The Great Depression The Great Crash Prelude to

The Great Depression

The Great Crash ■ Prelude to the stock market crash –In 1927, the economy had a recession but gov’t & business leaders ignored warning signs –The Federal Reserve lowered interest rates for loans to stimulate the economy, but this easy credit led speculators to buy stock “on-the-margin”

The Great Crash ■ An initial stock market crash on Oct 24, 1929 (Black Thursday) led to a catastrophic drop in stocks on Oct 29 (Black Tuesday) –Panicked investors sold stocks, causing stock prices to plummet –Banks lent less money, factories produced less, workers were fired or paid less → consumers had less money to spend → factories & businesses closed

The Great Crash ■ Reasons for the depression: –Overproduction of consumer durable goods & agriculture –The post-war conditions in Europe decreased foreign trade Consumers already owned durable goods & distribution were not buying –Unequal of more wealth, high consumer debt, stock market over speculation led to an overall decrease in consumer purchase power

Effects of the Great Depression ■ The Depression hit all classes: –Many families lost their homes or farms & were forced to live in “Hoovervilles” –The U. S. saw unprecedented poverty & suicide rates; fathers abandoned their families; lawlessness ensued –The U. S. gov’t offered relief checks to the unemployed

Effects of the Great Depression ■ African-Americans who had migrated to North were laid off ■ Mexican immigrants faced competition & deportation from angry Americans ■ The middle class was hit hard: –Refused relief checks & charity –Many lost their homes –Health care declined; doctor & dentist visits were “luxuries”

Employment Agencies & Relief-Check Lines

Soup Kitchens & Breadlines

Mortgage Foreclosures

“Hoovervilles” & “Hoover Flags”

Hoover and Voluntarism ■ President Hoover’s initial response individualism” was to “Rugged reassure Americans that prosperity would return ■ Hoover rejected bold gov’t action & called for volunteerism among charities, local gov’t, & business ■ As the depression worsened, Hoover called for gov’t projects like the Reconstruction Finance Corps (RFC) which loaned money to failing businesses

The Hoover administration initiated job-creation programs, like building the Hoover Dam

Hoover and Voluntarism ■ In 1932, Hoover’s presidency suffered two final blows: –When 22, 000 war veterans marched to the capital to demand their WW 1 bonus checks early, Hoover ordered this Bonus Army to be forcibly removed –The steady rise of bank failures led to a complete collapse of the U. S. banking system

Bonus Army Douglas Mac. Arthur Dwight Eisenhower

Bank Failures, 1929 -1933

The Dust Bowl (1931 -1939) worsened the Areas Affected by the Dust Bowl drought effects of the Depression

Fighting the Depression ■ The inability of Republicans to resolve the economic depression opened the door for a Democratic takeover in politics ■ Once in power, Democrats succeeded in relieving some suffering, restored hope, & created an unprecedented level of gov’t intervention in the process

The Election of 1932 ■ The depression made Hoover the “victim” while Franklin Roosevelt emerged as the “savior”: –In the 1932 election, FDR was able to unite the rural & urban factions of the Democratic party & won a landslide victory –FDR appealed to Protestants & Catholics, farmers & workers, native-born & immigrants

“I pledge you—I pledge myself to a new deal for the American people. ”

Conclusions ■ The Depression of the 1930 s came as a shock to Americans: –The consumer revolution led to confidence that 1920 s economic prosperity would continue –When the stock market crashed in 1929, businesses closed & millions were unemployed –Americans began to look to the gov’t for unprecedented support