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GREAT DEPRESSION by Mind Map: GREAT DEPRESSION
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GREAT DEPRESSION

Hoover

Responses

He didn't believe tat the gov. should play an active role in economy

Voluntary Non- Coercive Cooperation, he gives tax breaks to bankers/businesses in return for private sector economic investment

organized some private relief agencies for unemployed

worked out a system w/ European powers that owed U.S money as a result of WW1 debts, Hoover Moratorium, put a temporary stop to war debt & reparations payments, European countries were to purchase American goods instead to stimulate American economy

Tariff Wars

Democrats pass a high tariff industry which was supposed to stimulate purchasing of U.S goods

Fatal Error, Global Economy, other countries passed high tariffs and no foreign markets purchased American goods, so U.S productivity decreased again.

Tariff- bill, cost or charge

Banker's Panic

b/c of Russia's cheap wheat in an attempt to pay back Austrian banks (price was too low and they couldn't), Bank of International Settlement, Austrian banks borrowed from German banks and appealed to them, Austrian banks and loaning German banks therefore were forced into bankruptcy, b/c German banks borrowed from American banks, U.S banks began to go bankrupt, wiping out life savings of thousands of Americans

Americans React

Reconstruction finance corporation, had power to make emergency loans to banks

Rugged Individualism, Hoover wouldn't involve himself in any programs of direct gov. aid to individuals

People were frustrated - isolated protest movements, EX- Dairy farmers frustrated w/ low price of milk refuse to sell (dump it), Bonus March, EX- WW2 veterans (pensions discontinued by congress) had a march on Washington, set up Shantytowns = Hoovervilles, Hoover-meals = food-scraps, Hoover rides = hitchhiking journeys

1932 Election

1:4 were unemployed

national income = 50% of 1929's

Republics nominated Hoover vs. Franklin Delano Roosevelt. FDR by a landslide.

Productivity and Unemployment

purchasing demand has to be present: resulting in high employment and healthy economy

based on productivity- purchasing power- employment cycle

1924-27 productive capacity doubled, but only cus of technological innovation

Overproduction, more consumer goods, but not enough ppl to buy them.

Uneven distribution of Wealth

.1% wealthy ppl owned as much as bottom 42% below poverty line

middle class: not wealthy, depended on salary, when productivity declined, ppl lost their jobs, they had to cut back on their purchases this decline in consumption among the middle class ruined the whole country

The "Crash" (stock market crashes)

cause for depression

ppl invest in companies by buying stocks, in return they get a profit

Buying on Margin

was a lot of $$ so banks were quick to make loans to stock buyers. N investors only had to pay 10% of the stock's actual value.

Encouraged Stock Speculation, ppl wuld buy and sell stocks quickly to make quick money, Stock value increased b/c of it, Companies needed long term investments so they could pay bills (stock value was like an illusion), NOT careful traders wuld buy n sell shares intentionally to inflate a given companies stock value., gave a false sense of security, Panic Selling, bottom fell out of market, cus of all ppl trying to sell at one time., Thus, ppl going bankrupt and banks r now attacking ppl for their money., Ripple Effect, ppl who had lots of $$ owed little ppl money, wen market crashed, they didn't have money to give the little ppl

Economic Cycle

ppl culd not buy=productivity was bad= mor unemployment.

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