1. The Great Depression Begins
U.S. History

2. Causes of the Great Depression
1) Problems in Industry -
Over-production of goods.
Demand for many goods fell,
factories laid off workers…
2) Problems in Agriculture -
Over-production by farmers
caused crop prices to fall.
Many farms could not make a profit and foreclosed upon…

3. Causes of the Great Depression
3) Increased Consumer Debt -
Many Americans lived beyond their means.
Easy credit (buy now, pay later) on the installment plan increased debt for families.
Many cut back on spending…
4) Uneven Income Distribution –
Not all Americans shared in prosperity of the 1920s.
During 1920s, income of wealthiest Americans rose much more than the average family.
Poor got poorer,
could not afford to buy all the goods factories produced…

4. Causes of the Great Depression
5) Buying on Margin and Speculation –
speculation –
buying stocks to make a quick profit & ignoring risks.
buying on margin –
paying a small percentage of stock’s price as a down payment & borrowing the rest from a broker.
Brokers borrowed money from banks.
Unrestrained buying & selling
fueled market’s upward spiral.
Rising prices did not reflect companies’ worth.

5. Causes of the Great Depression
6) Fed. Reserve’s Monetary Policy
Federal Reserve (created by Wilson in 1913)
served as the nation’s central bank
loaned money & set interest rates for other smaller banks
Fed. Reserve concerned about “speculation”
chose to raise interest rates on loans in 1928
to discourage “bad” investing
bring down inflated stock prices.
Result:
Slowdown in economic activity,
together with high interest rates,
Combined, the most important source of the stock market crash that followed October 1929.

6. Hoover Becomes President (1928)
Republicans choose Hoover as presidential candidate in 1928.
Popular, head of Food Administration during WWI.
“rugged individualism”
believed people could solve their own economic problems
government should not meddle in those problems.
Herbert Hoover wins ‘28 election.
President Herbert Hoover

7. Stock Market Crash Early September 1929 stock prices began to fall.
Some investors quickly sold their stocks and pulled out (ex: Joseph Kennedy).
October 1929 – Black Tuesday
the bottom of the market fell out.
Shareholders frantically tried to sell before prices plunged lower.
Millions could not find buyers.
People who had bought on credit were stuck w/ huge debts.
Others lost most of their savings.
Stock market crash signaled beginning of the Great Depression.

8. Bank & Business Failures
After the crash,
people panicked and withdrew their money from banks.
Some could not get their $$ because banks had invested it in the stock market.
By 1933,
11,000 of nation’s 25,000 banks had failed.
Millions of Americans lost their savings accounts.
90,000 businesses went bankrupt.
Unemployment rose to 25% by 1933.

9. Depression in the Cities
People lost jobs,
evicted from homes,
ended up in the streets.
Some slept in parks or sewer pipes, wrapped in newspaper to keep warm.
Others used scrap materials to build shacks.
Shantytowns –
little towns consisting of shacks, sprang up.
Soup kitchens offering free or low cost food and bread lines were common.

10. Unemployment Lines

11. Shantytowns or “Hoovervilles”

12. Depression in Rural Areas
Farmers had one advantage over city dwellers –
most could grow food for their families.
However, with falling prices and rising debt,
thousands of farmers lost their land.
By 1932, 400,000 farms were lost to foreclosure.

13. The Dust Bowl Dust Bowl occurred in the Great Plains states.
Caused by drought & decades of harsh farming.
Removed the protective layer of prairie grasses which held down the topsoil.
Windstorms scattered millions of tons of topsoil and sand.
Thousands of farmers were evicted.
Many migrants (known as Okies) followed Route 66 to California to work as farmhands.

15. The Dust Bowl

16. Opinion Turns Against Hoover
Experts believed
depressions were a normal part of the business cycle.
Best to do nothing and let economy fix itself.
Americans grew more frustrated by the depression.
Hoover held firm to his belief in “rugged individualism” and
refused to support direct relief or govnt welfare.
Hoover seen as a cold & heartless leader.
Shantytowns called “Hoovervilles”,
newspapers called “Hoover blankets”,
empty pockets turned inside out called “Hoover flags”.

17. Hoover’s name became an object of ridicule

18. Hoover’s Attempts to Ease the Depression (cont)
Mexican Repatriation
In order to free up jobs for Americans, Hoover authorized the deportation of anywhere from 200,000 – 300,000 Mexicans.
Over the next 10 years, the Mexican population in the US dropped by 40%.
Later, President Franklin Roosevelt ended federal support of deportations, but many state and local governments continued with their efforts.
Estimates now indicate that approximately 60 percent of the people deported were children who were born in America and others who, while of Mexican descent, were legal citizens.