The Great Depression 10 07 2014 October 1929 o Stock Market Crash of October 1929 o Everyone touched by the Great Depression o Greatest debates o Regulation of the stock market o Welfare programs government as an employer Or just for a private sector o No explanation why the Great Depression followed this stock market crash Impact of the policies o Stock prices soared people thought it was better for them to put it in the stock market than put it in the bank o Summer 1929 US Stock Market stopped growing stagnate o 11 prominent people committed suicide because they thought they had been ruined o Wealth disappeared o Stock prices had become so high that the crash was more severe o Manufacturers closed factories and laid off workers Dust Bowl o 1930s drought and wind storms on highly tilled and dry land throughout the middle and mid west o Ships in the Atlantic reported having mud showers at sea mud storms in the east o Massive amount of soil erosion Causes o Over production Too much food in the US prices of crops were plummeting due to inflation In the 1920s better farmer techniques produced at a cheaper price so more farmers could afford them More and more people are buying products that they cannot afford Buying on credit selling people goods they can t afford o Mal distribution of wealth Tariffs Income in the US not evenly distributed A lot of wealth in the hands of very few Only the wealthiest 1 of people were in the stock market Bankers businessmen create jobs and loan that money out to other people are the most influential in the stock market Ford did not continue to give his workers higher wages Income was not high enough to maintain the purchases and production the US was capable in the 1920s SO MUCH WEALTH CONCENTRATED IN THE HANDS OF A FEW Denied the US of spending power Coolidge Harding instituted massive tariffs 1 American businessmen supported these tariffs highly farmers did not like the tariffs because it was harder for them to export food to European markets Consumers artificially higher prices 1920s US products becoming worldwide excess surplus off to Europe Tariffs mean Europeans ran out of to buy our stuff Treaty of Versailles stopped the overall international flow of money with American British and French o Low Regulation 30 of the market bought on margin credit Market being bought using loans Large companies lent out money to people who cannot repay them then they collapse because people cannot pay them back o Banking Practices High speculations of bank keeping people s money safe Banks invest money in wild stock market Stock market crash banks had no more money People loss confidence in banks runs on banks Banks with decent capital on hand could not cope with the people trying to pull all their money out Speculative stock market bank wealth crashes Great Depression Economic Indicators o Stock prices unemployment 25 unemployment widespread layoff o Production Banks closing Production cut in half Banks closed by the thousands they had no more money Runs on banks made this problem worse Social Indicators o Marriage birth rates Marriage rates dropped by 30 men felt like they could not support a family Birth rates dropped US population stagnated o Crime National murder rate tripled People were hungry Bank robberies for whatever money was left Bonnie and Clyde Many Americans driven out of their homes and farms People rode trains illegally searching for work 2 Response Herbert Hoover Hoover was blamed for the Depression scapegoat Hoover won election in 1928 born to Quaker parents moved out to be raised by other family members mechanical engineer promoted progressive ideas of scientific management streamlining production and mining processes family relief for people in Belgium In Belgium during WW1 Food relief to people in central Europe after the armistice truce become Secretary of Commerce under Coolidge and Harding successful trade policy how Europeans could sell their products to the US President in the spring of 1929 right before the crash spoke of traditional American values self help and independence willing to intervene and give the government a stronger role than before could not touch the American people used to being in charge not used to dealing with the lack of funds and suffering he faced in the US Bonus March o WWI veterans bonus to be paid out in 1945 by Congress o Hoover pushed this off until 1945 o Vets wanted their money now o 20 000 vets marched on DC to demand early payment of the bonuses o Instead of being presidential and diplomatic Hoover called the local army to forcibly kick them out o Major General Smedly Butler o Bonus Marcher s dispersed but Butler was part of the plot known as the Business plot wanted to over throw the government o Business leaders would have him lead a military oligarchy in the US o Smedly Butler backed out and switched sides but Congress failed to follow up on this o Congress said this was rumor but said Butler had no testimony or supporting facts backing this up Voluntary Cooperation o Hoover s policies were limited in scope o Business men did not support a very strong government control in the US o Met personally with business leaders and bankers and told them to work together o Told them not to compete but to loan each other money on a voluntary level o Created the National Credit Corporation Holding fund for money away from industries to pull their resources and help each other Trickle down o 1932 Reconstruction Finance Corporation Limited amount of deficit spending Money to large institutions will trickle down o Give money to large institutions versus small ones that are suffering Self liquidating ventures o Investing a little government money in the way that they government could be repaid 3 Summary Too little Too late o Growing government role o More shut downs of factories and more job loss people cannot buy what is being produced o Increasing role of US government in US economy o Hoover okay with deficit money but US should not be a direct employer for US citizens o Hoovervilles towns of poor migrants sprang up on the outskirts of towns of the US shanty towns blaming Hoover and his policies for creating these towns 1932 FDR blamed everything on Hoover campaigned against him He had a new way of dealing with these problems FDR won by 60 of the vote FDR and the New Deal FDR took office in 1933 Privileged childhood blue blood aristocracy press discrete about extra marital affair of the president FDR had many