Chap 15
Crash & Depression
1929-1933
Brother Can You Spare a Dime?
USII.11 Describe the Various Causes and Consequences of the Global Depression of the 1930s and
Analyze How Americans Responded to the Great Depression. (H,E)
USII.12 Analyze the Important Policies, Institutions, and Personalities of the New Deal Era. (H)
Essential Questions
• What contributed to the Market Crash of 1929?
• What was the ripple effect of the crash?
• How did the Great depression effect the standard of living in
the United States?
• Cite some examples
• What did some Americans do to survive tough times?
• How did President Hoover respond to the crisis?
• What was the significance of FDR’s 1932 election?
The Stock Market Crash
Sec One
• The Crash (Over multiple days in October 1929)!!! Signaled
the formal end to the Roaring 1920s.
• Wall St. experts were taken surprise.
• They had been reassuring the public that the initial downward trends
in the market were no need of concern. Even after GE stock had
plunged by a large amount.
• President Hoover maintained the nation’s business “is on a sound and
prosperous basis”.
• Despite the above, the market continued to plunge, falling from a
high of 381 to 198. The country had lost confidence in the market
(key ingredient).
• The crash was part of the nation's business cycle of ups and
downs.
The Stock Market Crash
Sec One
Certain Factors Made This Particular Cycle Much Worse.
The Stock Market Crash
Sec One
• The Ripple Effects of the Crash on the nation grew in
magnitude over time.
• Those invested in the market were initially hit hard. This was a
relatively small number (4 million) out of a population of 120
million.
• The effects continued to spread in the following ways:
• Risky Loans Hurt Banks (Business were unable to repay)
• Consumer Borrowing (Consumers could not repay)
• Bank runs/failures (Runs on the banks/loans could not be repaid)
• Stock Market Crash 1929
The Stock Market Crash
Sec One
•
Economic contraction set in. The economy began to shrink
and rapidly as people began to retrench.
•
Factories laid off workers
•
•
•
By 1932, 25% of the workforce was unemployed.
Farm prices began to fall even further
The economic crisis began to spread overseas to include
troubled countries such as Germany.
•
WW1 Allies stepped up pressure on Germany to pay
reparations even though its own economy was wrecked.
Social Effects of the Depression
Sec Two
Social Effects of the Depression
Sec Two
• Poverty spreads as unemployment rises dramatically.
• Hoovervilles: Homeless shanty towns named after President
Hoover. No one was immune from distress.
• Farm Distress Continued
• Dust Bowl: More on this later.
Social Effects of the Depression
Sec Two
• The Health of the American population began to decline as a
whole.
• Proper nutritional diets became less available.
• Many began to grow their own food, begged or rummaged through
trash cans.
• Home heating became out of reach for many.
• Families moved in together to pool resources.
• Men lost self-esteem because they could not support their families.
• Taking public relief was seen as a humiliation.
• Working women (especially married ones)were pressured out of jobs
to make room for men.
Surviving the Great Depression
Sec Three
• Young people began to ride the rail out of necessity or in
search of better future.
• Had to move to where potential opportunity was.
• Despite desperate economic times, the population did not rise
up to demand an overthrow of the system.
• Europe featured riots and political instability.
• Depression In Germany
• Prohibition was repealed.
• Perceived as failed social experiment. Control of sales returned to
the states. Much needed revenue gained.
The Election of 1932
Sec Four
• President Hoover is forced to act even though he is very
reluctant.
• Hoover was a natural engineer but not a skilled politician. This
lack of political ability would be a large liability.
• Hoover pushed through some relief measures such as the
Agricultural Marketing Act.
• Aim was to stabilize crop prices and steady farm income. It failed!
The Election of 1932
Sec Four
• President Hoover disliked having the Federal Government
handling relief programs directly. He believed that the states
should take the lead.
• Hoover felt that:
• Direct Federal aid would destroy people’s self-respect.
• Create a large bureaucracy.
• Hoover was a good man but was not philosophically capable of
dealing with the crisis.
• Many Americans began to view him as “cold” and uncaring.
The Election of 1932
Sec Four
• The low point for Hoover was the Veterans March on
Washington (Bonus Army).
• WW1 Vets who were down on their luck protested to receive a
pension bonus early and not have to wait until 1945.
• House said yes, Senate said no.
• Few thousand stayed in DC and lived in shacks in view of the
Capitol building.
• After a few incidents, Hoover ordered the Army (Douglas MacArthur)
to clear the protestors, violence erupted and the Vets were run out
of town.
• Occupy DC: remembering the US Veterans' "Bonus Army" protest
The Election of 1932
Sec Four
• Two economic philosophers that influenced the 1930s and still
do:
• John Maynard Keynes believed that the government should
intervene in the economy during hard times:
• Prime the pump with infusions of cash through projects, support for
the population through welfare.
• Called Keynesian economics
• Milton Friedman believed in almost unobstructed economics.
The free market should be left alone to correct mistakes and that
this would maximize job/wealth growth.
• Called Laissez-faire economics. Government intervention would
only distort the economy and muck it up.
• Revisiting the Economics of John Maynard Keynes
• Milton Friedman - Greed
The Election of 1932
Sec Four
• Stark contrast between Hoover and FDR during the 1932
campaign.
• Hoover believed mostly in voluntary aide to battle the
Depression. He attacked FDR and stated “this will not be the
America which we have known in the past”
• This type of debate still rages today between the Democrats and
the Republicans!!!
• Many Americans were skeptical of FDR’s claims but they loathed
Hoover even more.
• FDR handily won the election.
• Thus began a 12 year presidency that would alter the relationship
between the People of America and the Federal Government.
Chapter 15
Critical Takeaways
• The Crash and how its impact spread.
• From Wall St to Main St
• Economic contraction.
• What does this mean for the average worker.
• Social impact of the Great Depression.
• How did people survive.
• President Hoover’s response.
• The campaign of 1932 and the clashing vision on what to do.
Is Past is Prologue?