The Great Depression
I. The Great Depression
A. The Great Depression that began in 1929 came as a shock to Americans
1. The consumer goods revolution gave a false sense of long-term prosperity
2. When the stock market crashed, business closings & unemployment caused Americans looked to the gov’t for
unprecedented support
B. The Great Crash
1. A recession in 1927 was an early warning sign for the depression
a. But gov’t & business leaders ignored these warning signs
b. The Federal Reserve lowered interest rates, but this easy credit led to buying stock on-the-margin
2. The initial stock crash on October 24, 1929 (Black Thursday) & panic on October 29, 1929 (Black Tuesday) led sparked
the Great Depression
a. The business failures, bank closings, & downturn in spending reduced consumer purchase power & caused more
business/bank closings
b. Bank & business failures continued for 4 years; unemployment reached 25% by 1933
3. Reasons for the Great Depression:
a. Over-production of consumer goods & decline in trade with Europe after World War 1
b. Unequal distribution of wealth, consumer debt, & stock market speculation decreased consumer spending power
C. Effects of the Great Depression
1. The depression hit all classes; led to “Hoovervilles,” poverty, lawlessness, & gov’t relief checks
2. African-American & Mexican-Americans were laid off first
3. The middle-class refused charity, lost their homes, and/or abandoned expensive health care
II. Hoover’s “Rugged Individualism” Failed to End the Depression
A. Hoover & Voluntarism
1. Hoover offered reassured a return of prosperity, called for volunteerism, & rejected bold government action
2. But Hoover eventually saw the need for more government action via the Reconstruction Finance Corps
3. Despite some success of the RFC & job programs like the Hoover Dam, by 1932, Hoover had clearly failed
a. The military action against the “Bonus Army” made the gov’t seem callous & unsympathetic
b. Rising bank failures led to a collapse of the U.S. banking system
B. Fighting the Depression
1. The inability of Republicans to solve the economic problems opened the door for Democrats
2. Democrats relieved some suffering & restored hope but created unprecedented gov’t involvement
C. The election of 1932
1. The depression made Hoover the “victim” & Franklin Delano Roosevelt the “savior”
2. In 1932, FDR united urban & rural, Protestants & Catholics, farmers & workers, native-born & immigrants
III. Conclusions