Do Now: Page 705 both “Thinking Critically” Questions

Depression: Unemployed: The Unemployed Union: marchers south on Broadway: Camden New Jersey typical scene reflecting large population of unemployed in desperate need of work and looking for jobs. (Circa 1935)

CHAPTER 21 THE GREAT DEPRESSION

Section 1 Causes of the Depression

HOOVER WINS 1928 ELECTION

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

Problem Plague Agricultural Sector Rural farmers produced huge surpluses of

food that depressed prices. Farmers could not afford to buy goods or

repay their loans.

Wealth is Distributed Unevenly While factory

workers’ wages rose 8%, factory output increased by 32%.

As a result, worker incomes rose modestly, while rich investor incomes skyrocketed

Easy Credit Hides Problems Easy credit and

installment buying lead people to purchase goods they can’t pay for.

By 1929, Americans racked up more than $6 billion in personal debt — more than double the 1921 level.

- What is Wall Street?

- Why do people buy stocks and shares?

- Wall Street is where all the stocks and shares of every kind can be bought and sold.

The main reason people buy stocks and shares are because they think that what they invest would multiply and they would gain a lot of income.

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The Stock Market Crashes Until September 1929, the

stock market continued to rise.

Many people borrowed money to buy stock, assuming prices would continue to go up. - They would then make more money and then would return it.

Some economists feared that stocks were over-priced

STOCK MARKET HANDOUT

- In 1929, Wall Street crashes

- On October 29th, the stock market went into a free fall as investors tried to sell at any price.

- prices plunge- By mid Nov.

stockholders lose $30 billion

- stock losses exceed cost of US involvement in WWI

DO NOW: IN NOTESOnly the “Life in the 30s side

American Can 182 cents 86 centsAnaconda Copper 162 cents 70 cents

Electric Bond and Share 204 cents 50 centsGeneral Electric 396 cents 168 centsGeneral Motors 182 cents 36 cents

New York Central 256 cents 160 centsRadio 505 cents 28 cents

United States Steel 279 cents 150 centsWestinghouse E&M 313 cents 102 cents

Woolworth 251 cents 52 cents

Companies3rd September 13. Nov 1929 1929

The stock market crash didn’t start the Great Depression ,it merely hastened (sped up) its

arrival.

• In growth periods, workers are hired, wages rise, and demand for products increases.

• In contraction periods, workers are fired, wages drop, and demand for products falls.

The Great Crash was a hallmark of the nation’s business cycle. The economy periodically grows and then contracts.

The Great Depression Begins The Great Depression is generally

defined as the period from 1929 – 1940 in which the economy plummeted and unemployment skyrocketed

The Banks COLLAPSE After the crash,

many Americans panicked and withdrew their money from 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

• Many people

lost their life

savings.

Banking System Breakdown• When the stock market crashed, people could not repay their

loans to the bank.• Therefore, banks couldn’t give depositors their money and

banks closed.

Businesses Close and UNEMPLOYMENT SOARS

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

90,000 businesses went bankrupt Unemployment leaped from 3% in 1929 to

25% in 1933

HAWLEY-SMOOT TARIFF The U.S. was not the only country gripped by

the Great Depression Much of Europe suffered throughout the 1920s In 1930, Congress passed the toughest tariff

(tax on imports) in U.S. history called the Hawley- Smoot Tariff

HAWLEY-SMOOT TARIFF (con’t)

It was meant to protect U.S. industry yet had the opposite effect

Other countries enacted their own tariffs and soon world trade fell 40%

The Depression Goes Global

As international trade falls, a global drop in business leads to a worldwide

depression.

CAUSES OF THE GREAT DEPRESSION Tariffs & war debt

policies U.S. demand low, despite

factories producing more Farm sector crisis

Easy credit Unequal distribution of

income