The Great Depression

1. The Great Depression

2. Essential Questions: • What were the short term and long term causes of the Great Depression? • What were the effects of the G.D. on the American people? • How did President Hoover respond to the Great Depression?

3. Definition of Depression A depression is a long-term downturn of economic activity They are characterized by: Large increases in unemployment A banking crisis Shrinking output Decrease in demand Bankruptcies and foreclosures Significantly reduced amounts of trade Photo by Dorothea Lange

4. What is a Stock? • One way companies grow is by selling stock, or portions of their company • People like to purchase stocks because they can make a profit

5. 1920s Stock Market Boom Leads to Overconfidence • From 1922 to 1929, the Stock Market rose dramatically (Bull Market) • “foolproof” way to get rich • Investors bought stocks on margin (borrowed $) • Pay $1 upfront for $10 worth of stock, counting on Stock Market rise to pay for loan

6. 1. Stock Market Crash • Black Thursday: October 24, 1929  rumors began that the market was on the verge of collapse, a few nervous investors began selling stocks, others followed • Stock prices fell as selling continued and the market flooded with stocks  PANIC! • Black Tuesday: October 29  stock values fell $10-15 billion

7. The Effects of the Crash on Investors • Investors who bought stocks on margin lost original investment AND could not repay loans • Many lost their fortunes overnight

8. 2. Effect of the Crash on Banks • Investors borrowed from banks to buy stocks • Crash  banks could not collect from investors • Depositors rushed to withdraw their savings (run on banks)

11. Unemployment, 1929 - 1942

12. Effect of the Crash on Businesses • Banks were unwilling/unable to lend money to businesses • Consumers stopped purchasing goods • Companies shrink and lay off workers

13. Seeds of Decline

14. Decline in Farming during 1920s • Farmers profited during WWI • Prices for ag. products decreased after WWI • Farmers defaulted on loans, and farms were seized by the banks

15. 3. Unequal Distribution of Wealth • Richest 5% received 34% of income • More than 40% of Americans lived under the poverty line

16. 4. Overproduction • Frederick W. Taylor’s worker motion studies • Assembly line helps w/ mass production • Production increased by over 60% in a ten year period

17. 5. Overuse of Credit / Under-Consumption • 1920s consumers bought on credit  credit bills mounted • Consumers stopped spending in order to pay off credit • This led to decreased demand

18. 6. Protective Tariffs • Congress passed Hawley-Smoot Tariff • Foreign countries responded with their own protective tariffs • decrease in US sales abroad • International trade decreased 30% by 1933!

19. Effects of the Great Depression on the American People

20. American Families

21. Hobos Hobo Signs

22. Teenagers

23. Women

24. Bread and Soup Lines

25. Effects • 25% unemployed • 34 million people belonged to families without a job/income • 2 million migrants • Women/blacks were fired first • Men abandoned families • Teens were asked to leave – parents couldn’t support them

26. Hoovervilles

27. Hoovervilles • Homeless families used cardboard and packing crates to create shelters • Camps became known as Hooverville's • Criticized President Hoover

29. Hoover Responds to the Great Depression • Conservative • Asked for companies to cooperate voluntarily • Reconstruction Finance Corporation

30. Hoover • “Economic depression cannot be cured by legislative action or executive pronouncement. Economic wounds must be healed by the action of the cells of the economic body - the producers and consumers themselves.”

31. “The function of the Federal Government in these times is to use its reserve powers and its strength for the protection of citizens and local governments by supporting our institutions against forces beyond their control. It is not the function of the government to relieve individuals of the responsibilities to their neighbors, or to relieve private institutions [charities] of their responsibilities to the public, or of local government to the States, or of State governments to the Federal Government”

32. Bonus Army • In 1924, Congress approved a bonus for WWI vets • Over 20,000 veterans marched to Washington D.C. to ask for early bonuses • Camped out in D.C. • Hoover had federal troops disperse veterans • http://www.youtube.com/watch?v=xkmo4ygPTjc

33. 1932 Election • Hoover vs Franklin Roosevelt (FDR) • Roosevelt blamed Hoover for the depression • Franklin 57.4% of the votes • Hoover 39.7% of the votes

34. The Dust Bowl

35. The Dust Bowl Farmers struggled even before the Depression. • The Dust Bowl devastated farmers in the Midwest. • During WWI, farmers did well, because the war created a demand for farm produce and raised farm prices. • Farmers raised a lot of crops, but many of them did not understand crop rotation method (invented by George Washington Carver) and the crops used up many of the nutrients in the soil. These methods left the land dry, useless, and uncovered by crops.

36. The Dust Bowl • Midwest has wet/dry cycles. • Beginning in 1931, the region entered into a dry cycle • Year after year, farmers continued to plant wheat and cotton despite the failure of crops • Deep plowing killed the prairie grassed that held together the topsoil • Winds soon began blowing the dry topsoil away

37. The Dust Bowl During the early ‘30s, the Midwest also experienced a drought (lack of rain), which made the soil drier. • The Dust Bowl was a series of windstorms that carried the soil high in the airand created massive dark clouds of dust. • Some of these storms buried entirehomes and cities. The Dust Bowl forced many Midwest farmers to leave and move to other parts of the country. Like California!

38. The Dust Bowl

39. Okies