DID THE GREAT DEPRESSION

SIGNAL THE FAILURE OF

LAISSEZ FAIRE CAPITALISM?

Given a chance to go forward with the policies

of the last eight years, we shall soon with the help
of God be in sight of the day when poverty will
be banished from this nation.
I have no fears for the future of our country...It is
bright with hope.
- from Herbert Hoovers
inaugural address, 1929

By 1932:
25% of the population was left with no source
of income whatsoever.
Leading businesses failed.
11,000 banks failed (50%).
The average income dropped 40% (60% for
farm families).
There was no deposit insurance
There was no unemployment insurance.
There was no social security.
There were no food stamps, no welfare.

Jobless and
homeless
men on a
bread line.

WHAT CAUSED THE GREAT

DEPRESSION?

1. Weak Farm Economy

Farmers never saw the prosperity of the 20s
Agr. advancements/tech led to higher yields,
but put many farmers out of business
Overproduction declining market prices
(40% from 1920-21)
Foreclosure City!

2. False Prosperity/Maldistribution
of Wealth
Industrial prod. rose by 50% in the 20s but
wages did not (11%)
Consumerism on credit (installment buying)
illusion of booming economy
Banks extended credit (no regs)
Unregulated stock market - rampant
speculation
Top 1% owned 50% of wealth

4. Problems in the International

Economy
World debt cycle - ie. Dawes Plan (addressed
WWI debts owed to US)
Hawley Smoot Tariff passed by Hoover in 1930

Short Term Causes

Realization that stock prices were disproportionate to profits

Inability to pay debts/prevent foreclosures

Bank failures led to bank runs as investors became nervous
Stock market crash - due to panic selling
- Black Tuesday (late October 1929)

Impact of the Great Depression (19291941)

GNP and income dramatically drop
Unemployment peaks at 25% by 1933
50% of banks fail - 11,000 banks
Rampant homelessness, poverty, mortgage
failures, evictions
Hawley Smoot Tariff worsened conditions

A Hooverville

Hoover wagons

Squatters Shack, AK and

Hoover
blanket

Destitute migrant worker in California