The Great Depression

1
The Great Depression

• Chapter 24

2
Hard Times

• The economic depression that occurred in the
  1930s was more than financial
• The psychological impact was called the
  invisible scar
• Stock Market cracs WAS NOT the cause of the Great
  Depression
• Buying on the margins (loans) allowed more people
  to afford stocks
• Corporations with spending money would lend money
  to stockbrokers rather than re-invest in their
  own companies for new technologies, etc.
• Why is this a problem?

3
Hard Times

• Many assume that the stock market crash occurred
  over a few days
• Not truethe crash had been at least a month in
  the making
• It doesnt hit bottom until July 1932, falling
  89 from the Sept. 3, 1929 record
• As the stock market became shaky, so did the
  credit market
• Because the loans were backed by the stock
  itself, as the value decreased, the borrower had
  to pay the difference
• Half the value of stocks was lost in a matter of
  10 weeks
• In late Oct. Hoover stated that the country was
  on a sound and prosperous basis

4
Hard Times

• Overproduction was the key cause of the
  depression
• As more agricultural and industrial companies had
  been urged to make more, consumers were buying
  less
• Wages rose 8 between 23 and 29 while worker
  output rose 32
• An unequal distribution of wealth also
  contributed to the oncoming depression
• 80 of the nations families didnt have any
  savings

5
Hard Times

• The crash caused investors, businesses, and the
  wealthy to lose confidence
• Manufactures decreased production and laid off
  workers
• With higher unemployment, fewer people could buy
  goods and thus companies lost more money, which
  meant more layoffs
• Banks began to fail as people began withdrawing
  the money (banks were not insured at the time)
• 5000 bank failures occurred between 1929-1932

6
Hard Times

• There is no such thing as unemployment benefits
  during this time
• By 1933 16M people were without jobs (33
  unemployment rate)

7
Hard Times

• Men, especially 35-55, found it more difficult to
  cope with
• Women could get jobs easier because they were
  paid less
• Local efforts to help were not sustainable
• Money, resources, and staff could not deal with
  the 50 unemployment rate in some areas
• Warmer areas like FL and CA could not deal with
  the jobless migrants seeking employment
• By 1931 Los Angeles was seeing new arrivals at a
  rate of 1200 per day

8
Hard Times

• Hoover seemed to ignore the severity of the issue
  by claiming that the local communities could
  handle it
• The Presidents Organization for Unemployment
  Relief (POUR) was led by Walter S. Gifford who
  urged fundraising at the local level
• FDRs administration created federal aid in the
  form of welfare, etc? Has it been a disservice?

9
Hard Times

• Hoover believed that business confidence was the
  key
• He created the Reconstruction Finance Corporation
  (RFC)
• Government credit would be available for bank,
  RRs, insurance, and other businesses
• In 1932 Congress passed the Emergency Relief Act
  allowing 300M to go to states who needed
  additional funds
• Only 30M had been given out by Dec. 1933
• Only a small portion went towards public works

10
Hard Times

• By 1932, protests were occurring across the
  country
• Farmers created the Farmers Holiday
  Associationrefused to sell goods until prices
  rose
• Thousands marched on Ford River Rouge Factory in
  Detroitpolice killed 4
• The Bonus Army marched on D.C. to demand that
  the WWI bonus of 1k be paid in cash now instead
  of in the form of a matured bond in 1945
• The Senate refused to pass a bill
• The remaining soldiers were removed by
  MacArthurs men providing a sad image for the
  heroes of 1918

11
Hard Times

• It is easy to see why Hoover didnt get reelected
• FDRs acceptance speech for the Democratic
  candidacy was I pledge you, I pledge myself to a
  new deal for the American people.
• During the campaign, FDR called for addressing
  underconsumption and redistributing wealth