Great Depression

The Good – in the 1920s Economic indicators were up –Employment was high –Wages were growing steadily –Credit was cheap –Profits were growing –Production was up –The stock market was humming

The Problems The Unbalanced Economy –Large Groups Not Sharing in the Prosperity –Mal-distribution of Wealth Industrial Consolidation (Collusion) Among the People Stock Market Shenanigans

Industrial Consolidation Consolidation of industry continues Left unchecked by the Harding & Coolidge administrations. –Not anti-trust zealots –Almost encouraged collusion What will happen if industry folds?

Distribution of Wealth Among the People million people in US –Top 27,000 people earned more than the bottom 11 million. Why is this a problem?

The Stock Market Issues Stocks become overvalued People begin Trading on Margin –Investment firms would lend people money to invest - up to 90% of the price of the stock. Crash will ruin people

Warning Signs of Crash Danger signs begin to appear in early –Building contracts decline sharply –Business inventories begin to grow dramatically –Consumer spending declines by 50% between –People begin to be laid-off in 1929

The Crash (Sept – late Nov 1929) Black Tuesday – Oct 29, 1929 Several crashes and recoveries –mid-November - market down 50% – down about 70%

The Economic Depression Unemployment – 25% – million were out of work –Families were not two wage earners so this was devastating Income –60% drop in salaries Production –Down 26% by end of 1929, by 50% by end of 1932 Most serious depression in the country’s history

Effects on the People The wealthy were insulated If you were poor, unfortunate –Turn to family for help –Breadlines –Some distraught over bleak chances –Some men abandoned their families

Dust Bowl Farmers in the Plains are ruined –Poor farming practices – lack of crop rotation –Drought in the 30s –Effects of Depression Dust storms of blowing top soil John Steinbeck – Of Mice and Men, The Grapes of Wraith

Hoover’s Solutions Purchase surplus crops Reconstruction Finance Corp - Provided 1.5 billion to private businesses to keep them afloat Increase Tariffs - isolationist No relief for the people

The Tragedy of Herbert Hoover He’s a very well-qualified, intelligent, well-intentioned person. He brought a strong, well thought through, conservative business philosophy to the White House. –Yet he fails. –He couldn’t overcome the depression. He was bound to a political philosophy that wouldn’t work to move America out of the depression.

Year of Crisis – The Depression Deepens The American Mood – The American people’s response is to gut out the depression –In 1932, this attitude changes. People begin to lose faith in Hoover. People became angrier. Hoovervilles – shantytowns created by homeless Bonus Army

Bonus Army War veterans marched on Washington DC. Hoover demanded that the Bonus army evacuate. Contributed to national malaise