Great Depression:

The Good Times are Coming

to an End

SSUSH17: The student

will analyze the causes &

Economic Troubles on
Horizon
While manythe
European
nations
suffered a post-WWI recession,
the United States did not

American businesses, farms, &

banks had profited greatly
during the war by selling
products to European
countries
However, by 1929, the
economic growth for the U.S.
was over & the Great

Industrial
Overproduction
Industries
had increased their
productivity however,
eventually there was a surplus
of supplies

As a result, important
industries (railroad, textile,
steel) barely made any profit
Railroads lost business due to
new forms of transportation
(automobile)
Mining & lumbering (which had

Farmers Need Help

During WWI, prices rose & international

demand for crops (wheat & corn)
increased dramatically
Farmers had planted more & taken out
loans for land & equipment
However, demand fell after the war, and
crop prices declined by 40% or more
Farmers increased production in the
hopes of selling more crops, but this only
depressed prices further

Consumers Have Less

Money
tofell,
Spend
As farmers
incomes
they bought

fewer goods & services, but the problem

was larger

By the late 1920s, Americans were

buying lessmainly b/c of rising prices,
lower wages, & overbuying on credit
Production had also expanded much
faster than wages, resulting in an everwidening gap between the rich and the
poor

Living on Credit

Although many Americans

appeared to be prosperous
during the 1920s, in fact they
were living beyond their
means
They often bought goods on
credit (agreement where
consumers agreed to buy now
and pay later for purchases)
often in the form of an
installment plan (usually in
monthly payments) that

Uneven Distribution of
Income
During the 1920s,
the rich got richer and
the poor got poorer

1920 1929 income of the wealthiest

1% of the population increased by
75%.............compared w/ a 9% increase
for Americans as a whole
More than 70% of Americas families
earned less than $2,500 per year
(considered the minimum amount needed
for a decent standard of living)
Even families earning 2xs that much

Election of 1928

Herbert Hoover
(Republican) vs. Alfred
Smith (Democrats)
Since the previous
presidents during the
prosperous 1920s (Harding
& Coolidge) were
RepublicansHoover made
sure to point this out in his
campaign
Americans believed him

Get Rich Quick

Attitudes
People were buying
stocks & bonds
on the chance of a quick profit
while ignoring the risks

Many began buying on margin

Paying a small % of a stocks price as

a down payment & borrowing the rest

With easy money available to

investors, the constant cycle of
buying & selling fueled the
markets upward spiral
Govt did little to discourage this

Stock Market Crashes

Early September 1929 stock

prices peaked and then fell
Confidence in the stock market
started to waver, and some
investors quickly sold their
stocks and pulled out
Oct. 24, 1929 the market
took a plunge

Panicked investors sold their

shares

Oct. 29, 1929 Black

Financial Collapse

The stock market crash signaled the

beginning of the Great Depression
(1929-1940 when the economy
plummeted & unemployment
skyrocketed)

Crash alone did not cause the Great

Depression, but it quickened the collapse of
the economy & made the depression more
severe

Bank Failures

After the crash, many

people panicked &
withdrew their money
from banks

But some couldnt get their

money b/c the banks had
invested it in the stock
market

1929 600 banks closed!

By 1933 11,000 of the

nations 25,000 banks had
failed

Business Failures

Great Depression hit businesses hard too

1929 1932 the amount of goods &
services was nearly cut in from $104
billion to $59 billion
Approx. 90,000 businesses went bankrupt

Once-successful automobile & railroad

companies were some of these businesses

As the economy plunged, millions of

workers lost their jobs

Unemployment increased from 3% (1.6

Hoovers Response to
Depression
While in office,
Herbert Hoover
attempted to diminish the impact of
the Great Depression

Created work relief programs (including

the construction of the Golden Gate Bridge
and the Boulder (later called Hoover) Dam

He attempted to slow home

foreclosures by asking the federal govt
to guarantee home loans

However, his programs appeared to the

public as too little too late

Worldwide Shock Waves

U.S. was not the only country affected

by the Great Depression
Much of Europe had suffered
throughout the 1920s (trying to
recover from WWI with high war debts)

Germany had to pay war reparations to the

Allied Powers for the damages of the war

Great Depression compounded these

problems by limiting Americas ability
to import European goods
This made it difficult to sell American

Depression in the Cities

In cities across the U.S.,

people lost their jobs, were
evicted from their homes, and
ended up in the streets
Some slept in parks or sewer
pipes, wrapping themselves in
newspapers (Hoover
Blankets)
Others built makeshift shacks
out of scrap materialspeople
called these little towns of

Depression in Rural
Areas
Life in rural areas
was hard, but it did
have one advantage over city life most
farmers could grow food for their families

With falling prices & rising debt, though,

thousands of farmers lost their land
1929 -1932 about 400,000 farmers
were in foreclosure

Many farmers turned to tenant farming

Dust Bowl

A symbol of overproduction &

contributing factor to the economic
decline of the 1930s
Originated in the southern plains of the
U.S.
First, farmers arrived at the end of the
1800s drawn there by the Homestead
Act & the rich soil of the region
Farmers in the region talked of the rich,
fertile soil & were soon producing a lot
of crops (wheat, corn, cotton) &

Farmers continued to plant wheat &

cotton despite the failure of crops year
after year
Winds soon began blowing the dry top
soil awayforming dust clouds thousands
of feet high & wide
Dust storms & drought lasted for 10
years!
Although 2/3rds of families remained in
the region, a large group of sharecroppers
& tenant farmers left the farms of
Oklahoma, Texas, & eastern Colorado &

Bonus Army March on

Spring 1932 between 10,000-20,000 WWI veterans &
Washington
their families arrived in Wash D.C.
Called themselves the Bonus Army
Protesting that they had not been adequately
compensated for their wartime service

Congress had approved in 1924 a bonus payment

to WWI veteranshowever it wasnt supposed to be
paid out until 1945

The veterans were demanding it now!

Hoover thought that the Bonus Army were communists

and people with criminal records rather than veterans

Hoover opposed the legislation, but said the

marchers could protest peacefullyhe even provided

June 17th Senate voted down this

bonus payment bill, so Hoover then
called the marchers to leave
Washington
Most did leave, but approx. 2,000
refused to leave
Pres. Hoover was afraid the angry
protesters would become violent, so he
decided to call in the national guard to
forcibly disband the protestors
National guard ended up gassing more
than 1,000 peopleincluding killing an