Great Depression to 1950s - Horrendously and Ridiculously Long APUSH 1st Semester Notes Part 9 The Great Depression Causes Warning Signs 1920s Lots of

Great Depression to 1950s - Horrendously and Ridiculously...

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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
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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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