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Chapter 17

Chapter 17. The Great Depression 1928-1941 (this chapter: 1928-1932). Impending Disaster. As the fun of the Roaring 20’s was going on, the economy started to go through some changes. RR – b/c of trucks, buses; textiles and steel not making much of a profit.

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Chapter 17

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  1. Chapter 17 The Great Depression 1928-1941 (this chapter: 1928-1932)

  2. Impending Disaster • As the fun of the Roaring 20’s was going on, the economy started to go through some changes. • RR – b/c of trucks, buses; textiles and steel not making much of a profit. • Coal wasn’t in as big of a demand b/c of new energy, new houses (Housing Starts) weren’t being built as much, which affects lumber and lots of other related industries.

  3. Farmer’s Struggle • During war, farms were prospering...after war, demand went down. • Farmers took out loans to buy more equipment to produce more • Farms couldn’t pay loans back so banks foreclosed • Some banks closed b/c they weren’t getting payments from farms. • Farmers also bought on credit to try to get appliances

  4. Unequal Wealth Distribution -Lots of stuff being produced - families buying it on credit – price’s rising – lot’s of debt – production increasing more than wages – rich getting richer. -70% of families – earn less than $2,500, (considered minimum for standard of living)

  5. Herbert Hoover • In the election of 1928, people voted based on republican prosperity of the 1920’s and Hoover was easily elected over Democratic candidate Alfred Smith.

  6. Stock Market • 1929 – 4 million Americans owned stock • Speculation – people began buying stocks and bonds on the chance of a quick profit • Buying on the Margin – Paying a small % of a stock’s price as a down payment and borrowing the rest. • Laissez-faire

  7. The Crash • 9/3/1929 – stock market peaked and fell • 10/24/29 – market went down; Black Thursday • 10/29/29 – Black Tuesday – The market crashed, people tried to sell but many were stuck w/huge debts…people lost all their savings • 3-4 wks later, investors had lost $30 billion. • Hoover tried to calm the public but by Nov 13, 1929 stock went from 381 to 198.7

  8. The Great Depression • The Great Depression – the period from 1929 –1941 w/big unemployment and bad economy. • Banks closing – 11k/25k, 90k business went bankrupt, 25% of workforce unemployed (Ford laid off 75k at one factory), GDP was cut in ½ - 104 billion to 59 billion • The FED limited $ supply to discourage lending and so there was to little $ in circulation when the stocks crashed

  9. Hawley Smoot Tariff • Highest tariff in U.S. history, supposed to protect farmers & manufactures from foreign comp, instead Europeans couldn’t sell and therefore couldn’t buy U.S. stuff • Europe raised their tariffs • This caused a ripple effect where no one was making $

  10. The “Snowball Effect”

  11. Hoover Gets the Blame • Hoovervilles/Shanty-towns – People were evicted from their homes...these little towns consisting of made up shacks sprang up.

  12. Charities Lend a Hand • Soup Kitchens + Breadlines – People went to these to get food which were run by charities. • African Americans and Latinos had it worse off…had lower pay and Latinos were told to get out...”last hired, first fired”

  13. The Dust Bowl • Dust bowl – b/c many farms overused their land and drought in the mid-west, it was void of trees and became a dust center. • Farmers moved West to escape the dust storms and b/c they were evicted from their farms….800k moved…they were called “Okies” • Some farmers resorted to tenant farming

  14. Traveling the Rails...Looking for Work • Lots of men became hobos (as young as 15-20) • There was no federal system of direct relief – helping out the poor w/food and $ • Some cities offered relief but not much.

  15. The Plight of Families • There was resentment against women b/c people thought they shouldn’t work if men couldn’t + they weren’t seen in breadlines • Children ran away on trains around the country, 300,000 kids were out of school b/c schools closed and families couldn’t afford them

  16. Hoover’s Plan • Hoover wanted the country to remain up- beat…no worries that all of your $ just went down the drain and you’ll never get out of debt…it will be all good. • Voluntarism • Gov’t’s role was to facilitate cooperation between competing groups and interests in society

  17. Volunteerism and Rugged Individualism • Rugged Individualism – People should succeed through their own efforts and federal handouts would be disrespectful • He told business’s to work together, not layoff people, demand higher wages...doesn’t work...contradicts human self-interest

  18. Too Little...Too Late • Federal Home Loan Bank Act – lowered mortgages and allowed farmers to refinance • Reconstruction Finance Corporation – $2 billion to banks, RR, life insurance…trickle down economics – if the gov’t gives out loans to banks, they’ll loan to business’s and then they’ll make money, give raises, and hire jobs • He did have the Hoover Dam built and cut taxes

  19. Hoover Fails at Press Relations • Bonus Army – Veterans wanted $ now instead of 1945 that they had been promised w/ the Adjusted Compensation Act. • Congress voted to give them their $ in 1931 but Hoover vetoed it...everybody is hurting • They marched on DC • Hoover had the Bonus Army removed from Washington (forcefully/violently) and it hurt his image

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