The Great Depression

Notes:

Chapter 14

I.) The Election of 1928

A. Republican candidate = Herbert Hoover

B. Democrat candidate = Alfred E. Smith

C. Outcome:

Hoover wins and public opinion is in favor of the Republicans

II.) Causes of the Great Depression

A. availability of “Credit” (living beyond means)

B. unequal distribution of wealth (rich get richer, poor get poorer)

C. farming crisis (falling prices, loss of farms, surplus crops)

D. tariffs & war debt (loss of foreign markets for goods)

III.) The Events that lead to DepressionLate 1920’s = Industry in trouble

(railroad, textile, steel, mining, lumber, automobile, construction)

During WWI = Farms Prosper

During 1920’s = Farms Suffer(demand falls, crop price falls, income falls, farmers default on loans, rural banks fail)

Late 1920’s = Consumers have less Money(rising prices, stagnant wages, uneven distribution of wealth, overbuying on “credit”)

In 1920’s = Stock Market is a “Bull Market”(Speculation- rush to buy stocks in hopes to strike it rich)

By 1929 = People “Buying on Margin”(unrestrained buying & selling fuels market upwards)

IV.) The Great Depression BeginsSeptember 1929

Stock prices peak then begin to fall

October 24, 1929

Stocks plunge investors unload shares

October 29, 1929

“Black Tuesday” Stock Market Crashes(16.4 million shares dumped, stock prices plummet, people left with debt)

V.) Financial CollapseA. Rush to with draw money leads to “failure

of banks”

1. 1929 = 600 banks close

2. 1933 = 11,000 banks fail

Result: millions of Americans loose their savings

B. Gross National Product is cut in half

1. from $104 billion to $59 billionResult: business's go bankrupt

C. Workers loose their jobs

1. 1929 = 3% unemployment

2. 1933 = 25% unemployment

Result: 1 out of 4 cannot find work

VI.) Hardships and SufferingA. People loose homes

1. Shantytowns called

“Hoovervilles” created

B. People cannot find food

1. “Soup kitchens” & “Bread Lines”

C. African Americans & Latinos face highest level of unemployment

1. racial violence

D. Farmers can grow their own food

1. tenant farming

E. Dust Bowl results in farmers fleeing land or evicted

F. Traditional family values emphasized

G. Men turn to the streets (“Hobos”)

H. Women struggle in workplace and become a target of resentment

I. Children receive poor diets, healthcare, work in sweatshops, don’t go to school

J. Suicide rate increases & social sacrifices

VII.) Hoover’s Policies FailA. President Hoover believed that the govt. should only play a

limited role in solving economic problems

1. govt. role was to encourage cooperation between

business groups in society not to control it

2. Hoover opposed federal welfare or direct relief to the needy

B. Hoover’s Attempt to Help

1. Hawley-Smoot Tariff- established highest protective tariff on

imported goods in U.S. history

2. Boulder Dam- provides flood control, electricity, water supply, and

construction jobs

3. Federal Farm Board- organization of farm cooperatives aimed at

raising crop prices

4. National Credit Corporation- loaned money to smaller banks to

help prevent bankruptcy

5. Federal Home Loan Bank Act- lowered mortgage rates to home-

owners & refinances to farmers

6. Reconstruction Finance Corporation- $2 billion emergency funds

to large businesses (trickle down theory)

C. Outcome: too little, too late!

VIII.) Hoover’s Image SuffersA. The Bonus Army- 1932 incident in which WWI veterans

march on Washington D.C. to support Patman Bill to pay wartime bonus now rather than 1945

1. created a “shantytown” in D.C.

2. June 17, 1932 bill fails and veterans told to leave & refuse

3. Gen. MacArthur and Major Eisenhower lead troops to

disband Bonus Army

4. American public stunned by treatment of veterans