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
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