Objective: To examine the causes of the Great Depression
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Became 30 th President after Harding died 1923 Supported big
business and laissez-faire economics (government should not
regulate business or the market, it will automatically fix itself)
Most of 1920s stock market did well People bought stock on
speculation (made high- risk investments hoping to make a large
profit) Also engaged in buying on the margin (purchasing stocks for
portion of what they cost (10%), borrowing the difference, and
paying interest)
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Helped a booming economy in the 1920s Ford and the assembly
line Mechanization (use of machines) Increased production
Manufacturers could charge less More people purchased cars,
clothes, appliances Consumerism buying and consuming products meant
people were spending more than they saved
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Cycle of Consumerism $$, spending, good economic times
(prosperity) Improved Economy Companies do well, make profit
Increased employment
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Overproduction market has more of a product than consumers want
Underconsumption consumers reluctance to buy all that has been
produced (also due to rising interest rates) Combination leads to
falling prices
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Cycle of Disaster many businesses went bankrupt Falling prices,
hurting economy Producers are hurt Little profit Loss of jobs,
people have less $ to spend Demand for goods fall
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Technology (new tractors) led to overproduction (esp. during
WWI) Agricultural prices dropped drastically Many attempts by
Congress to pass bills increasing farm prices were vetoed by
Coolidge (laissez-faire: the chief business of the American people
is business) Farms went into foreclosure
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A foreclosure sale in Iowa in the early 1930s when "the bottom
fell out of everything." Military police were on hand to keep
farmers from disrupting the auction.
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Farmers prevent the foreclosure of a dairy farm in Des Moines
Iowa 1933 Foreclosure: the sale or repossession of a persons home
or property by creditors!
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Overproduction and poor farming techniques led to drought Dust
Bowl (1931-1939) storms hit Midwest destroying farms leaving
hundreds of thousands homeless migrants
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Causes of the Dust Bowl: Overgrazing by cattle and plowing by
farmers destroyed the grasses that once held down the soil.
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Dust Storms: "Kodak view of a dust storm Baca Co., Colorado,
Easter Sunday 1935 The loose soil, a drought, and high winds helped
to cause the Dust Bowl.
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Farmer and sons, dust storm, Cimarron County, Oklahoma, 1936.
Photographer: Arthur Rothstein.
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Farm foreclosure sale. (Circa 1933) Effects of the Dust Bowl:
Farmers could barely make a living, causing many to leave their
homes for the west.
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Farm Security Administration: Families on the road with all
their possessions packed into their trucks, migrating and looking
for work. (Circa 1935) Many farmers became migrant farmers as they
moved from region to region looking for work.
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Farm Security Administration: farmers whose topsoil blew away
joined the sod caravans of "Okies" on Route 66 to California.
(Circa 1935)
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Became President in 1929 Opposed too much government
interference in business Oct. 29, 1929 Black Tuesday stock market
crashed: Stock prices dropped (caused by panic and selling of
stocks) Many people lost everything Bankers began calling in loans
that people had no $$ to pay Marked beginning of Great
Depression
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Rush to withdraw money from banks caused them to close Fewer
investments in stocks caused prices to fall even further Roughly
25% of all Americans were unemployed People had to rely on soup
kitchens and breadlines (provided food for poor and homeless)
Hoovervilles homeless lived in homemade shacks and makeshift
villages
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A Bank Run in 1933 Its A Wonderful Life
http://www.youtube.com/watch?v=lbwjS9iJ
2Sw&feature=player_detailpage
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Hoover did take action to intervene in the economy, but it was
too little too late...
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The sole function of the government is to bring about a
condition of affairs favorable to the beneficial development of
private enterprise. Herbert Hoover (1930)
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Officials believed that raising trade barriers (tariffs) would
force Americans to buy more goods at home, which would keep
Americans employed.
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But they ignored the principle of international trade- it is a
two-way street; If foreigners cant sell their goods here, they will
shut off our exports there!
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Greatest economic crisis in U.S. history lasting more than a
decade Severe worldwide economic downturn prior to WWII (affected
industrialized nations and countries that exported raw materials to
them)
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Log in!
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Overproduction and underconsumption that led to falling prices
Consumerism Installment plan (buying on credit) Speculation and
buying stock on the margin Political and economic decisions Black
Tuesday
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Dorothea Lange's "Migrant Mother," destitute in a pea picker's
camp, because of the failure of the early pea crop. Most of the
2,500 people in this camp were destitute. By the end of the decade
there were still 4 million migrants on the road.
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Young Oklahoma mother; age 18, penniless, stranded in Imperial
Valley, California. Migrant farmers from Oklahoma became known as
Okies.
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The Great Depression forced many Americans to go hungry or
depend on charities for food, clothing, and other necessities.
Here, people wait in a breadline to receive free food.
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A soup kitchen Free Food for the Homeless
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These areas were nicknamed Hoovervilles because their
inhabitants blamed President Herbert Hoover for their plight.
Shantytowns formed in cities across the United States in the 1930s,
built by people made homeless by the Great Depression.
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Franklin Delano Roosevelt wins the next election in a
landslide!
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In order to bring about direct relief, FDR created quick,
short-term jobs, and federal help to those hurting financially
(FERA Federal Emergency Relief Agency)
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In his First 100 Days in office, he passed program after
program for recovery Immediately began creating the New Deal
Program Three Phases- First 100 days, The First New Deal, and The
Second New Deal Relief, Recovery, and Reform