THE GREAT DEPRESSION 1929 1940 False Prosperity of

THE GREAT DEPRESSION 1929 -1940

False Prosperity of the 1920’s n n n n Industrial production Increased wealth New businesses & products Low unemployment New investment opportunity (Stock Market) Little gov’t. interference Everything looked ok, but underneath the surface major economic problems are present.

Causes Ø Ø 1. Overproduction and underconsumption Ø In the late 1920 s, factories and farmers produced more than they could sell. 2. Inequality of wealth Ø gap between the rich and the poor Ø Top 1% of people got 75% of all new wealth created (rich were getting richer) 3. Stock Market – Ø People invest too much in hopes to “get rich quick” Ø Purchase stocks with borrowed money or do not pay full price = buying on margin = artificially high prices Ø No gov’t regulation 4. Shaky Banking – Ø Gov’t did not regulate banks Ø Everyone is overusing credit. $ is not insured. Ø Banks have invested in the stock market

Stock Market Crash n n n People started to sell their stocks October 29 th 1929: “Black Tuesday” the market crashed! q People could not repay loans and led to many bank failures q Millions lost life savings q Prices fell, and factories closed, workers lost jobs People are concerned that their banks invested in the market q People rush to banks to withdraw their savings q Bank Run

Unemployment Rate: 1929 -1943

Problems of the Great Depression n 25% Unemployment Businesses are not making money and are closing The economy is completely unregulated

What Does President Hoover (R) Do? n n n Talks confidently Cut taxes Increase gov’t spending on federal projects Volunteerism – Hoover meets with leaders of business, labor and agriculture and asks them to maintain wages and production “Rugged Individualism” q q Personal responsibility Work your way out of G. D.

Hoover is Unpopular n n Shanty towns of the homeless and unemployed were called “Hoovervilles” Bonus Army – veterans marched in D. C. in 1932 to demand their bonus for fighting in WWI. Hoover calls army out

BONUS ARMY

The Dust Bowl: 1931 1939

Dust Storms: "Dust Storm Near Beaver, Oklahoma. " (July 14, 1935)

The Dust Bowl n n Droughts in the early 1930 s dried up crops and topsoil, turning soil into dust. Over 1 mill farmers were driven from their lands. q Many leave to become migrant workers in Cali – “Okies” n John Steinbeck – The Grapes of Wrath Unemployed men leave families to find work and not be a drain Some families expand to include extremely poor or needy relatives

Election of 1932 n n n Hoover (R) v. Franklin Delano Roosevelt (D) FDR wins by a landslide. Believed: q q n federal government should be the one to fix the problems of the depression. It is a National problem, not an international problem Roosevelt promised Americans a “New Deal” to put them back to work.

Eleanor Roosevelt n Humanitarian q n Traveled extensively q n Especially for women and minorities Husband’s eyes and ears Would travel and talk to those struggling q Reports influenced New Deal programs

Building Confidence n n n Brain Trust – group of talented people who served FDR in cabinet or gov’t Fireside Chats – FDR spoke to the people using the radio, his cheerful optimism helped to restore public confidence. Hundred Days – period in 1933 when FDR pushes programs through Congress

Bank Holiday n n March 5 -9, 1933 Emergency Banking Act q q q n All banks closed Gov’t inspects every bank’s financial health 2/3 rds of banks are deemed strong enough to reopen Restores some confidence in banks q People deposit money – banks can loan it out

FDR’s 3 Pronged Attack on the Great Depression n FDR passed laws – 3 R’s – Relief, Recovery and Reform q q q Relief – provides jobs to unemployed Recovery – government spending to put money back in the economy Reform – changes in laws to fix and prevent another depression