The Great Depression

1. The Great Depression

2. The Nations Sick Economy • Industries in trouble • Key industries were barely making profit (textiles, steel, railroads) • Mining and lumbering (which had expanded to meet needs during WWI) faced diminished demand for their goods in peacetime • Coal miners faced competition from new types of energy (fuel oil, natural gas, hydroelectric power) • Construction of new houses fell, causing a chain reaction for other businesses that depended on housing industry (furniture makers, building materials, household appliances, labor)

3. Farmers in trouble After the war, demand fell and crop prices declined Many lost their farms, and as farmers began to default on loans, rural banks began to fail

4. Consumers spend less As they had less money to spend, consumers bought fewer goods and services Many Americans were living on credit, acquiring tremendous debt which many had trouble paying off

5. Uneven distribution of income Between 1920-1929, the income of the wealthiest 1% of the population rose by 75%, compare with 9% for Americans as a whole In 1929, the wealthiest 5% of families took nearly 1/3 of the nation’s income while the poorest 40% earned just over 1/10th of the nations income

6. Dreams of riches in the Stock Market Some economists were warning of serious weaknesses in the economy, but most Americans remained unaware Stock market prices rose steadily (“bull market”) and many Americans rushed to buy stocks and bonds Investors engaged in speculation (bought and sold stocks rapidly, causing prices to rise on paper, but not necessarily in real worth) Investors began buying on margin (paying a small percentage of the stocks price and borrowing the rest)

7. Black Tuesday • In early September 1929, stock prices peaked and began to decline • Confidence in the market wavered and some investors sold their stocks and pulled out • October 29 was known as Black Tuesday—the bottom fell out of the market • People and corporations sold their stocks, and those who had bought on credit now had huge debts • By mid-November, investors had lost $30 billion ( The amount equal to what the US spent in WWI)

8. Great Depression • Period from 1929-1941 in which the economy was in severe decline and millions of people were out of work • Stock market crash signaled beginning, but historians and economists cite a common set of factors • An old and decaying industrial base—outmoded equipment made some industries less competitive • Crisis in farm sector • Availability of easy credit • Unequal distribution of income—too little money in the hands of working people, who were the vast majority of consumers

9. Financial Collapse • Americans panicked and withdrew their money from banks, causing banks to close • Roughly 9million people lost their savings • Millions of workers lost their jobs • Unemployment leapt from 3% in 1929 to 25% by 1933 (1 out of every 4 workers did not have a job)

10. Hardship and Suffering During the Depression • Depression in the cities • Many could not pay rent or mortgage—lived in the streets • Slept in parks or sewer pipes, wrapped in newspapers to fend off the cold • Shantytowns—little towns consisting largely of shacks sprang up on the outskirts of cities • Soup kitchens and bread lines opened up in many cities to feed the homeless

11. Depression in Rural Areas • Rural life had one advantage over city life—most farmers could grow enough food to feed their families • Dust Bowl • Farmers from Texas to North Dakota had used tractors to break up the grasslands, they eventually exhausted the lands • When the drought and winds began in the early 1930’s, little grass and few trees were left to hold the soil down • Plagued by dust storms, and evictions, many packed up their families and moved to California

14. Men and their families • Men swarmed the streets looking for jobs • After years of not finding any work, some simply stopped looking or abandoned their families • Approximately 2 million men wandered the country, hitching rides on box car of railroads and sleeping under bridges

16. Women and Children Struggle Women worked, but received less money than men Women became targets for resentment as some people believed that they had no right to work when men were unemployed Children suffered malnutrition and diet related diseases Falling tax revenues cause schools to close, many children went to work in sweatshops under horrendous conditions instead

17. Social and Psychological Effects • Between 1928-1932, the suicide rate rose nearly 30% • Three times as many people were admitted to state mental hospitals as in normal times • Adults stopped going to the doctor and dentist and young people had to give up their dreams of college, getting married and having families • For some, achieving financial security became the primary focus in life • Many people did, however show great kindness to strangers down on their luck • Strengthened bonds within communities • Many people developed habits of saving and thriftiness that would stay with them a lifetime • Many of these habits shaped a whole generation of Americans