Economical Crisis

  • Herbert Hoover
    • accumulated wealth as a mining engineer

    • Gained fame for international food relief during WWI

    • Considered himself a progressive

    • Nominated by the Republicans as the successor to Coolidge

    • Promised to banish poverty

  • The Great Depression
    • Stock market crashed on Black Friday 1929

    • $10b vanished in 5 hours

    • Banks were failing before the stock market crash

    • Destroyed many investment companies

    • 4/5 of Rockerfeller family’s money vanished

    • Hundreds of thousands of people went to road search for work

    • 4k children lined up for bread in Detroit every day

    • Caused deurbanization

    • Chicago mayor phoned people and begged them to pay their taxes

    • Banks sold worthless bonds

    • People acted with resignation or protests

    • 20,000 veterans demanded a early payment of bonus due in 1945

    • Milo Reno lead road blocks to protest low prices

    • Communist party formed unemployed councils

    • Andrew Mellon told Hoover that the depression was a normal part of capitalism

    • Hoover opposed direct federal intervention

  • Smoot-Hawley tariff made the situation worse

  • Reconstruction Finance Corporation loaded money to failing banks, railroads, etc

  • 35000 millionaires in 1928

  • Maldistribution of wealth
    • The 1% owned 60% of the nations wealth

  • Instability in the economy

  • Oct 29, 1928

  • Causes of the Great Depression
    • Unregulated (by the gov) Speculation
      • Buying on margin

    • Lack of Government Regulation

    • Weakness of the economy
      • Farming was not going well

      • Railroads

      • Automobiles were not selling well

      • Construction

      • Underconsumption (= overproduction)

      • Oligopolies
        • A few large companies dominate

      • International finances

  • 1928 - 1933
    • 50% drop in GDP

    • 80% drop in construction

    • 25% unemployment

  • The Reconstruction Finance Cooperation
    • Loaned out the money to cooperations

  • The bonus army
    • WWI veterans demanding early payments

    • Hoover sent troops against them