Chapter Eight The Great Depression

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1 Chapter Eight The Great Depression ` Learning Objectives H-SS 11.6 Students analyze the different explanations for the Great Depression and how the New Deal fundamentally changed the role of the federal government. 1

2 2/8/ Causes of the Depression Prosperity Hides Troubles The roaring 20 s was a total bull market. Every index was going up. Optimism was high, and people trusted the Republican government. Harding, Coolidge, and Hoover were all Republican presidents, all of them believed in hard work and competition, none of them could foresee the impending financial doom that would sweep the nation, and the world. 2

3 2/8/15 Farms fell after the war. 1/4 of the US population were farmers. They became wealthy during WWI by selling bumper crops to war torn nations. After the war they faced greatly reduced demand. They could not pay their debts, many lost their farms. Bad credit problems also plagued the nation. Credit came easy during the war. After the war, bad loans forced many out of their homes. The Stock Market Crash Stock prices were, and still are, based on speculation. The optimistic consumer of the 20 s believed so much in the economy, that they bought stocks at extremely inflated prices. On October 24, 1929 the stock market began to fall. The Dow Jones Average dropped by nearly half. The confidence that was working with them finally gave up. They all sold their stocks, and stock prices plummeted. The Great Depression had begun. The Great Depression Begins The stock market crash marked the beginning of the Great Depression, a period of time lasting from in which the economy faltered and unemployment soared. Banks collapsed. Investors rushed to their banks (bank run) to pull out all of their savings. Some found that the banks were closed, and that they had no money left. Businesses closed and unemployment rose. Less employed people meant less consumers, and then less employment In order to protect Americans, the president passed the HawleySmoot Tariff. The effect was terrible for the economy. The depression spread around the world because of the US, and Germany. 3

4 What Caused the Great Depression? Contraction of money supply Stock market crash Bank runs Dust Bowl Lack of government influence Unequal distribution of wealth Speculation PROBABLY a mixture of all of the above. 8.2 Americans Face Hard Times 4

5 Misery and Despair Grip Americas Cities The Great Depression had a deep and lasting impact on the lives of the people who lived through it. Workers lost their jobs, families lost their homes, and people fell into extreme economic hardships. 1/4 people who had jobs in 1929 were now searching for a job. People who kept their jobs faced sharp pay cuts. Eventually they would also lose their jobs. They were forced to search for jobs, but no one was hiring. Their clothes became frayed and ragged, their faces began to sink in, their children's milk and meat was replaced with bread and water. They stood in bread lines. They descended into poverty. They had no place to live, many ended up in Hooverviles (tent cities). Poverty Devastates Rural America In cities and towns across the nation Hoovervilles popped up. Crop prices plunged and farmers were left with heavy loans. When they could not pay the loans they lost their homes, and went on the road to look for work. They stayed in tent cities with other farmers right outside of major cities. Big tent cities were in Dixon and Winters. Okies drove west after losing their farms to the Dust Bowl. 800,000 new people ended up on the west coast. Farmers printed out pamphlets telling people that they needed work. They purposely saturated the work market, increasing supply and lowering wages. Few Americans Escape Hard Times During the Great Depression they called it a, panic or a, crisis. President Hoover called it a, Depression to make it sound less severe. No matter what they called it, American people were overwhelmed by seemingly inescapable poverty. Men who lost their jobs felt shame, some left their families. Men who had jobs lived in fear that they would lose their jobs. Women worked to stretch family incomes 5

6 8.3 Hoover s Response Fails Cautious Response to Depression Fails The Great Depression was nation wide. The unemployed and homeless crowded into Hoovervilles around most major cities. Hoover did not cause the depression, but Americans expected him to solve the crisis. Hoover viewed the depression as a natural economic downswing. He felt the government should not interfere with such events. But, by doing nothing, he perpetuated the Great Depression. Hoover eventually interfered by telling rich people to give to charity. He also told people to stop rising prices. Volunteerism failed to bring relief, people did not give enough, the economy continued to depress. 6

7 Hoover Adopts More Activist Policies Hoovervilles and homelessness was on the rise. Ghetto rigged stuff was called Hoover. Hoover tried to repair credit in the us, but did not have the power to do so. The American government gave the banks money, but the banks did not pass it on to the people. On project of Hoovers that did make a difference was the Hoover dam. This project supplied hundreds of people with jobs. Americans Protest Hoover s Failures Hoover worked to stop the depression, but the American people saw him as a failure. Americans urged radical change. Some wanted communism to bridge the gap between rich and poor. Some wanted a fascist state. In Europe they did turn to socialism, communism, and fascism. One group of WWI vets protested by marching on the capital. They started a riot when police attempted to stop the protest. Hoover ordered the Bonus Army out. His troops, under MacArthur were sent in with bayonets and tear gas. 20,000 WWI vets posed a serious threat to the president. Hoovers response shocked the nation. Americans were ready for change. 7

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