1930sThe Great Depression

Mr. PagliaroSeymour High School

@PagsAPUSH

Part 1: The Nation’s Sick EconomyCauses of the Great Depression

9 Key Causes for Great Depression1. Debt liquidation and distress selling2. Contraction of money supply as bank loans are paid3. High taxes on middle class4. Larger decrease in net worths of businessbankruptcies5. Decreased profits6. Reduction in output, in trade, and in employment.7. Pessimism and loss of confidence8. Hoarding of money9. Decreased interest rates; increased deflation

Causes for 1929 Market CrashStocks bought on marginLiberal credit policies of 1920s

4/7 of all loans went unpaid at close of 1920sAgricultural recession of 1920sInequality of production vs. consumption5,000 banks collapsed 1923-1930Unequal distribution of wealthDeclining real estate valuesIntroduction of Hawley-Smoot Tariff

Black ThursdaySept. 3, 1929-Dow reached all-time high-381Dropped 17% over next monthOct. 24, 1929-12.9 million shares traded

Bloc purchase of blue chips Stop the bleeding

Day ended down 6.38 points

Black Monday & TuesdayRegular investors got out – huge losses

Total losses = $30 billion

Date Change % Change Close

Monday, October 28, 1929 −38.33 −12.82 260.64

Tuesday, October 29, 1929 −30.57 −11.73 230.07

Stock Market Crash, Oct. 1929

Run on banks…

Consequences of Market CrashLack of confidence in stock exchangeReduced industrial outputDeclined investment in capital goods

Over-production & Under-consumptionCompanies

overproduced consumer goods

Consumers did not have $ to pay

American Industrial Production

International TradeHawley-Smoot Tariff (1930) raised rates on 20k goods

"The world is paying for its ruthless destruction of life and property in the World War and for its failure to adjust purchasing power to productive capacity during the industrial revolution of the decade following the war.”

Record high tariffsDecreased trade by 40% in 3 years

European recessionEnd of Dawes Plan loans to GermanyImport quotas

Decreased International TradeU.S. imports decreased 66% from US$4.4 billion (1929) to

US$1.5 billion (1933)exports decreased 61% from US$5.4 billion to US$2.1 billion

Unemployment

How about now?

Wealth Disparity

And today?

Decline in Farm ProsperityDecreased production in 1920s and 1930sDeflated prices on agricultural goods

The Dust Bowl1930s era drought conditions of Great PlainsFarming techniques +drought Massive wind erosion

Dust Storms Black Blizzards

Dust Bowl Resources

Migration westward“Okies”Moved to California

Searched for workSame poor conditionsMigrant workers

Chronicled by:John Steinbeck

Grapes of Wrath Of Mice & Men

Dorothea Lange

Part 2Herbert Hoover and the Great Depression

Hoovervilles

The Bonus ArmyWorld War Adjusted Compensation

Act – 1924 – Pension/Bonus1932 – March on Washington

12-17,000 vets, families, supporters (43,000 total)

Supported by Senate candidate, Maj. Gen. Smedley Butler

July 1932 – Hoover called out armyGen. D. McArthur marched soldiers

on protestors; used gas

Hoover’s Economic PolicyBelieved economic recovery depended on businessCare for unemployed? Emphasis on charities

Spirit of voluntarismSupported Federal Loan program to support

State/local governmentPrivate companies

Agricultural Marketing Act/Federal Farm Boardloans to farmersbuy crops

1929-1932>10,000 Banks closed (>40% of 1929)GNP down 31%Farm values down 53% (after dropping 30-40% in 20s)Unemployment at 23.6%

Reconstruction Finance CorporationProvided $1.5-2 billion in loans to states, cities,

infrastructure businesses (1932)Did little to help lower classesUnemployment continued to riseRFC spent $1.8 billion in 1933 and 1934Public opinion on Hoover dropped

1932 ElectionName Electoral Popular

FDR 472 22.8 mil.

Hoover 59 15.7 mil.

Franklin D. Roosevelt – Dem.

Herbert Hoover – Rep.

Throughout the nation men and women, forgotten in the political philosophy of the Government, look to us here for guidance and for more equitable opportunity to share in the distribution of national wealth... I pledge you, I pledge myself to a new deal for the American people... This is more than a political campaign. It is a call to arms.

I pledge you, I pledge

myself, to a new deal for

the American people.