The Great Depression

Section 1

An Economy in Trouble

• The 1920’s were prosperous for Americans, but not everybody

• Farmers were hit especially hard because they produced more than they could sell

• Less than 1% of the population controlled the nation’s resources.

The Stock Market Crash

• By August 1929, some investors began to sell their stocks

• People saw this and began to sell their stocks as well, driving stock prices down (herd mentality)

• Stock prices continued to fall as people in a panic tried to get rid of them in reaction

Crash (Continued)

• “Black Tuesday” October 29, 1929- Stocks become worthless and people desperately tried to get rid of them

• Prices fell even more because no one wanted to buy worthless stock

• People who were millionaires suddenly lost everything overnight

Why did this happen?

• Overproduction- farms and factories made more goods than the American public could buy

• Weakness in the banking system- banks gave out loans to people who weren’t able to pay them off

It just gets worse

• Business relies on money from investors. Many investors were ruined in the Stock Market crash so they had no money to give businesses

• Businesses declare bankruptcy

• Unemployment skyrockets

It just gets worse (cont’d)

• Many people lose their homes

• Unemployed people would try to sell apples or shined shoes for money

• People drift from town to town looking for work (riding the rails)

Hoover Responds

• Hoover cared about the unemployed and people facing hard times, but believed the government shouldn’t interfere too much

• Believed that businesses could bring the economy back

• Called on private charities to help; such as churches.

Hoover (cont’d)

• Many churches set up soup kitchens to feed people

• Realizing that the problem would not fix itself, Hoover began instituting public works programs

• Reconstruction Finance Corporation-loaned money to banks to keep them in business

Too little, too late

• Despite doing more than any President to that point to reverse an economic crisis, the effort had little effect.

• Many people blamed Hoover for not doing enough

• Hoovervilles-name given to the shacks where the homeless lived

The Bonus Army

• After WWI, Congress had voted to pay the veterans a bonus in 1945

• The conditions of the Depression caused the veterans to march to Washington to demand the bonus

• The Senate rejects the bill that would allow the bonus to be paid

Bonus Army (cont’d)

• Police try to force the veterans (who made a tent camp along the Potomac river) to leave

• Veterans refuse and battle police

• Hoover sends in the army to remove the veterans by force

• Hoover loses whatever support he had left among the American people