M3/10/13; M3/5/12; W3/9/11; T3/9/10; M3/9/09;
H3/13/08; T3/6/07; W3/15/06; F3/18/05
Great Depression & Hoover’s
Response
(Ch. 25.1; pp. 707-714)
Q: What were the long-term causes of the Great
Depression?
Q: What role, if any, should the federal gov’t play in
dealing with an economic downturn?
I. Causes
A. Immediate Cause
• “Black Thursday” – Oct. 1929
– Stock Market Crash
B. Long Term Causes
•
•
•
•
•
•
•
over-speculation in Stock Market
buying on margin – credit/personal debt
war debt – Allied, US, Ger.
declining farm prices
weakness in heavy industries – little investment
overproduction of consumer goods
banking system
I. Causes (cont.)
C. Impact
• GNP
– ↓ 50%
• Farm prices
– ↓60%
• RR’s
– 1/3 bankrupt
• Banks
– ~10K closed b/w 1929-33
• Unemployment
– 25% by 1933 – 13M
II. Hoover’s Response
A. Personal philosophy
•
•
•
•
•
slow to act
“rugged individual”
private initiative
local initiative
no federal gov’t role
– later indirect relief
• volunteerism
• cyclical economy
II. Hoover’s Response (cont.)
B. Action
– major problems:
•
•
•
•
Unemployment
bank runs
business recession
relief [review worksheet]
– “Hoover blankets”, Hoovervilles
– slow response followed by unprecedented federal
response
II. Hoover’s Response (cont.)
B. Action (cont.)
•
•
•
•
•
unprecedented federal response
1. Hawley-Smoot Tariff (1930)
2. Emergency Comm. For Employment (1930)
3. Nat’l Credit Corp (1931)
4. Reconstruction Finance Corp. (1932)
– fed $$ → private companies, local & state gov’ts
– no direct relief
• 5. Glass-Steagall Banking Act (1932)
• 6. Home Loan Bank Act (1932)
• 7. Revenue Act (1932) – raised taxes
II. Hoover’s Response (cont.)
C. Protests
• 1. Farmer’s Holiday Ass’n (1931)
• 2. Bonus Marchers (June-July 1932)
– public relations disaster
– Douglas MacArthur
III. Election of 1932
• major issue: economic depression
• Hoover – Rep.
• FDR – Dem.
– “New Deal” – vague
– “reckless spending”
– optimistic, charismatic
• landslide victory
– 57% of vote
• controls H of R & Sen.