Causes of the Great Depression Industry: Some industries were less competitive Farming: Farmers produced more than they could sell Easy credit: Many went.

Causes of the Great Depression• Industry: Some industries were less

competitive• Farming: Farmers produced more than they

could sell• Easy credit: Many went into debt buying

goods on the installment plan • Income: Rich got richer while the poor got

poorer

A New PresidentThe Election of 1928

Democrats RepublicansAlfred E. Smith Herbert HooverGovernor of New York Sec. of CommerceWitty / Outgoing Formal / Reserved

Hoover Wins

Risky Business

• Many Americans practiced speculation & buying on margin• Speculation – very risky• Buying on margin – only

paying for part of the stock

Stock Market CrashesOctober 29,

1929• Stock prices

dropped• Investors

started selling all their stocks

• Wall Street lost $30 billion in one month

Financial Collapse Many Americans lost

EVERYTHING in the crash

After the Crash Americans panicked & tried

to withdraw their money from the bank

The banks ran out of money and closed

People lost their savings

After the Crash, Continued

• 85,000 businesses went bankrupt

• 1 out of every 4 people were unemployed

• People who kept their jobs had cut hours and less wages

Hawley – Smoot Tariff Act

• Highest tariff in US History• Designed to protect farmers

and manufacturers from foreign competition• Backfired – foreign countries

couldn’t afford to buy American goods

Questions over Section 1Fill in the following graphic organizer:

Depression in the Cities

Many people were evicted from their homes and lived on the street or in shantytowns

Charities provided food in soup kitchens and bread lines

Minorities & the Depression• African Americans and

Latinos had the highest unemployment rates

• Racial violence increased – there were 24 lynchings in 1933

• Many demanded that Latinos be deported to Mexico

• Some left voluntarily while others were deported

Depression in Rural Areas Some farmers were able to

grow enough food to feed their families

Over 400,000 farms were foreclosed due to unpaid debts

Many turned to tenant farming but were VERY poor

Thousands left their land and went to California

The Dust BowlFarmers overused land Grasslands became unsuitable for farmingDrought and winds blew the soil away

Men & the Depression• Men could not provide for their

families• 2 million men abandoned their

families and wandered the country

Relief?•The government did not offer direct relief •Some charities gave a weekly payment of $2.39 for a family

Women and Children• Women sewed

clothes and canned food

• Managed household budgets

• Worked outside the home

• Many women were too ashamed to admit their hardship

Problems• Poor diets and lack of money

for health care led to health problems for many children–Malnutrition–Rickets–Pellagra

Social and Psychological Effects

• Suicide rates rose by 30%• People developed habits

of thriftiness• People gave up on dreams

Positive Effects of the Depression

• People showed kindness to strangers• Gave food, clothing and a

place to stay for the needy• Shared resources and helped

each other out

Answer the following questions

• What were positive effects of the depression?

• What were negative effects of the depression?

Hoover’s Philosophy

• Tried to reassure Americans that the economy was on strong footing.

• Felt the gov. should play a limited role in helping to solve the economy’s problems.

• Gov. role to encourage & facilitate cooperation.

• Direct relief efforts not support them finacially.

Hoover takes Cautious Steps

• Cautious approach to the depression– Asked employers not to cut wages or layoff

workers– Asked labor leaders not to demand higher

wages or go on strike.– Created a special organization to help

private charities generate contributions for the poor.

• None of these steps made much of a difference.

Boulder Dam

• Hoover dam was approved to be built in 1928. Boulder Dam

• World’s tallest dam & second largest dam

Democrats Win in 1930 Congressional Elections

• Political tide turned• Republicans lost control of the House of

Representatives & only remained in control by only 1 vote in Senate.

• Farmers burned crops rather than sell at a loss.

• Declared a “farm holiday” – refused to work in fields.

• Calling Shantytowns “Hoovervilles”– Hoover blankets– Hoover Flags

Hoover Backs Cooperatives

• Attempts to relieve the depression involved negotiating agreements among private entities reflecting his belief in small gov.

• Tried to prop up banking system by establishing the National Credit Corporation.– Loaned money to smaller banks

Direct Intervention

• Appealed to Congress to pass a series of measures to reform banking.– Provide mortgage relief– Funnel more money into business investment– Federal Home Loan Bank Act – lowered

mortgage rates & allowed farmers credit– Glass – Steagall Act – separated investment

from commercial banking– Reconstruction Finance Corporation –

authorized $2 billion for emergency financing for banks

Patman Bill Denied

• 10,000-20,000 WWI veterans went to Washington D.C. – Bonus Army

• Patman Bill authorized the gov. to pay a bonus to WWI veterans.

• Was supposed to be paid out in 1945• Wright Patman believed money

should be paid immediately.• Hoover opposed legislation• Called on Bonus Army to leave -

refused

Hoover Disbands the Bonus Army

• Hoover called for the infantry to gas 1,000 people who were injured.

• Most Americans were stunned & outraged at the government’s treatment of veterans.

Hoover’s Response

Review Questions1. Why was Hoover reluctant to help people during the

Depression?2. What types of action did Hoover take to remedy the

effects of the Depression?3. What measures did Hoover take and what results did

he achieve to help the economy?4. Why did Hoover use to force against World War I

veterans?5. What was the Patman Bill and what happened when it

failed in the Senate?6. What happened to the Bonus Army?7. How did the treatment of the Bonus Army affect

President Hoover?