21.1 - Causes of the Great Depression

Objectives

• Discuss the weaknesses in the economy of the 1920s.

• Explain how the stock market crash contributed to the coming of the Great

Depression.

• Describe how the Great Depression spread overseas.

Terms and People

• Herbert Hoover – former Secretary of Commerce and Republican candidate for

President in 1928

• speculation – when investors gamble that stock prices will rise

• Black Tuesday – October 24, 1929, the day the stock market crashed

• business cycle – periodic expansion and contraction of the economy

Terms and People (continued)

• Great Depression – The collapse of the United States and world economies beginning in 1929

• Hawley-Smoot Tariff – high protective tariff passed in June 1930 that contributed to a

worldwide depression

http://www.youtube.com/watch?v=eih67rlGNhU

Brother Can You Spare a Dime?

THE GREAT DEPRESSION

Was brought on by a chain of events:

LET’S TAKE A LOOK!REMEMBER THE 1920S?

• THE ECONOMY WAS BOOMING

EVERYONE WAS

WHY ARE THEY HAPPY?Because life is GOOD!

• Business is growing…..

• Stocks are up…companies grow and make more products. They build more factories and hire more people.

Life is good!!!!!!

• People have jobs. They have more money to spend. They buy more products, homes, cars, etc..

But the good times didn’t last………

WHY?

• Something went wrong!!!!

• spiraling down from a BOOM economy to a BUST economy

OVERCONFIDENCE

• People believed that the stock market will keep going up and they will make lots of money. They invest in the stock market.

But stocks went down instead of up. Peoplestarted to lose confidence in the stock market and they began to sell off their

stocks making the prices go even lower.

Buying On Margin

Buying on margin is when people borrow money from the banks to invest in the stock market.

They plan to pay the banks back when the price of stock goes up and they make a BIG profit…….But the stocks went down and people could not pay back their loans.

BANK CRISIS

* Banks start to go out of business. They have no money because people did not pay back their loans. People’s bank accounts disappear over night. People flock to get their money out of the banks but the banks are out of business.

OVERPRODUCTION

• Companies made more goods than people could buy. Farmer’s grow more food than people can eat.

• So…………..

* Companies closed up

* Workers got laid off

THE PARTY’S OVER!

WHEN?

OCTOBER 29, 1929 AKA

BLACK TUESDAYTHE DAY THE STOCK MARKET CRASHED AND

THE GREAT DEPRESSSION BEGAN!

THE STOCK MARKET CRASHES

• Stock prices fall. People sell off their stock to cut their loses. The economy continues to get worse……

•

The stock market crash didn’t start the Great Depression by itself. Instead, it quickened

the collapse of the U.S. economy.

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

At a Glance

The great depression

Companies closePeople get

Laid off

Banks call in loans and begin to fail

People have no money, no jobsand the economy continues

To spiral down and get worse

Stock Market Crashes

21.2 - Effects of the Depression

• Examine the spread of unemployment in America’s cities.

• Discuss the impact of the Great Depression on rural America.

• Explain the human and geographical factors that created the Dust Bowl.

Objectives

Terms and People• bread line – where charities or local agencies gave

food to the poor

• Hooverville – term used to describe makeshift shantytowns set up by homeless people during the

Great Depression

• tenant farmer – rural farmers who lost their land but stayed on to work for larger landowners

• Dust Bowl – millions of acres in the Great Plains that were destroyed when dust storms blew away

the soil

Terms and People

• Okies – Great Plains farmers forced off their land by the Dust Bowl

• repatriation – policy whereby local, state, and federal governments encouraged or

coerced Mexican immigrants—some of them U.S. citizens—to return to Mexico

Between 1921–1929, the unemployment

rate never rose above 4 percent. By 1933,

however, it was near 25 percent.

Those who managed to keep their jobs

had their wages and

hours cut.

Few Americans understood the causes of the Great

Depression, but everyone felt the

impact.

Life in the GREAT DEPRESSION

• 1 IN 4 People are unemployed (25%)• Many people are evicted. Some live in

shantytowns called Hoovervilles, named after President Hoover.

• People who have no food wait on breadlines

• Many companies go out of business• Banks fail (1300 in the first 6 months of the Great Depression)

RESULTS……..

People….• Lose their jobs• Can’t pay their bills• Can’t pay their rent• Can’t buy food• Lose all their money in the stock market• Have no money in the banks

THIS IS HAPPENING ON A MASSIVE SCALE

On a Massive Scale

• People are broke, hunger, and homeless………

People look to government for help……….

WHAT WILL GOVERNMENT DO?

The remaining farmers on the

Great Plains suffered a terrible drought, which led to the Dust Bowl.

Dust storms destroyed millions

of acres of farmland.

• Farmers had dug up thick prairie grasses to plant wheat, so there was nothing to hold the

soil in place.

• Winds traveling as fast as 100 mile-per-hour winds blew dust clouds 8,000 feet tall in

Oklahoma, Texas, New Mexico, and Colorado.

• Wildlife and farm animals suffocated in the choking winds.

Millions of tons of topsoil were blown away in giant dust storms.

Family life was hurt by the Great Depression.

Some teens ran away, and families broke up.

America’s birthrate fell to its lowest level on record.

Those who were still working felt guilty because friends and relatives were unemployed.

Those who still had jobs lived in fear that their next paycheck would be their last.

Minorities suffered even more during the depression.

• As Okies moved west to find work, Mexicans and Mexican Americans faced

fierce competition for jobs.

• Local governments urged repatriation for Mexican

Americans.

• Even in good times, African Americans were

“last hired and first fired.”

• Many were thrown off southern farms where

they were sharecroppers.

21.3 - Hoover’s Response to the Great Depression

• Discuss how Hoover’s initial conservative response to the depression failed.

• Explain the changes in the President’s policies as the crisis continued.

• Describe how Americans reacted to Hoover’s relief programs.

Objectives

Terms and People

• localism – policy whereby problems are best solved at the state and local level and not by the

federal government

• Reconstruction Finance Corporation – created in 1932 to lend cash to investors to stimulate the

economy

• trickle-down economics – economic theory that held that money lent to large banks and

corporations would in turn be invested in small businesses which would hire more workers

Terms and People (continued)

• Hoover Dam – huge public works project on the Colorado River that provided jobs, water

for irrigation, and power

• Bonus Army – group of World War I veterans who marched on Washington, D.C., in 1932, to demand early payment of a bonus promised

them by Congress

• Douglas MacArthur – supervised the forced removal of the Bonus Army, which angered

many Americans

Why did Herbert Hoover’s policies fail to

solve the country’s economic crisis? As the Great Depression spread misery across

America, Herbert Hoover struggled unsuccessfully to respond to the nation’s

problems.

As a result of Hoover’s failed response, in 1932 Americans would turn to a new leader and

increased government intervention to stop the depression.

Herbert Hoover did not cause the Great Depression, but Americans looked to him

to solve the crisis.

He tried a number of different approaches, but in the end he

failed to discover the right formula for stopping the

crisis.

The RFC gave billions of dollars to banks and

large businesses.

The idea was that they would lend to, and

invest in, struggling businesses who would hire workers and thus end the depression.

The RFC failed when businesses did not hire more workers.

In 1932, Hoover urged Congress to

create the Reconstruction

Finance Corporation (RFC). The RFC

employed a policy known as trickle-down economics.

One policy that did succeed was the construction of

Boulder Dam, (later renamed Hoover Dam) across the

Colorado River.

Started in 1930, the huge dam provided power for more than a million people and irrigation

for farm land, and brought needed jobs to the Southwest.

With Hoover’s failures, Americans looked to a new leader for hope :

Franklin Delano Roosevelt