Horrendously and Ridiculously Long APUSH 1 st Semester Notes Part 9 ◊ The Great Depression ♦ Causes & Warning Signs ⇒ 1920s: Lots of problems that the gov ignored because Rs believed gov shouldn’t interfere with business: • Growing gap between rich and poor Partly because of government tax policies Makes economy depend too much on the rich investing their money EX: 20s not roaring for the farmers. Both bills passed by Congress to help farmers were vetoed by the Republican president • Labor reforms are reversed Conditions for workers are crappy Progressive reforms are almost all reversed • Changed from debtor nation to creditor nation Before we borrowed, now we lend Can’t get other countries to pay off WWI debt. Only way is to: ⊗ Import more than we export ⊗ Forgive the debt ⊗ Make more loans so they can pay off old loans with new loans ∇ We do this through the Dawes Plan cuz we won’t try anything else However, the Hawley-Smoot Tariff (by Hoover) ⊗ Makes it impossible for them to pay back any debts ⊗ Drives trade to a halt • Bad business practices Example: Buying stock from other companies ⊗ Banks do this too…with investors money • Stock boom Over valued (esp. in late 20s) ⊗ Lots of people buying, prices increase ⊗ Once everybody starts selling, prices plummet People are buying on margin ⊗ This is buying stock with bank loans (never a good idea) ⊗ This is what causes the bank failure ♦ The GD under Herbert Hoover ⇒ 10/24/29: Black Thursday • A big drop in the stock market • Stocks seem to be recovering the following Friday and Monday Partly because JP Morgan invested millions to get the prices back ⇒ 10/29/29: Black Tuesday • Stock market bottomed out - everyone was trying to sell, nobody buying • Lost 75-80% of their value
• Massive bank failures People lose everything including their trust in the banks ⊗ Loss of trust makes money go out of circulation ⊗ Adds a lot to the problem • Not much different from any other economic crash including today’s (houses!) Multiplier effect is what made it different…and make it the Great Depression The car & stock industries run the economy and create other fields ⊗ When they crash, everything crashes ⇒ 1930-32: One of the worst doubts ever hits the US – Dust Bowls ⇒ GD Life • Bread lines, soup kitchens, etc • No federal relief – all relief is from private charities and their aren’t enough of those • Hoovervilles Shanty towns made of cardboard and other scrap materials Common for the many people who lose their homes ⇒ Hoover’s initial response • Cares about the people but convinced direct dole (fed handouts) would ruin America Idea of rugged individualism – work harder in hard times Welfare checks would destroy American character • Tries to help banks and industry Believes in trickle-down economics Ineffective, but paved the way for the New Deal Probably prevented GD from being any worse ⇒ 1932: Hoover realizes his policy isn’t working •
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