Economic Troubles

The Great Depression

Industry In Trouble

• Steel &Textiles – No more military business

• Railroads – Lost transport $ to cars & trucks

• Coal Mining – Lost out to oil & gas fuels

• Farmers lost $ when demand fell after WW I

• Weak Overseas markets – Europe in debt

Consumers in Trouble • Overspent in

good times with buying on the “installment plan”

•Lost jobs when industry hit hard times

Saturated US Markets

• Limited sales for US companies

• Sales slowed, prices rose to compensate• Wages stayed the same – people lost

“purchasing power”.

• Farmers produced more than they could sell.

• Goods remained unsold.

Over-production & under-consumption

Uneven Distribution of Income

• Rich got richer & poor got poorer

• High prices of goods helped rich for a while

• They too lived on credit

• Speculated in Stock Market– Buying on the margin – pay 10% up front

anticipating gains with which to pay the rest later.

Black Tuesday

• October 1929 – Stock Prices “PEAK” &

then begin falling.

• Investors sell fast. Prices fall further.

• 16 Million Shares sold on 10/29/29.

• “Margin” Investors were ruined.

• Millionaires lost fortunes.

Worldwide Problems• Europe depends

on US sales to escape WW I debt.

• US was broke, Europe now

suffered too.

• No $ for US farm products

Europe - No US sales

US – No European Sales

Europe can’t pay debt

WorldwideDepression

Shantytowns, Soup Kitchens & Bread Lines

A New York City “Hooverville”

Drought, the Dust Bowl & Okies

President Hoover’s Response• Slumps were normal part of business cycle

• Believed Gov’t. should promote cooperation, & guide relief efforts not give direct aid to people.

• “Rugged Individualism” succeed themselves

• Asked labor – no wage hikes

• Asked employers – no layoffs

Nothing worked

Hoover ActsGovernment Projects

• Boulder Dam – Now Hoover DamStimulate jobs & business

• Reconstruction Finance Corp Emergency loans to large cos. – banks

railroads

• Federal Home Loan Bank ActLower mortgage rates & refinance farms

Hoover’s Image Damaged

• Initial Response hurt his imagePublic sentiment turns against him.

• Upcoming Election changed his tactics Too little too late for Hoover

• Bonus Army - WWI veterans gathered in DC to support the

Patman Bill – to give bonuses to underpaid vets.

- Forcibly removed them once the bill was beat in the

Senate. Gassed, shot 1000 people

• Led to FDR’s Election and the New Deal