Causes of the Great Depression
When the stock market rose, many people bought stocks and they were very cheap. When people stopped buying stocks, the stock market crashed. Many people sold their stocks quickly before the stock market plunged anymore for far less than they paid for them. On October 24, 1929, the market plummeted further. This day came to be called Black Thursday. On October 29, Black Tuesday, prices took the steepest dive. The stock market lost between $10billion and $15 billion in value. By mid-November, stock prices had dropped by more than one-third. $30 billion was lost.
The stock market crash forced the banks to cut back drastically on the loans they made. With less credit available, consumers and businesses were not able to borrow as much money. This helped to send the economy into a recession. Some banks were even forced to close because they were not able to deal with the losses they suffered. Customers of the banks that closed lost their savings. Many people decided to withdraw all of their money from the banks causing the banks to collapse.
Overproduction was one factor contributing to the onset of the Great Depression. More efficient machinery produced too much goods for the consumers to buy with their wages.
When consumers bought high priced items, they had to make payments which cut back on the company’s income and this forced the companies to lay off employees. The laid off employees could no longer pay for their new things so they also hurt companies that they owed and the companies had to cut back on their production which needed less workers so they also had to lay off employees. When these companies shut down, this hurt the companies that they bought from.
Life During the Great Depression
Many people lost their jobs during the Great Depression. Also lots of banks had failed. The people who didn’t have jobs often went hungry and stood in lines more than a block long just to get free food. They also lost their homes and were forced to get out. Court officers known as bailiffs then ejected the nonpaying tenants, piling their belongings in the street. Those who were homeless would put up shacks on unused land and start communities called shantytowns. Hobos would wander around looking for jobs.
Dust Bowl- a major drought caused the ground to dry up and when the wind blew, it caused dust to be blown everywhere and these were called black blizzards. When the farmers plowed fields, it caused all of the plants roots that held in the water and held the soil together to be pulled out. When the drought hit, with nothing to hold the water in and the ground together the soil turned to dust. When the wind picked up, it carried all of the loose dust into the air, sometimes suffocating animals and people caught in the dust storm. Some farmers were forced to move because of the dust and some took different jobs.
Entertainment grew in popularity because people turned to this to escape their worries of the 1930s. Comedies also became popular because they provided a release from daily worries. Moviegoers also loved cartoons. Walt Disney produced the first feature-length animated film, Snow White and the Seven Dwarfs. In 1939 MGM produced The Wizard of Oz, a colorful musical that lifted viewers’ spirits.
Radio also became popular because it offered information and entertainment as near as the living room. Some of the stations included comedies, dramas, and soap operas.
Literature and art also flourished during the 1930s. Writers and artists tried to portray life around them, using the homeless and unemployed as their subjects.
Governments Response to the Great Depression
Hoover tried to avoid more bank runs and layoffs by urging consumers and business leaders to make rational decisions. His efforts failed and the economy continued its downward slide. He then decided that the government should not step in to help individuals out. Industry leaders pledged to keep factories open and to stop slashing wages. By 1931, they had broken those pledges. Hoover then increased the funding for public works. Some jobs were created but only few for the number of unemployed. The government could create new jobs by spending money but Hoover refused to do so. During elections, citizens blamed the Republicans for the unemployment and they lost 49 seats and their majority in the House of Representatives.
Hoover focused on expanding money supply to get the economy growing again. He believed that if the government helped banks make loans it could expand production and the companies would rehire workers. The president asked the Federal Reserve Board to put more money into circulation but they refused. Hoover set up the National Credit Corporation which created a pool of money that allowed struggling banks to continue lending money in their communities but this program failed. In 1932 Hoover requested Congress to set up the Reconstruction Finance Corporation to make loans to business. Early 1932 the RFC had lent about $238 million to 160 banks, 60 railroads, and 18 building-and-loan organizations. It failed to increase its lending sufficiently to meet the need.
Though Hoover strongly opposed relief, Congress passed the Emergency Relief and Construction Act in July. The new act called for $1.5 billion for public works and $300 million in emergency to the states for direct relief. This was the first time in history that the government supplied direct relief funds. The new program could not reverse the accelerating collapse.
Protests and looting became more abundant. Protesters wanted food and water and they were denied until some members of Congress insisted on the marchers right to petition their government. They hungry poor were not the only ones who began to protest conditions during the Depression. After the war, prices sank so low that farmers began losing money. Nebraska farmers began to burn their corn to heat their houses. Georgia diary farmers blocked highways and stopped milk trucks, dumping the milk into ditches.
After WWI, Congress had enacted a $1000 bonus for each veteran, to be distributed in 1945. In may 1932 several hundred Oregon veterans began marching to Washington to lobby for passage of the legislation. Other veterans joined wearing ragged military uniforms and singing old war songs. They became known as the “Bonus Army.” Hoover acknowledged the veterans right to petition but refused to meet with them. Senate voted down the bonus bill. Some protestors went home, some stayed and some stayed at motels in town. In late July, Hoover ordered the buildings cleared. The police tried, but one panicked and shot two veterans and the city government called in the army. Soon unarmed veterans were running away. The soldiers tear-gassed stragglers and burned the shacks. This harmed Hoover’s reputation. Although Hoover failed to resolve the economic crisis, he did more than any prior president to expand the federal government’s economic role.
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