US Chp 22 The US Chp 22 The Great DepressionGreat DepressionUS Chp 22 The US Chp 22 The

Great DepressionGreat Depression

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Hoover….Dam!!!

The Best Laid Plans of Stocks

And Bonds Often Go Awry,

Leaving US Naught But

Grapes of Wrath

Causes of the Great Causes of the Great DepressionDepression

Causes of the Great Causes of the Great DepressionDepression

Unequal Distribution of Wealth

High Tariffs and War Debt

Overproduction: industry and agriculture

Federal Reserve Monetary Policy

Stock Market Crash and Financial Panic

Unequal Distribution of Wealth

High Tariffs and War Debt

Overproduction: industry and agriculture

Federal Reserve Monetary Policy

Stock Market Crash and Financial Panic

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UNEQUAL DISTRIBUTION

OF WEALTH OVER PRODUCTION

HIGH TARIFFS AND WAR

DEBTS

CAUSES OFTHE GREAT

DEPRESSION

AGRICULTURE

INDUSTRY

MONETARY POLICY

STOCK MARKET CRASH AND

FINANCIAL PANIC

Historians disagree as to the causes of the GreatDepression. Most scholars would include:

1920s was prosperous - though not for everyone.

installment buying - using credit and paying back in small amounts was introduced. People began to buy cars, radios, etc. on the installment plan

Farmers were not doing well

1920s was prosperous - though not for everyone.

installment buying - using credit and paying back in small amounts was introduced. People began to buy cars, radios, etc. on the installment plan

Farmers were not doing well

Farmers Not Doing WellFarmers Not Doing WellFarmers Not Doing WellFarmers Not Doing Well•Rural Poverty•Rural Poverty

“We don’t need price supports. Farmers have never made money. I don’t believe we can do much about it.”

0.901.79Milk (per cwt)

3.807.50Hogs (per cwt)

0.100.24Wool (per lb)

0.160.25Butterfat (per lb)

0.130.21Butter (per lb)

0.170.34Oats (per bushel)

0.410.88Wheat (per bushel)

0.200.56Corn (per bushel)

1932-19331912-1913Agriculturalproduct

Table shows the sharp decline in the prices of various products from American farms 30% of

Americans still live on farms

Some Industries in Some Industries in TroubleTrouble

Some Industries in Some Industries in TroubleTrouble

Very little profit for key industries

RR, steel, textiles

Mining and lumbering hurting

coal mining unprofitable

*housing starts going down

Very little profit for key industries

RR, steel, textiles

Mining and lumbering hurting

coal mining unprofitable

*housing starts going down

New forms of competition

Overproduction in Overproduction in FactoriesFactories

Overproduction in Overproduction in FactoriesFactories

• Factories making lots of products but wages weren’t rising enough for people to buy the products

• The surplus products couldn’t be sold overseas due to high tariffs and lack of money in Europe

Unequal Distribution of Unequal Distribution of WealthWealth

Unequal Distribution of Unequal Distribution of WealthWealth

Nation’s wealth grew by billions but not everyone benefited evenly.

The top 1% received 75% increase to their disposable income while the other 99% of people only saw an average 9% increase in their disposable income

80% of Americans had no savings at all

Nation’s wealth grew by billions but not everyone benefited evenly.

The top 1% received 75% increase to their disposable income while the other 99% of people only saw an average 9% increase in their disposable income

80% of Americans had no savings at allDisposable income is

money remaining after necessities have been paid for

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The chart shows that 99% of the population received a 9% increase in their income, while the top 1% saw their income rise by 75%.

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i n c o m e

The economy grew by billions throughout the 1920s. Total realized income rose from $74.3 billion in 1923 to $89 billion in 1929

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Chart showing wages of unskilled workers. Notice how little the wages changed during the supposed prosperity of the 1920’s.

•Election of 1928•Election of 1928

In the 1928 presidential contest, Democratic New York Governor Al Smith ran against Republican Secretary of Commerce Herbert Hoover. Many were suspicious of Smith who was Catholic, while Hoover was popular for feeding starving Europeans after WWI.

Al Smith Herbert Hoover

“We in America today arenearer to the final triumph

over poverty than ever beforein the history of any land. Thepoorhouse is vanishing from

among us.” 1928

President Hoover’s belief in self-reliance would later affect his ideas about how to best solve the upcoming depression

"I do not believethat the power andduty of the GeneralGovernment oughtto be extended to

the relief ofindividual suffering.

. . . The lessonshould be constantly

enforced thatthough the people

support theGovernment the

Government shouldnot support the

people."(1930)

Farmers, who had been suffering during the 1920s,suffered further declines during the Great Depression.Wholesale food prices collapsed, which led to a lack ofmoney to purchase new equipment and many could not

pay for their mortgages and lost their farms.

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F a r m i n c o m e i n

b i l l i o n s

Pictured below is one of thousands of farmforeclosure sales. A foreclosure happens when anowner cannot pay for their mortgage and the bank

repossesses the property to sell it.

ONE OF HOOVER’S FIRST ACTS WASDEALING WITH THE FARM CRISIS

MCNARY-HAUGEN BILL FEDERAL FARM BOARD, SUPPLIED WITH $500,000,000 TO ADVANCE TO FARM CO-OPERATIVES FOR MARKETING PURPOSES, TO STABILIZATION CORPORATIONS FOR BUYING AND HOLDING SURPLUS CROPS.

Millions of average Americans began speculating in the stock market in the 1920s. Speculating is buying risky stocks out of a desire to get rich quick, rather than investing because of a sound investment.

Major reasons for the stock market crash inOctober 1929

Stocks were overpriced due to speculation - meaning they were not worth their sale price

Massive fraud and illegal activity occurred due to lack of regulation and rules

Margin buying or buying using credit

lack of strong Federal Reserve Policy

Federal Reserve PolicyFederal Reserve PolicyFederal Reserve PolicyFederal Reserve PolicyFederal Reserve System created in 1913 was to help stabalize the economy. it created a central banking system for theUS

One of its major goals was to deal with bank panics

At the beginning of the Grt Deprs. the Fed did not address the failing banks, and many historians believe that idleness worsened the Grt Depres.

Federal Reserve System created in 1913 was to help stabalize the economy. it created a central banking system for theUS

One of its major goals was to deal with bank panics

At the beginning of the Grt Deprs. the Fed did not address the failing banks, and many historians believe that idleness worsened the Grt Depres.

What Does Hoover Do?What Does Hoover Do?What Does Hoover Do?What Does Hoover Do?

Tries to help farmers through legistlative acts that encourage producers’ cooperatives.

Tries to stabalize Grain and Cotton prices

too little too late

Tries to help farmers through legistlative acts that encourage producers’ cooperatives.

Tries to stabalize Grain and Cotton prices

too little too late

Hoover fears handouts from federal gov’t will only weaken the national fiber; we might become

socialists or communists...

What Does Hoover Do?What Does Hoover Do?What Does Hoover Do?What Does Hoover Do?

Passes the Hawley-Smoot Tariff of 1930 - 60% rise in tariffsPasses the Hawley-Smoot Tariff of 1930 - 60% rise in tariffs

What Does Hoover Do?What Does Hoover Do?What Does Hoover Do?What Does Hoover Do?His “make work program” - Hoover Dam.His “make work program” - Hoover Dam.

What Does Hoover Do?What Does Hoover Do?What Does Hoover Do?What Does Hoover Do?

•He assists the RR, banks, and rural credit corporations hoping it would trickle down to the people

•* criticism with hindsight vision but the truth is Hoover’s plans were quite radical for the day and paved the way for FDR’s success in getting similar measures passed

There must be other reasons than the failure of the system:

“We in America today (winter 1931) are nearer to the final triumph over poverty than ever before in the history of any land.”

Henry Ford said (March 1931) the crisis was here because, “the average man won’t really do a day’s work unless he is caught and cannot get out of it. There is plenty of work to do if people would do it.”

A few weeks later he laid off 75,000 workers.

What Does Hoover Do?What Does Hoover Do?What Does Hoover Do?What Does Hoover Do?

Bonus Army 1932Bonus Army 1932

What Does Hoover Do?What Does Hoover Do?What Does Hoover Do?What Does Hoover Do?Hoover began a significant shift in American history - before him Americans just “sweated it out” and the gov’t did nothing to tweak/assist in economic recovery.

With Hoover that all changed.This is the beginning of a major shift (one FDR will carry much further) in the belief the Federal Gov’t does have the responsibility to take care of its citizens’ welfare.