Chapter 23

THE GREAT DEPRESSION

What were some of the causes of the Great Depression? What made it so severe, and why did it last so long?

What was the impact of the depression on farmers, minorities, and women?

How did President Hoover and his administration try to deal with the Depression? What was the results of those efforts?

Questions to think About

Causes of Great

Depression

Domestic Reasons

Fractional Reserve Lending

Easy Credit

Buying on Margin

Loans for Stock

Purchase

Bank Runs

Over-Production

Reduced Consumer Spending

Overseas Reasons

BANK of England

High American

Tariffs

WWI Reparation

s

Inflation

International Debt

International Monetary Policy

During WWI Countries go off

the Gold Standard

They were trying to protect their

gold

British Central Bank looks to keep their dominance over

world Financial markets through the League of

Nations

After WWI

No Gold Standard

Why? Before WWI1 Pound = $4.86

After1 Pound = $3.50If return to Gold

Standard

30% Loss

Britain’s Problem

British Manufacturers Could not cut wages because of Unions creating less Profits

All Countries Inflate Currencies to keep prices competitive

Gold Prices Rise

Britain’s Scheme

Keep Pounds at

Inflated Level

Want to save Exports

British Manufacturers Could not cut wages

because of Unions so they need low prices

High Tariffs

The Collapse

Loans

Germany redeems Pounds for Gold to pay

loans

The Collapse

Germany redeems Pounds for Gold to pay

loans With Less Reserves US

Banks begin to Collapse

Margin Calls

“The Crash” “Black Tuesday”

October 29th 1929 Panic $40 Billion lost Banks close Unemployment

goes to 20% Farms close

President Hoover’s Solution

Voluntarism“No cuts to

hours or wages”

Agricultural Marketing

Act

“Parity”

Reconstruction Finance Corporation

“Loan Program”

“Hoovervilles”Public Works

Smoot-Hawley

Tariff

Bonus Army 1932 20,000 vets go to DC to demand

payment Hoover sends army to evacuate Vets Riot ensues Makes Hoover Look Bad Hoover is blamed for Depression