Mr. Ermer U.S. History Honors Miami Beach Senior High

Maldistribution of Wealth: Top 5% of households hold 30% of income 2/3 of American families live on very little earnings Lack of diversification in the American economy Most of the wealth of the 1920s generated from construction & automobile production 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 Reserve (FED) did not have safeguards against speculation Mismanaged interest rate levels Declining American exports to Europe as European industry recovers Insecure international debt structure American banks loan money to Europe after WWI, increasing postwar European debt Great Depression spreads to Europe and other countries indebted to U.S. banks ROOT PROBLEMS

1928 Presidential candidates campaign on continued prosperity Alfred Smith’s campaign sunk by anti-Catholic backlash February 1928: Stock market begins year and a half of steady rise 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 IMMEDIATE CAUSES

THE STOCK MARKET CRASH

HARD TIMES Big industrial cities paralyzed by high unemployment Unemployment and poverty seen as signs of personal failure Government and charitable organizations unable to meet demands of unemployed Farmers forced into foreclosure, horrible drought in plains = Dust Bowl Still, farms were producing more food than Americans could afford, prices drop fast Many families leave for other places like California (called Okies as most came from Okla.)

Hobos roam country after being ejected from homes by bailiffs 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 WORSENING DEPRESSION

President Hoover’s Laissez-Faire stance does not convince the public American Individualism and private sector responsibility was Hoover’s strategy The failure of volunteerism 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 PRESIDENT HOOVER RESPONDS