The Great Depression 1928-1932
Learning Outcomes:
1. Discuss the weaknesses of the
economy in the 1920’s
2. Explain how the stock market
crash contributed to the coming of
the Great Depression
3. Describe how the Great
Depression spread overseas
Key Terms and People
 Herbert Hoover
 speculation
 Black Tuesday
 business cycle
 Great Depression
 Hawley-Smoot Tariff
Prosperity Hides Troubles
 Consumption
went up
 Gross national
product went up
 Stock market went
up
 Bull market
Optimism Sweeps Hoover to “W”
Republican
Ran against
Alfred E.
Smith—lost
because he
was Catholic
Problems Plague the Agricultural
Sector
Summary
 During the war there
was a high demand of
farming good
throughout the
country. Once the war
was over demand for
those good went down
and sent the rural
community spiraling
into a depression.
 Farmers bought costly




equipment to keep up
w/ the demand of
WWI.
Took on huge debt
Post WWI demand
went down
Rural depression,
natural disasters
Lived off credit from
month-to-month
Wealth is Distributed Unevenly
 Wages and disposable
income rose in the 20’s
 As wages rose gradually,
worker productivity
increased
astronomically
 Rich became richer and
workers became less
poor—economic
problems
 Income distribution
chart p. 369
The Stock Market Crashes
 What was the basis for
 Too much money was
soaring stock prices
during the 1920’s?
 What happened when
investors lost
confidence in the
stock market?
being poured into
stock speculation
 Black Thursday—
nervous investors
started to sell stocks
 Black Tuesday—16
million shares were
sold
The Banks Collapse
Summary
 After the stock market
crashed people
became fearful and
tried to get their
money from banks,
but after some flawed
policies put in by the
gov’t the banks ran out
of money.
 Frightened depositors
feared for their money
and tried to withdraw
it from their banks
 Misguided monetary
policy—cut interest
rates to stimulate
economic growth
 The “Fed” discouraged
lending—too little
money in circulation
Businesses Close &
Unemployment Rises
 Collapse of stock
prices and reduced
consumer spending
led to business failure
 Production cutbacks,
maintain price levels,
layoffs, and reduced
payroll
 By 1933, 25% of
Americans had lost
their jobs
Tariffs Add to Woes
 The gov’t moved to
protect American
products from foreign
competitors
 Hawley-Smoot Tariff
 European countries
retaliated and passed
tariffs of their own
against U.S. goods
 Helped destroy
international trade
The Depression Goes Global
 Copy diagram on top
of p. 372
 European problems of
reparation payments,
war debt payments,
and international
imbalance of trade had
already created a
shaky economic
structure
 Germany ceased
payments—GB/France
suspended payments
Review Questions
1. Why did many farmers face economic
2.
3.
4.
5.
difficulties during the 1920’s?
Why did the uneven distribution of wealth
contribute to the economic troubles of the U.S?
What problem did the availability of easy credit
create?
How were the stock market crash and the
collapse of the banking system related?
How did these events affect the nation’s workers
and businesses?
Learning Outcomes
1. Discuss how Hoover’s initial
conservative response to the Great
Depression failed.
2. Explain the changes in the
President’s policies as the crisis
continued.
3. Describe how Americans reacted
to Hoover’s relief programs.
Key Terms and People
 Localism
 Reconstruction Finance
Corporation
 trickle-down economics
 Hoover Dam
 Bonus Army
 Douglas MacArthur
Cautious Response to Depression
Fails
Summary
 President Hoover
attempted to restore the
nation’s economy by
changing his “hands off”
approach through
volunteerism and gov’t
policies to help kick
start the economy and
end the depression.
 Hoover asked business
and industrial leaders to
keep employment,
wages, and prices at
current levels.
 Called for gov’t to reduce
taxes, lower interest
rates, create publicworks programs
 Requested the rich give
to charities
Volunteerism Fails to Bring Relief
 Relied too much on




voluntary cooperation
Hoover was cautious to
encourage…not legislate
Volunteerism did NOT
work
Localism—no financial
or human resources to
successfully work
The crisis demanded
decisive federal action
Hoover Adopts More Activist
Policies
 The association of the




President’s name w/
suffering and want
indicated Americans’
feelings for him
Reconstruction Finance
Corporation (RFC)
Trickle-down economics
Did NOT work!
Hoover Dam Project—
brought much-needed
employment to the SW
Some Urge Radical Change
 Some Americans
thought the answer
was to reject
capitalism and
accept
socialism/communis
m
 These ideas were
rejected
 Americans never lost
faith in their country
Bonus Army Marches on
Washington
 Bonus Army—war vets
seeking bonus Congress
had promised them
from WWI
 Adjusted Compensation
Act—provided lumpsum payment to vets
 Vets wanted early
payment, but Hoover
vetoed bill
Hoover Orders the Army Out
 General Douglas
MacArthur, Dwight
Eisenhower, and
George Patton
 Marchers were teargassed and many were
badly injured
 In 1932, Americans
were ready for a
change in the Oval
Office.