1. Great Depression

2. 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

3. The Problems Mal-distribution of Wealth Consolidation and Collusion Stock Market Shenanigans

4. Mal Distribution of Wealth: Groups Not Sharing the Prosperity Farmers –Prices drop sharply –Costs increase –Competition Labor –Wages up, but not significantly –Decreased the buying power –Company profits mostly reinvested

5. Mal Distribution of Wealth 1920 -110 million people in US –Top 27,000 people earned more than the bottom 11 million. People need disposable income to buy stuff

6. Industrial Consolidation Consolidation of industry continues Collusion between big boys leaves competition reeling –Auto –Banks –Public Utilities Left unchecked by the Harding & Coolidge administrations. If the big boys fall, the industry will be crushed

7. 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

8. Warning Signs of Crash Coolidge decides to not run for President again in 1928. Danger signs began to appear in early 1929. –Building contracts decline sharply –Business inventories begin to grow dramatically –Consumer spending declines by 50% between 1928- 29 –People begin to be laid-off in 1929

9. The Crash (Sept – late Nov 1929) Black Tuesday – Oct 29, 1929 Several crashes and recoveries –mid-November - market down 50% –1932 - down about 70%

10. The Economic Depression 1929-1932 Unemployment – 25% –12 - 15 million were out of work Income –60% drop in salaries Production –Down 26% by end of 1929, by 50% by end of 1932 –GNP – $81 billion to $41 billion in 1932 Farm Income – down 57% by 1932

11. 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

12. 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

13. President Herbert Hoover Iowa – engineer – self- made millionaire - mining business. Effective engineer and businessman Had a lot of faith in American capitalism –Believed America close to wiping out poverty –Will guide his policy

14. The Response of the Hoover Administration to the Depression Voluntary Agreements –He asks businesses to hold the line on wages and employment. Government Actions –Hoover: government should not get too involved in economy –(See next 6 slides)

15. Gov’t Action: Creates a Federal Farm Board Farm surpluses were being built up Hoover bought up surplus crops and held them until the market improved. This encouraged farmers to increase production, which depresses prices further.

16. Reconstruction Finance Corp Provided 1.5 billion (in 1932 alone) to private businesses to keep them afloat –Short-term loans – not grants –Gives companies more debt

17. Increase Tariffs Believed depression started in Europe. –Isolationist Smoot-Hawley Tariff –Second largest in US history Retaliatory Tariffs Massive decline in trade

18. Relief policy Hoover believed in relief, but it was the responsibility of private, philanthropic organizations He doesn’t commit the government to personal relief.

19. Created Jobs 1932 – Public works projects –$500 million dollars to build roads, bridges, etc. This created jobs for people. Unfortunately, it was too little, too late for Hoover

20. Committed to balancing the budget Tough though because the tax base is dropping since many people aren’t working.

21. 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.

22. 1932 - Year of Crisis – The Depression Deepens The American Mood –Changes over time Initially (1929-31) – gut out the depression In 1932, people begin to lose faith in Hoover. Hoover’s policies designed to address –the corporations –large farming operations –Individuals will fend for themselves Hunger Hoovervilles – shantytowns created by homeless

23. Bonus Army - 1932 War veterans marched on Washington DC. Release pension funds decade early –Help ride out depression Congress and the Hoover Administration were unresponsive. Hoover demanded evacuation –Sent in troops –Torched their camps Contributed to national anger –Government pushing around vets