Mr. ErmerU.S. History Honors

Miami Beach Senior High

HOOVER, THE CRASH OF 1929, & THE GREAT DEPRESSION

• Maldistribution of Wealth: Top 5% of households hold 30% of income

• 2/3 of American families live on very little earnings

• Lack of diversification in the American economy

• Most of the wealth of the 1920s generated from construction & automobile production

• Installment plans for expensive goods

• As demand falls, workers laid off, demand continues to fall

• 1920s: Banks slowed lending to foreign companies/countries

• Exports fall as Americans lose jobs

• Federal Reserve (FED) did not have safeguards against speculation

• Mismanaged interest rate levels

• Declining American exports to Europe as European industry recovers• Insecure international debt structure

• American banks loan money to Europe after WWI, increasing postwar European debt

• Great Depression spreads to Europe and other countries indebted to U.S. banks

ROOT PROBLEMS

• 1928 Presidential candidates campaign on continued prosperity

• Alfred Smith’s campaign sunk by anti-Catholic backlash

• February 1928: Stock market begins year and a half of steady rise

• Speculation and margin buying drives 1920s bull market

• Falling stock prices force lender margin calls

• October 29, 1929: Black Tuesday market crash

• Loss of credit, bank losses, stock prices drop drastically

• Bank runs cause more bank closures

• The stock market crash of 1929 was the big hit on a weak system with many problems at its roots

IMMEDIATE CAUSES

THE STOCK MARKET CRASH

HARD TIMES

• Big industrial cities paralyzed by high unemployment

• Unemployment and poverty seen as signs of personal failure

• Government and charitable organizations unable to meet demands of unemployed

• Farmers forced into foreclosure, horrible drought in plains = Dust Bowl

• Still, farms were producing more food than Americans could afford, prices drop fast

• Many families leave for other places like California (called Okies as most came from Okla.)

• Hobos roam country after being ejected from homes by bailiffs

• Art and Entertainment are happy escape for struggling people

• Movies and radio shows

• Radio soap operas

• The Wizard of Oz and Gone With The Wind

• Literature and Art

• William Faulkner’s The Sound and the Fury

• Grant Wood’s American Gothic

WORSENING DEPRESSION

• President Hoover’s Laissez-Faire stance does not convince the public

• American Individualism and private sector responsibility was Hoover’s strategy

• The failure of volunteerism

• Can’t raise taxes, can’t lower taxes—Republicans lose Congress in 1930

• Hoover asks FED to put more money in circulation, they refuse

• National Credit Corp. (NCC) fails to expand credit

• Congress passes Emergency Relief & Construction Act

• $1.5 Billion to states for relief (payments to suffering people)

• $300 Million for public works construction projects

• Hunger marches, farmer protests, and the Bonus Army

PRESIDENT HOOVER RESPONDS