Essential Question:

What caused the Great

Depression & how did the
federal government respond?

The Great Depression

The Great Depression

The Depression of the 1930s
came as a shock to Americans:
The consumer revolution led to
confidence that 1920s economic
prosperity would continue
When the stock market crashed
in 1929, businesses closed &
millions were unemployed
Americans began to look to the
govt for unprecedented support

The Great Crash

Prelude to the stock market crash
In 1927, the economy had a
recession but govt & business
leaders ignored warning signs
The Federal Reserve lowering
interest rates for loans would
stimulate the economy, but this
easy credit led speculators to
buy stock on-the-margin

The Great Crash

An initial stock market crash on
Oct 24, 1929 (Black Thursday) led
to a catastrophic drop in stocks on
Oct 29 (Black Tuesday)
Panicked investors sold stocks,
causing stock prices to plummet
Banks lent less money, factories
produced less, workers were
fired or paid less consumers
had less money to spend
factories & businesses closed

Unemployment, 1929-1942

This downward spiral continued for 4 years;

By 1932 unemployment was at 25%

The Great Crash

Reasons for the depression:
U.S. factories overproduced
consumer durable goods
The post-war conditions in
Europe decreased foreign trade
Unequal distribution of wealth,
high consumer debt, stock
market over speculation led to
an overall decrease in
consumer purchase power

In 1929, the total

market debt of
By
1934,
U.S.
the USA was
debt rose
to
210%
of the
value of GDP
265%

In 2005, the value of U.S.

debt was 303% of GDP

Effects of the Great Depression

The Depression hit all classes:
Many families lost their homes
or farms & were forced to live
in Hoovervilles
The U.S. saw unprecedented
poverty & suicide rates; fathers
abandoned their families;
lawlessness ensued
The U.S. govt offered relief
checks to the unemployed

Effects of the Great Depression

African-Americans who had
migrated to North were laid off
Mexican immigrants faced
competition & deportation from
angry Americans
The middle class was hit hard:
Refused relief checks & charity
Many lost their homes
Health care declined; doctor &
dentist visits were luxuries

Employment Agencies &

Relief-Check Lines

Soup Kitchens & Breadlines

Mortgage Foreclosures

These 4 potatoes are Christmas Dinner

Wheres
daddy?

Hoovervilles & Hoover Flags

Hoover Struggles to
Fight the Depression

Hoover and Voluntarism

Hoovers initial response was to

reassure Americans that prosperity
would return
Hoover rejected bold govt action
& called for volunteerism among
charities, local govt, & business
As the depression worsened,
Hoover called for govt projects
like the Reconstruction Finance
Corps (RFC) which loaned money
to failing businesses

The Hoover administration initiated job-creation

programs, like building the Hoover Dam

Hoover and Voluntarism

In 1932, President Hoover
suffered two final blows:
When 22,000 war veterans
marched to the capital to demand
their WW1 bonus checks early,
Hoover ordered this Bonus Army
to be forcibly removed
The steady rise of bank failures
led to a complete collapse of the
U.S. banking system

Bonus Army

Douglas
MacArthur

Dwight
Eisenhower

Bank Failures, 1929-1933

Fighting the Depression

The inability of Republicans to
resolve the economic depression
opened the door for a Democratic
takeover in politics
Once in power, Democrats
succeeded in relieving some
suffering, restored hope, &
created an unprecedented level
of govt intervention in the process