The Great Depression

1. The Great Depression

2. The Great Crash • Prelude to the stock market crash • In 1927, the economy had a recession but gov’t & business leaders ignored warning signs • The Federal Reserve lowered interest rates for loans to stimulate the economy, but this easy credit led speculators to buy stock “on-the-margin”

3. The Great Crash • An initial stock market crash on Oct 24, 1929 (Black Thursday) led to a catastrophic drop in stocks on Oct 29 (Black Tuesday) • Panicked investors sold stocks, causing stock prices to plummet • Banks lent less money, factories produced less, workers were fired or paid less → consumers had less money to spend → factories & businesses closed

4. The Great Crash • Reasons for the depression: • Overproduction of consumer durable goods & agriculture • The post-war conditions in Europe decreased foreign trade • Unequal distribution of wealth, high consumer debt, stock market over speculation led to an overall decrease in consumer purchase power Consumers already owned durable goods & were not buying more

6. Effects of the Great Depression • The Depression hit all classes: • Many families lost their homes or farms & were forced to live in “Hoovervilles” • The U.S. saw unprecedented poverty & suicide rates; fathers abandoned their families; lawlessness ensued • The U.S. gov’t offered relief checks to the unemployed

7. Effects of the Great Depression • African-Americans who had migrated to North were laid off • Mexican immigrants faced competition & deportation from angry Americans • The middle class was hit hard: • Refused relief checks & charity • Many lost their homes • Health care declined; doctor & dentist visits were “luxuries”

8. Employment Agencies & Relief-Check Lines

9. Soup Kitchens & Breadlines

10. Mortgage Foreclosures

12. “Hoovervilles” & “Hoover Flags”

13. Hoover and Voluntarism “Rugged individualism” • PresidentHoover’sinitialresponse was to reassure Americans that prosperity would return • Hoover rejected bold gov’t action & called for volunteerism among charities, local gov’t, & business • As the depression worsened, Hoover called for gov’t projects like the Reconstruction Finance Corps (RFC) which loaned money to failing businesses

14. The Hoover administration initiated job-creation programs, like building the Hoover Dam

15. Hoover and Voluntarism • In 1932, Hoover’s presidency suffered two final blows: • When 22,000 war veterans marchedtothecapitaltodemand their WW1 bonus checks early, Hoover ordered this Bonus Army to be forcibly removed • The steady rise of bank failures led to a complete collapse of the U.S. banking system

16. Bonus Army Douglas MacArthur Dwight Eisenhower

17. Bank Failures, 1929-1933

18. The Dust Bowl (1931-1939) worsened the effects of the Depression Areas Affected by the Dust Bowl drought

19. Fighting the Depression • The inability of Republicans to resolve the economic depression opened the door for a Democratic takeover in politics • Once in power, Democrats succeeded in relieving some suffering, restored hope, & created an unprecedented level of gov’t intervention in the process

20. The Election of 1932 • The depression made Hoover the “victim” while Franklin Roosevelt emerged as the “savior”: • In the 1932 election, FDR was able to unite the rural & urban factions of the Democratic party & won a landslide victory • FDR appealed to Protestants & Catholics, farmers & workers, native-born & immigrants

21. “I pledge you—I pledge myself to a new deal for the American people.”

22. Conclusions • The Depression of the 1930s came as a shock to Americans: • The consumer revolution led to confidence that 1920s economic prosperity would continue • When the stock market crashed in 1929, businesses closed & millions were unemployed • Americans began to look to the gov’t for unprecedented support