Great Depression. The Good – in the 1920s Economic indicators were up –Employment was high –Wages were growing steadily –Credit was cheap –Profits were.

Great Depression

The Good – in the 1920s

• Economic indicators were up– Employment was high– Wages were growing steadily– Credit was cheap– Profits were growing– Production was up – The stock market was humming

The Problems

• The Unbalanced Economy– Large Groups Not Sharing in

the Prosperity– Mal-distribution of Wealth

• Industrial Consolidation (Collusion)

• Among the People

• Stock Market Shenanigans

Industrial Consolidation

• Consolidation of industry continues

• Left unchecked by the Harding & Coolidge administrations. – Not anti-trust zealots– Almost encouraged collusion

• What will happen if industry folds?

Distribution of Wealth Among the People

• 1920 -110 million people in US– Top 27,000

people earned more than the bottom 11 million.

• Why is this a problem?

The Stock Market Issues

• Stocks become overvalued

• People begin Trading on Margin– Investment firms would lend

people money to invest - up to 90% of the price of the stock.

• Crash will ruin people

Warning Signs of Crash

• Danger signs begin to appear in early 1929.– Building contracts decline sharply– Business inventories begin to grow

dramatically– Consumer spending declines by 50%

between 1928-29– People begin to be laid-off in 1929

The Crash (Sept – late Nov 1929)

• Black Tuesday – Oct 29, 1929

• Several crashes and recoveries– mid-November -

market down 50%– 1932 - down about

70%

The Economic Depression 1929-1932

• Unemployment – 25%– 12 - 15 million were out of work– Families were not two wage earners

so this was devastating

• Income– 60% drop in salaries

• Production – Down 26% by end of 1929, by 50%

by end of 1932

• Most serious depression in the country’s history

Effects on the People

• The wealthy were insulated• If you were poor,

unfortunate– Turn to family for help– Breadlines– Some distraught over bleak

chances– Some men abandoned their

families

Dust Bowl

• Farmers in the Plains are ruined– Poor farming practices

– lack of crop rotation– Drought in the 30s– Effects of Depression

• Dust storms of blowing top soil

• John Steinbeck – Of Mice and Men, The Grapes of Wraith

Hoover’s Solutions

• Purchase surplus crops

• Reconstruction Finance Corp - Provided 1.5 billion to private businesses to keep them afloat

• Increase Tariffs - isolationist

• No relief for the people

The Tragedy of Herbert Hoover

• He’s a very well-qualified, intelligent, well-intentioned person. • He brought a strong, well thought through, conservative business

philosophy to the White House. – Yet he fails. – He couldn’t overcome the depression.

• He was bound to a political philosophy that wouldn’t work to move America out of the depression.

1932 - Year of Crisis – The Depression Deepens

• The American Mood– 1929-31 - The American people’s response is to gut

out the depression – In 1932, this attitude changes. People begin to lose

faith in Hoover.• People became angrier.• Hoovervilles – shantytowns created by homeless• Bonus Army

Bonus Army - 1932 • War veterans marched

on Washington DC.

• Hoover demanded that the Bonus army evacuate.

• Contributed to national malaise