■ Essential Question:

–What caused the Great Depression & how did the federal government respond?

■ Warm-Up QuestionWarm-Up Question:

–What caused the Great Depression?

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 gov’t for unprecedented support

The Great Crash■ Prelude to the stock market crash

–In 1927, the economy had a recession but gov’t & business leaders ignored warning signs

–The Federal Reserve hoped a lowered loan interest rate would stimulate the economy, but this easy credit led speculators to buy stock on-the-margin

The Great Crash■ On October 29, 1929 the stock

market dropped & investors panicked by selling; led to a plummet in stock prices

■ Banks lent less money, factories produced less, workers were fired or paid less → consumers had less money to spend → factories & businesses closed

Black Tuesday

The Great Crash■ Reasons for the depression:

–US factories produced too many goods for people to consume

–The post-war conditions in Europe decreased foreign trade

–Unequal distribution of wealth, high consumer debt, stock market over speculation led to a an overall decrease in consumer purchase powerconsumer purchase power

Consumers already owned durable goods & were not buying more

Unemployment, 1929-1942

Downward spiral continued for 4 years; By 1932 unemployment was at 25%

In 1929, the total market debt of the USA was 210% of the

value of GDP

By 1934, US debt rose to

265% of GDP

In 2005, the value of US 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 US saw unprecedented poverty & suicide rates; fathers abandoned their families; lawlessness ensued

–The US gov’t 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

Where’s daddy?

“Hoovervilles” & “Hoover Flags”

Hoover Struggles to Fight the Depression

Hoover and Voluntarism■ Hoover’s initial response to the

Depression was reassurance that prosperity would return

■ Hoover rejected bold gov’t action & called for volunteerism among charities, local gov’t, & business

■ As the depression worsened, Hoover called for gov’t projects like the Reconstruction Finance Reconstruction Finance CorpsCorps (RFC) which loaned money to failing businesses

Hoover and Voluntarism■ In 1932, President Hoover

suffered two final blows:–When 22,000 WWI veterans

marched on Washington DC to demand immediate payment of their bonus checks, Hoover ordered this Bonus ArmyBonus Army to be forcibly removed

–Steady rise of bank failures led to a complete collapse of the US 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 but created an unprecedented level of gov’t intervention in the process