The Great Depression began after the stock market crash of 1929 and lasted throughout the 1930s. Several factors contributed to the crash and prolonged economic crisis, including overproduction, uneven income distribution, declining exports, mistakes by the Federal Reserve, and droughts that caused the Dust Bowl. As unemployment rose above 25%, many Americans lost their homes and lived in shantytowns. President Hoover did not take action to help citizens, worsening the crisis until Franklin D. Roosevelt was elected in 1932 on a platform of reform.
The Great Depression: Causes and Life During the Era
1. AP
The Great Depression
After Coolidge decided not to run for
President, Herbert Hoover ran on the
Republican ticket with slogan:
“Two cars in every garage and a
chicken in every pot”
2. Causes of the Great
Depression
• #1
Stock Market Crash
Why did the Market Crash?
Bull market vs Bear Market
5. • In the 1920’s it was a Bull market. Many
people bought stocks on margin-they
borrowed money to buy stocks and
only put a small amount down as a
payment.
6. • For example: With $1,000, an investor
could buy $10,000 worth of stock. The
other $9,000 would come as a loan
from a stockbroker—he would hold the
stock as collateral.
• As long as the price kept rising buying
on margin was safe because you
always made money. It only took a
short time for prices of stocks to rise
and investors could pay back loans.
7. The Great Crash
• The bull market lasted only as long as
investors continued putting new money
into it. By the latter half of 1929, the
market was running out of new
customers. Professional investors
sensed danger and began to sell off
their holding. Prices slipped. Others
followed and prices fell even more.
8. Black Tuesday
• October 29, 1929, prices took the
steepest dive.
• If you had $1000 on 3 September 1929, it
would have been worth only $108.14 (89.2%
loss) by July 8th, 1932. Full recovery of this
loss didn’t occur until 1954, 22 years later
9.
10. Bank Failures
• The Crash hurt banks in two ways:
• ----banks had lent money to investors
• ----banks had invested in the Stock
Market
• Banks lost tons of money—people
panicked and ran to their banks to get
their money out of savings—money
was gone!!!!
12. • During the first two years of the
Depression, more than 3,000 banks
were forced to close
13. Causes of the Depression
#2
Overproduction of goods:
Efficient machinery increased the
production capacity of both factories
and farms. Low consumption of goods
led manufacturers to cut production
and lay off employees.
14. A vicious cycle
Over
Lay off
produce
workers
goods
Lay off No money
more to buy
workers goods
Produce
fewer
goods
15. Causes of the Depression
• #3
• Uneven distribution of Income
• In 1929 2/3 of families earned less than
$2,500 a year, leaving them little
expendable income.
16. Causes of the Depression
• #4
• Decline in Export Sales:
• Hawley-Smoot Tariff put large tariffs
on imports. Americans did not buy
foreign goods because they were too
expensive and foreigners did not buy
Americans goods as well.
17. Causes of the Depression
• #5
• Mistakes by the Federal Reserve:
• During the 1920’s the Federal Reserve
made money very cheap to borrow
(low interest rates) but after the crash
they rose the interest rates—tightening
up credit.
18. Life During the Depression
• The Depression grew steadily
worse. In 1932 some 9,000
banks had failed and over
30,000 companies went out of
business. By 1933 ¼ or 25% or
1 in 4 people of the workforce
were unemployed.
19. • President Hoover believed
that government should not
interfere in the economy.
His reputation suffered as
his administration did
nothing for the people.
23. Hobos
• In search of work or a better life, many
men began to wander around the
country, walking, hitchhiking “riding
the rails”.
• They developed intricate symbols that
they wrote on trees, fences, or building
to warn or inform other hobos.
24.
25.
26. Because President Hoover did
nothing his name became
synonymous with the depression
• http://youtu.be/sfylLnHjcu0
• http://youtu.be/TZz7mwvmm7A
27. • Hoovervilles were shantytowns
• Hoover blankets were newspapers
• Hoover flags were empty pockets
29. • Farmers soon faced a new disaster.
Beginning in 1932, a terrible drought
struck the Great Plains. The soil dried to
dust and winds whipped the arid earth
up, blowing it around and blackening the
sky for hundreds of miles. Dust buried
crops and livestock and piled up against
farmhouses like snow. No matter how
carefully farm families sealed their home,
dust covered everything in the house.
30. • Film about the dust bowl
• http://youtu.be/csnY0Tnvdj8
• http://youtu.be/xAQsGdcLl4c
31. • Many families packed all their
belongings into old cars or trucks and
headed west to California, hoping for a
better life. Since many migrants were
from Oklahoma, they became known
as “Okies”. John Steinbeck
immortalized their story in his best
seller the Grapes of Wrath.
• http://youtu.be/jE6kKwUjb_c
32. Escaping the Depression
• Ordinary citizens often went to the
movies to escape to see people who
were rich, happy and successful. In the
early 1930’s:
• Animal Crackers-Marx Brothers
• http://youtu.be/8CQHOCsOfWw
• Walt Disney’s Snow White and the
Seven Dwarfs
• Gone with the Wind
33. Bonus Marchers
• In appreciation of the World War I service
of American soldiers and sailors,
Congress in 1924 had enacted a $1,000
bonus for each veteran, to be distributed
in 1945. Many veterans marched to
Washington D.C. to ask that they receive
their bonus early. Over 1500 camped out
near the White House. President Hoover
sent the police to clear them out. When
that didn’t work, he called in the Army.
Soon unarmed veterans were on the run
with 700 soldiers at their heels. Their
campsite was buried to the ground. It was
a public fiasco for Hoover.