The Great Depression

Chapter 22 Sec 1&2

• Many American industries weren’t making large profits.– Steel, railroads, cars, construction,

coal mining, lumber.

• Housing sales stopped. • So what, why do I care!!• What do you need to put in a new house?

Causes of the Great Depression

• 1. American policies and tariffs cut down the foreign market for U.S. goods.

• 2. Overproduction by farms.– Annual Farm Income

• 1919= $10 Billion• 1921= $4 Billion

• 3. Overuse of Credit- people were in debt.– They buy less goods

• 4. Unequal Distribution of Wealth. – 70% of the nation made less

than $2500 a year.– ½ of homes had electricity.– Couldn’t afford consumer goods.– While the income of wealthiest

1% increased by 25%.

In the late 1920’s on farms…• Overproduction made

prices fall.• Farmer got loans for

machines and produced more. (sound familiar)

• Price fell more. • Farmers defaulted on the

loans and s lost farms.• Rural banks that gave loans

failed.

• Peoples received lower wages.

• They still wanted the nice things they were used to having, so they used…

• CREDIT- Why is this dangerous?

• When the debt became too big, people stopped spending.

• Election of 1828: Herbert Hoover Wins!!

• Many invested their wealth in the Stock Market

• People were engaging in speculation.– Seeking quick return investments– Ignoring the risk involved

• Buying on Margin= Buying stocks with borrowed money. – If stock prices fell, they could not pay off the loans

Then….

What was Black Tuesday?

On October 29th 1929, the stock market crashed.

Investors hurried to sell stocks before they were worthless.

$30 billion dollars in stock became worthless overnight.

16.4 million shares of stocks were sold that day. Others could not be sold and became worthless.

The Effects of the Stock Market Crash• Americans panicked took

money out of banks.• Banks lost money and couldn’t

pay customers• By 1933 11,000 of 25,000

banks n the U.S. had failed.

• 9 million savings accounts disappeared.

• 90,000 businesses closed. • 25% of workers were out of

work by 1933.• Those with jobs had pay cuts.

More Results!!!(These are from Ch 14 sec 2)

• Shanty towns

• Soup kitchens/Breadlines– Run by ?

• Increase in Racism

• 400,00 farms lost to foreclosure

• “The Dust Bowl”– Drought in the Plain states

• Hobos (1919-1929)• 24,647 killed for tresspassing• 27,171 injured on railroad

property

• Okies• 2600 Schools shut down

• 300,000 studen

• Suicide rate up 30%

Americans were:Americans were:

strugglingdemoralizedwithout hope

And finally…

The government wanted a quick solution so they passed…

• The Hawley Smoot Tariff act.– It created a tariff on foreign goods.

• It made things worse.– Other countries stopped buying our

stuff too.