reconstruction Finance Cooperation gave billions of dollars in federal loans to business, railroads and banks. • The banks were supposed to loan more money to business who would then hire more workers. In the end the money did not trickle down to the people who needed it most.

Hoover’s Response Fails • Hoover did succeed with one project the construction of a dam on the Colorado River. This was later renamed the Hoover Dam. Construction of that dam brought much needed employment to the Southwest during the early 1930’s,

Americans Protest Hoover’s Failures • To many out of work Americans Hoover became the symbol of failure. • Some Americans called for radical change in the form of socialism or communism. • Other called for more fascist ideals. • Most Americans however never lost faith in their country

The Bonus Army • The Veterans of WWI had been promised a bonus to be paid out in 1945. But in 1931 many veteran’s groups wanted the money paid out sooner. Congress agreed, but the president vetoed the Bill that would pay the vets sooner. • In the summer of 1932 almost 20 thousand veterans arrived in the capital setting up camps and occupying empty office buildings.

Bonus Army • The President asked the army to clear the protestors out. Mac. Arthur and others used more force than called for by the President. When people saw photographs of troops marching against veterans they were shocked. • The President lost any chance he had for reelection. Americans were ready for a change.