The Great DepressionThe Great Depression

Chapter 23 – Section 1Chapter 23 – Section 1

Hoover and the CrashHoover and the Crash

The Collapsing EconomyThe Collapsing Economy

The United States economic problems The United States economic problems began began in the late 1920sin the late 1920s..

The country was entering an economic The country was entering an economic recession, thus many major industries recession, thus many major industries began to decline.began to decline.

However, stock prices were still However, stock prices were still increasingincreasing. . The prices did not match industry.The prices did not match industry.

The rise in prices encouraged risky The rise in prices encouraged risky investments by investments by margin buyersmargin buyers..

Buying on margin is purchasing Buying on margin is purchasing stocks at a lower price and agreeing stocks at a lower price and agreeing to pay off the difference later.to pay off the difference later.

When the stock market started When the stock market started falling, margin buyers falling, margin buyers could not pay could not pay off their differences and were force off their differences and were force to sell their stocksto sell their stocks..

The stock market finally crashed on The stock market finally crashed on October 29, 1929October 29, 1929, the day that , the day that would become known as Black would become known as Black Tuesday. Tuesday.

Black TuesdayBlack Tuesday

The Great Depression The Great Depression BeginsBegins

The Great Depression was a major The Great Depression was a major economiceconomic and and socialsocial disaster that disaster that affected the entire country.affected the entire country.

The Great Depression lasted The Great Depression lasted 1212 years years and was triggered by the and was triggered by the Great Crash.Great Crash.

One of the problems that caused the One of the problems that caused the Great Depression was Great Depression was overproductionoverproduction. . Factories produced more goods than Factories produced more goods than people could afford to buy.people could afford to buy.

The decline in the industrial goods The decline in the industrial goods economy started a downward spiral.economy started a downward spiral.

As people began losing money they As people began losing money they could no longer afford to purchase could no longer afford to purchase factory goods. Without the goods factory goods. Without the goods being purchased factories could no being purchased factories could no longer afford employees and began longer afford employees and began massive layoffs.massive layoffs.

Without these factory incomes, Without these factory incomes, Americans could no longer afford Americans could no longer afford goods, thus completing the cycle.goods, thus completing the cycle.

A national A national bankingbanking crisis also crisis also contributed to the Great Depression. contributed to the Great Depression. Banks closed because Banks closed because frightened frightened depositors began withdrawing their depositors began withdrawing their savingssavings..

People had less money because they People had less money because they lost their jobs or savings in the bank.lost their jobs or savings in the bank.

The Human CostsThe Human Costs

From 1929 to 1933, the From 1929 to 1933, the unemployment rate went from unemployment rate went from 33 to to 2525 percent.percent.

Nationally the number of people Nationally the number of people without jobs was about without jobs was about 13 million.13 million.

With little or no money, many people With little or no money, many people lacked adequate lacked adequate food, shelter, and food, shelter, and clothing.clothing.

The Great Depression was a time of The Great Depression was a time of widespread widespread povertypoverty..

Many people stayed in shanty towns, Many people stayed in shanty towns, called Hoovervilles, on the edges of called Hoovervilles, on the edges of cities.cities.

Hoover RespondsHoover Responds

At first, President Hoover’s advisors At first, President Hoover’s advisors recommended doing recommended doing nothingnothing. They . They believed the Depression was believed the Depression was temporarytemporary..

Hoover disagreed with his advisors and Hoover disagreed with his advisors and took actiontook action

Hoover’s first measures encouraged Hoover’s first measures encouraged businesses and local governments – not businesses and local governments – not the the FederalFederal government – to take the lead government – to take the lead in helping people.in helping people.

He also urged private He also urged private charitiescharities to set up to set up soup kitchenssoup kitchens..

The unemployed waited in line The unemployed waited in line for hours to get foodfor hours to get food

As the Depression worsened, Hoover As the Depression worsened, Hoover created the created the Reconstruction Finance Reconstruction Finance CorporationCorporation in 1932 to provide in 1932 to provide fundingfunding to key industries and local to key industries and local governments.governments.

Bonus ArmyBonus Army

A group of WWI war A group of WWI war veterans marched veterans marched on Washington DC on Washington DC demanding demanding immediate payment immediate payment of a $1000 bonus of a $1000 bonus that was that was guaranteed to them guaranteed to them in 1945. Hoover in 1945. Hoover responded by responded by sending in police to sending in police to break up the rally. break up the rally.

At least one veteran was killed and 100 were injured. This incident scared the Hoover administration.The treatment of the Bonus Army further damaged Hoover’s popularity.