The Great Depression 10-07-2014- October 1929o Stock Market Crash of October 1929o Everyone touched by the Great Depressiono Greatest debateso Regulation of the stock marketo Welfare programs- government as an employer? Or just for a private sector?o No explanation why the Great Depression followed this stock market crashImpact of the policieso Stock prices soared, people thought it was better for them to put it in the stock market than put it in the banko Summer 1929- US Stock Market stopped growing, stagnateo 11 prominent people committed suicide because they thought they had been ruinedo Wealth disappearedo Stock prices had become so high, that the crash was more severeo Manufacturers closed factories and laid off workers - Dust Bowlo 1930s- drought and wind storms on highly-tilled and dry land throughout themiddle and mid-west o Ships in the Atlantic reported having mud showers at sea, mud storms in the easto Massive amount of soil erosion- Causeso 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 affordo 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 tariffs1 American businessmen supported these tariffs highly, farmers did notlike 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 crashesGreat Depression- Economic Indicatorso Stock prices, unemployment 25% unemployment, widespread layoffo 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 Indicatorso Marriage & birth rates Marriage rates dropped by 30%, men felt like they could not support a family  Birth rates dropped- US population stagnatedo 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 work2Response: Herbert HooverHoover was blamed for the Depression; scapegoat; Hoover won election in 1928; born to Quakerparents; 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 Marcho WWI veterans bonus’ to be paid out in 1945 by Congresso Hoover pushed this off until 1945o Vets wanted their money nowo 20,000 vets marched on DC to demand early payment of the bonuseso Instead of being presidential and diplomatic, Hoover called the local army to forcibly kick them outo Major General Smedly Butlero Bonus Marcher’s dispersed, but Butler was part of the plot known as the Businessplot, 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 onthiso 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 scopeo Business men did not support a very strong government control in the USo Met personally with business leaders and bankers and told them to work togethero Told them not to compete, but to loan each other money on a voluntary levelo 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 downo Give money to large institutions versus small ones that are suffering- “Self-liquidating” ventureso Investing a little government money in the way that they government could be repaid3- Summary: Too little, Too lateo Growing government roleo More shut downs of factories and more job loss, people cannot buy what is being producedo Increasing role of US government in US economyo Hoover okay with deficit money, but US should not be a direct employer for US citizenso 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 towns1932: FDR blamed everything on Hoover, campaigned against him. He had a new way of dealing with