Unit 6: Republican Ascendancy and the causes of the Great Depression Flashcards
The Republican Ascendancy
- period in Am. history from 1920-32 in which Republicans held a majority in Congress and the White House
- Presidents Warren G. Harding, Coolidge, Hoover
- Warren Harding wins 1920 election w/ promises of “return to normalcy”; but has one of the most scandal filled presidencies
Laissez-faire economic policy ( Republican Ascendancy)
- belief that the gov’t should pay a very limited role in the economy and regulating businesses
( R - A) Warren Harding Domestic & Economic Policy:
- Big Business Runs the Country- laissez-faire
- High Tariffs- up to 50% on some goods > foreign goods cost more
American industry grows, but is expensive > American consumers rely on credit to buy products - Tariff “War” with 33 other countries ***Key cause of the Depression
“Trickle-Down Economics”- massive tax cuts to top 1% and other members of the wealthy class; wealthy are supposed to pass down the excess benefits to the mass (lower and middle class) > “trickle down”
50% of the population is considered to be living below the poverty line
( R - A ) Calvin Coolidge Domestic and Economic Poiicy
- High tide of laissez-faire politics
- 200 large monopolies take control of half of the nation’s wealth
Vetoes multiple relief bills to assist American farmers struggling; farmers continue to struggle ***Key cause of the Depression
Coolidge Prosperity- some see success under Coolidge- higher wages, low unemployment rates, WWI veterans promised a bonus payment in 1945, consumer spending up (but with credit…)
(R - A) 1928 election and Hoover presidency
1928 Election:
- Herbert Hoover (Republican) wins campaigning to maintain the policies of Harding and Coolidge; hopes to build off of Coolidge Prosperity
- Hoover Presidency:
- Hoover and his policies do not cause the Great Depression; but they do little to help prevent it and deal with the effects of it
- $2 billion in loans to big businesses, banks, and railroads
- Tariffs Rise Up to 60% on Some Goods
Causes of Great depression
1. The Economy
1a) Business Overproduction:
- American businesses experienced a boom during World War I that continued into the 1920s
-Luxury Items, largely bought on credit
-Businesses continue to produce even as demand goes down
-Profits of industry are raising faster than workers wages
-People can’t pay back their credit! Not real prosperity… > consumers stop buying goods > production slows > unemployment goes up
1b) High Tariffs (See Previous Slides)
1c) Overspeculation in the Stock Market- Buyers don’t know what their investing into (investing on loans and with credit)
1d) Income Inequality- Approx. 50% of population is living at or below the poverty level (hungry and little to no credit), 7% unemployment rate by the end of the 1920s (most have 2+ jobs just to survive and buy essentials); no safety net exists (Social Security, federal minimum wage, healthcare, federal unemployment assistance)
Causes of the Great Depression
2. The Farmers
- Farmers had been on the decline since the Civil War, but saw a brief rise during World War I
- 1920s- Farmers Already in a Depression; Not “Roaring”
- Prices of crops fell due to overproduction from more industrialized farming
- Many farmers are declaring bankruptcy and foreclosure
- Generations of family own land was lost by many farmers
- Congress attempts to pass aide multiple times > all attempts vetoed by Coolidge
- By 1929:
- Many farmers attempt to survive of off approx. $220 annually!
- Farmers have little to no purchasing power in the economy
Causes of the Great Depression
3.) World War I Loan Repayments-
Allies cannot afford to pay back their loans to the U.S. > many European nations heading towards economic depression as well > worldwide economic collapse
Causes of Great Depression
4.) The stock market crash
- trigger to jumpstart the Great Depression; not the only cause
- Throughout the 1920s, Americans are buying stock on the margin (loans & credit) with hopes of making a profit and paying back their broker (loaner)
Early Warning Signs of an Impending Crash & Economic Crisis:
- Construction is Down More Than ⅔
- Consumer Spending is Down
- Unemployment is Slowly Rising
Oct. 21, 1929- market closes “up” in value
Oct. 23- market loses $4 billion; causing early panic
Oct. 24- Record Number of Trades & Prices Plunge
Oct. 29- “Black Tuesday”- $14 billion lost on record trades; fully exposes problems in the economy, loan repayment issues, and struggles of the farmers
- By the end of 1929- $40 billion is lost
- By end of Herbert Hoover’s term in 1932- $75 billion is lost
- No economic safety nets for the American peopl
Men and women in GD
Men- working in the auto industry full time in Detroit; World War I veteran
Women- part time librarian; allowing time to raise your newborn while still working
- You want to make sure your family has the best things in life and a future of prosperity.
The “Coolidge Prosperity” is in full swing! You feel so confident in America’s financial security you decide to invest a huge portion of your savings into the stock market to start your new family off in the right direction
Hoover elected in 1928
Republican Herbert Hoover ran against Democrat Alfred E.
Smith in the 1928 election
Hoover emphasized years of “prosperity” under Republican
administrations
Hoover won an overwhelming victory thanks to the support of
you and many others
The Great Crash
By late 1929, a lack of new investors in the stock market caused stock prices to drop
On October 29, 1929, stock prices fell drastically on Black Tuesday, resulting in a $10 to $15 billion loss in value.
While this did not cause the Great Depression, it did undermine the economy’s ability to hold out against its other
weaknesses.
The GD begins
The Stock Market crash signaled the beginning of the Great Depression
The Great Depression is generally defined as the period from 1929 – 1940 in which the economy plummeted and unemployment skyrocketed
Rugged Individualism
After the stock market crash, President Hoover tried to reassure Americans
He recommended business as usual; no handouts from the government
Breaking news from Lansing, MI! As a result of the stock market crash
it appears many people are not able to repay their loans to the bank.
Governor warns the banks may run out of money if this continues!
Bank Failures-
- After the crash, many Americans panicked and withdrew their money from banks causing a run on the banks
- In addition as a result of the crash many people were not able to repay their loans to the banks.
- Banks had invested in the Stock Market and lost money
-In 1929- 600 banks fail - By 1933 – 11,000 of the 25,000 banks nationwide had collapsed
- When the banks collapsed depositors lost their savings
- With the loss of so much so quickly many people unfortunately committed suicide
- The suicide rate climbed 30% between 1929 and 1932
Reduction in purchasing
Between 1928-1932, the U.S. Gross National Product (GNP)
– the total output of a nation’s goods & services
– fell nearly 50% from $104 billion to $59
billion
No work
By 1933 thousands of banks and closed and millions of Americans were
unemployed
90,000 businesses went bankrupt
Unemployment leaped from 3% in 1929 to 25% in 1933
14 million are jobless- 1933
Hoovervilles
A “Hooverville” or shanty town was a community of houses or “shanties” made from scraps they could find
By calling them “Hoovervilles” people conveyed their disgust and disappointment with Hoover.
In addition to the term “Hooverville,” President Hoover’s name was used
mockingly in other ways during the Great Depression.
Part of the reason you came to D.C. to setup your shanty was to show
your support for the passage of the PATNAM BILL. If Congress passes the PATNAM BILL it would be VERY beneficial for WWI Veterans like yourself.
Bonus Army March
Spring of 1932 about 15,000 World War I vets arrived in Washington to support the passage of the proposed Patnam Bill
If the bill passed WWI Vets would be issued a $1,000 bonus immediately instead of waiting until its scheduled date of 1945
Patnam Bill Rejected
On June 17, 1932 the Senate voted down the Patnam Bill
Hoover called the Bonus Marchers, “Communists and criminals”
Marchers clash w/ soldiers
Hoover told the Bonus marchers to go home– most did
2,000 refused to leave
Hoover sent a force of 1,000 soldiers under the command of General Douglas MacArthur and his aide Dwight Eisenhower
MacArthur’s 12th infantry gassed more than 1,000 marchers,
including an 11-month old baby, who died
Burned down Shanties
Two vets were shot and others injured
Americans were outraged with Hoover
Hobos
or homeless Americans who wandered around hitching rides on
railroad cars, searched for work and a better life.
-during the GD some people, primarily men and teenagers boys, took advantage of their homelessness and rode the rails across the US
Hobo Markings
Since people reacted in different ways to these homeless “hobos”, these wanderers began to use markings to help fellow hobos who came after them.
These might be left in chalk on a fencepost, on the side of building, or some other place that would be visible to other hobos who came along later.
soup kitchens
- Soup kitchens in America started around
- 1929
- When soup kitchens first appeared, they were run by churches or private charities.
- Al Capone opens the first soupkitchen
- By the mid-1930s, state and federal governments also were operating them.
- Soup kitchens served mostly soup and bread. Soup was economical because water could be added to serve more people, if necessary
