The Great Depression Section 1
Jan 12, 2016
The Great Depression
Section 1
An Economy in Trouble
• The 1920’s were prosperous for Americans, but not everybody
• Farmers were hit especially hard because they produced more than they could sell
• Less than 1% of the population controlled the nation’s resources.
The Stock Market Crash
• By August 1929, some investors began to sell their stocks
• People saw this and began to sell their stocks as well, driving stock prices down (herd mentality)
• Stock prices continued to fall as people in a panic tried to get rid of them in reaction
Crash (Continued)
• “Black Tuesday” October 29, 1929- Stocks become worthless and people desperately tried to get rid of them
• Prices fell even more because no one wanted to buy worthless stock
• People who were millionaires suddenly lost everything overnight
Why did this happen?
• Overproduction- farms and factories made more goods than the American public could buy
• Weakness in the banking system- banks gave out loans to people who weren’t able to pay them off
It just gets worse
• Business relies on money from investors. Many investors were ruined in the Stock Market crash so they had no money to give businesses
• Businesses declare bankruptcy
• Unemployment skyrockets
It just gets worse (cont’d)
• Many people lose their homes
• Unemployed people would try to sell apples or shined shoes for money
• People drift from town to town looking for work (riding the rails)
Hoover Responds
• Hoover cared about the unemployed and people facing hard times, but believed the government shouldn’t interfere too much
• Believed that businesses could bring the economy back
• Called on private charities to help; such as churches.
Hoover (cont’d)
• Many churches set up soup kitchens to feed people
• Realizing that the problem would not fix itself, Hoover began instituting public works programs
• Reconstruction Finance Corporation-loaned money to banks to keep them in business
Too little, too late
• Despite doing more than any President to that point to reverse an economic crisis, the effort had little effect.
• Many people blamed Hoover for not doing enough
• Hoovervilles-name given to the shacks where the homeless lived
The Bonus Army
• After WWI, Congress had voted to pay the veterans a bonus in 1945
• The conditions of the Depression caused the veterans to march to Washington to demand the bonus
• The Senate rejects the bill that would allow the bonus to be paid
Bonus Army (cont’d)
• Police try to force the veterans (who made a tent camp along the Potomac river) to leave
• Veterans refuse and battle police
• Hoover sends in the army to remove the veterans by force
• Hoover loses whatever support he had left among the American people