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Hoover, The Crash of 1929, & The Great Depression

Hoover, The Crash of 1929, & The Great Depression. Mr. Ermer U.S. History Honors Miami Beach Senior High. Root Problems. Maldistribution of Wealth: Top 5% of households hold 30% of income 2/3 of American families live on very little earnings

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Hoover, The Crash of 1929, & The Great Depression

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  1. Hoover, The Crash of 1929, & The Great Depression Mr. Ermer U.S. History Honors Miami Beach Senior High

  2. Root Problems • 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

  3. Immediate Causes • 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

  4. The Stock Market crash

  5. 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.)

  6. Worsening Depression • 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

  7. President Hoover Responds • 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

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