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The Great Depression

The Great Depression. Causes and Hoover. October 29, 1929 the US stock market crashed. Known as “Black Tuesday”. Wall Street marked the beginning of the Great Depression, but did not cause it. Causes. Distribution of Wealth. Unequal distribution of wealth.

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The Great Depression

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  1. The Great Depression Causes and Hoover

  2. October 29, 1929 the US stock market crashed. • Known as “Black Tuesday”. • Wall Street marked the beginning of the Great Depression, but did not cause it.

  3. Causes

  4. Distribution of Wealth • Unequal distribution of wealth. • 0.1% of the richest Americans had as much total income as the bottom 42%. • Half the nation lived below the subsistence level. • Not enough purchasing power to keep the economy going.

  5. Oligopolies • Oligopolies dominated American industry • Led to “administered prices”. • Kept prices artificially high • Did not rely on supply and demand.

  6. Agriculture, Industry and Banks • Suffered from overproduction • Prices were declining and farmers had heavy debt. • Coal and textile industries suffered the same. • Banks were poorly managed and regulated.

  7. Foreign Trade • US crash caused panic in Europe • Great Depression became global • European nations defaulted on loans • European nations stopped purchasing American goods. • US exports fell by 70% from 1929-1932

  8. Federal Government • Didn’t enforce antitrust laws. • Encouraged oligopolies and high prices • Failed to regulate banks and the stock market. • Reduced taxes on the wealthiest • Opposed labor unions which kept workers wages and purchasing power low • No affective agricultural policy • High tarrifs discouraged foreign trade

  9. Hoover

  10. Volunteerism • Hoover believed voluntary, private action would solve the Depression. • Did not want federal intervention • Asked business leaders to maintain employment and wage levels • Business leaders couldn’t do it. • Felt charities, through private donations, should help the needy. • Believed the economy would naturally right itself.

  11. Hoover’s Approach • As the economy worsened, Hoover began to take some action. • Congress cut taxes to increase consumer buying power. • Increased public works budget to create jobs. • Reconstruction Finance Corporation lend funds to banks, insurance companies and railroads. • Hoover was seen as indifferent to the peoples’ suffering.

  12. Bonus Army

  13. 1932, veterans of WWI demanded payments of service bonuses that weren’t due until 1945. • Hoover refused to meet with them • 10,000 veterans created a shantytown at the edge of Washington.

  14. Response • General Douglas MacArthur led cavalry, infantry and tanks against the “bonus army”. (July 28, 1932) • The shantytown was burned down and several veterans died.

  15. Election of 1932

  16. With no hope for victory, Republicans renominated Hoover • Democrats nominated Franklin D. Roosevelt. • In 1932, the Democratic and Republican platforms differed very little. • FDR knew he would win just because Hoover wouldn’t.

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