The Great The Great DepressionDepression

The period of time The period of time

from 1929-1941 in which thefrom 1929-1941 in which the

economy faltered and economy faltered and

unemployment soared.unemployment soared.

Causes of the DepressionCauses of the Depression

1.Crisis in the farm sector

2.Unequal Distribution of Wealth

3.Availability of Easy Credit

4.Tariffs and War Debt Policies

5.Stock Speculation

Agricultural ProblemsAgricultural Problems

Farmers: ¼ of American workforce (25%)Farmers: ¼ of American workforce (25%)Post WWI demand for agricultural goods fell Post WWI demand for agricultural goods fell sharplysharply– Prices for crops Prices for crops plummetedplummeted– Could not meet Could not meet debtsdebts– Faced foreclosuresFaced foreclosures– Lost land, Lost land, equipment and equipment and

livestocklivestock

Uneven Distribution of WealthUneven Distribution of Wealth

Uneven distributionUneven distribution– 65% under $1,99965% under $1,999– 29% $2,000- $4,00029% $2,000- $4,000– 5% $5,000- $9,9995% $5,000- $9,999– 1% $10,000 and over1% $10,000 and over

Easy CreditEasy Credit

1929 consumer debt was more than $6 1929 consumer debt was more than $6 BillionBillion““Credit” was new andCredit” was new and

people started spending people started spending irresponsiblyirresponsibly

Too many usedToo many used credit to buy the smaller credit to buy the smaller thingsthings

Stock SpeculationStock Speculation

Stock Speculation: “gambling” in the stock Stock Speculation: “gambling” in the stock market which unrealistically raised stock prices market which unrealistically raised stock prices

Black Tuesday: October 29, 1929Black Tuesday: October 29, 1929– Normal business cycle ledNormal business cycle led

to falling stock prices in earlyto falling stock prices in early

OctoberOctober– Investors sold and pulled Investors sold and pulled

money out of market and money out of market and

billions of dollars were lostbillions of dollars were lost

Banking CollapseBanking Collapse

Stock market crash led to people pulling Stock market crash led to people pulling their money out of the bankstheir money out of the banks

So many bank runs occurred that in 1929 So many bank runs occurred that in 1929 641 banks failed, in 1930 1,350 banks 641 banks failed, in 1930 1,350 banks failed, and in 1931 1,700 banks failedfailed, and in 1931 1,700 banks failed

Bank failures were also caused by the Bank failures were also caused by the Federal Reserve limiting the money supply Federal Reserve limiting the money supply which left banks without enough currencywhich left banks without enough currency

The Great Depression BeginsThe Great Depression Begins

The stock market crash and less The stock market crash and less consumer spending led to the failure of consumer spending led to the failure of many businessesmany businesses

Businesses responded by laying off Businesses responded by laying off workers and cutting wagesworkers and cutting wages

By 1933 25% of workers hadBy 1933 25% of workers had

lost their jobslost their jobs

TariffsTariffsHawley-Smoot Tariff: raised prices on foreign Hawley-Smoot Tariff: raised prices on foreign imports so that they could not compete in American imports so that they could not compete in American

marketsmarketsEuropean tariffs raised on imports from AmericaEuropean tariffs raised on imports from America

The tariffs created closedThe tariffs created closed markets and worsenedmarkets and worsened the depression.the depression.

Global DepressionGlobal Depression

Europe depended on the U.S. for loans to Europe depended on the U.S. for loans to pay their war debts but the U.S. couldn’t help pay their war debts but the U.S. couldn’t help

any longerany longer

Europe’s businesses failed and banks collapsedEurope’s businesses failed and banks collapsed

Hard TimesHard Times

Bread Lines: line of Bread Lines: line of people waiting for people waiting for food handouts from food handouts from charity or public charity or public changeschanges

Unemployment and Unemployment and cut hours forced cut hours forced families to hard timesfamilies to hard times– Families starvedFamilies starved

PovertyPovertyWhole families descend Whole families descend into hunger and into hunger and homelessnesshomelessnessMany sold most of their Many sold most of their belongings belongings Hoovervilles: makeshift Hoovervilles: makeshift shantytowns set up by shantytowns set up by homeless on public land homeless on public land (Central Park). Used (Central Park). Used scrap wood or cardboard scrap wood or cardboard to build shelter.to build shelter.

Dust BowlDust Bowl

Migration from the dust Migration from the dust bowl to the citybowl to the city– Okies: dust bowl refugeesOkies: dust bowl refugees– 800,000 left the Great 800,000 left the Great

Plains Plains

Central and Southern Great Central and Southern Great Plains during the 1930’sPlains during the 1930’s– Suffered drought and massive Suffered drought and massive

dust storms (“dirty 30’s”)dust storms (“dirty 30’s”)

Family LifeFamily Life

Men suffered in Men suffered in

shame and sometimesshame and sometimes

deserted their familiesdeserted their families

Birthrates plummetedBirthrates plummeted

African AmericansAfrican Americans

African Americans were hit the hardestAfrican Americans were hit the hardest– 50% unemployment50% unemployment

Mexican AmericansMexican Americans

Encouraged/forced to Encouraged/forced to repatriate (become repatriate (become Mexican citizens Mexican citizens again)again)

Faced discrimination in Faced discrimination in southwestsouthwest

Pushed out of the U.S.Pushed out of the U.S.

Hoover’s ResponseHoover’s Response

Cautious responseCautious responseHands-off policy- thought it Hands-off policy- thought it

was a natural part of the was a natural part of the business cyclebusiness cycle

Called for lower interest rates, reduce Called for lower interest rates, reduce taxes, create public-works programstaxes, create public-works programsAsked wealthy Americans to give to Asked wealthy Americans to give to charitycharity

Hoover’s Failed PlanHoover’s Failed Plan

Hoover realized his plan wasn’t working so he Hoover realized his plan wasn’t working so he decided to reverse course and use federal decided to reverse course and use federal money to fight depressionmoney to fight depression

Reconstruction Finance Reconstruction Finance

Corporation: gave Corporation: gave

billions in loans to billions in loans to

railroads, big railroads, big

business, and banksbusiness, and banks

Plan Cont’d…Plan Cont’d…

Trickle-Down Economics: Trickle-Down Economics: – Belief that money lent to banks Belief that money lent to banks

and businesses will trickle and businesses will trickle

down to consumers (it didn’t!)down to consumers (it didn’t!)

Hoover Dam: public works Hoover Dam: public works program in 1930program in 1930– Brought much needed employment Brought much needed employment

to Southwestto Southwest

Hoover ProtestHoover Protest

Americans called for change, and Americans called for change, and protested against Hooverprotested against Hoover

Hoover lost the election in 1932 to FDRHoover lost the election in 1932 to FDR

Bonus ArmyBonus Army

WWI veterans marched WWI veterans marched on Washington in 1932on Washington in 1932– Demanding payment of Demanding payment of

bonus promised by bonus promised by CongressCongress

Hoover ordered them Hoover ordered them out: MacArthur out: MacArthur RespondedResponded– Drove them out with tear Drove them out with tear

gas and bayonetsgas and bayonets

Result doomed HooverResult doomed Hoover