1. The Great Depression

2. Causes Bank Failures Business Failures Unemployment Income & Spending
Stock Market Speculation

3. Bank Failures Banks had invested in the Stock Market
Couldn’t get the money they invested in the stock market back after “Black Tuesday”.
600 closed
11,000 of 25,000 failed by 1933

4. Bank failures

5. Business Failures Key industries were barely making a profit
-Railroads -Mining
-Textiles -Lumbering
-Steel -Coal Mining
Boom industries of the 1920’s were weakening
-automobiles
-construction
-consumer goods

6. Business failures

7. Business Failures Today

8. “Trickle Down Effect” New housing starts were down

9. Unemployment
Trickle down effect would eventually effect employment.

10. Unemployment in the 1920’s
2,132,000 unemployed
Unemployment 5.2%

11. Unemployment today

12. Income & Spending
Americans of the 1920’s were living on credit

13. Businesses were actually encouraging Americans to pile-up debt

14. Results of buying on credit
Unfortunately many Americans had trouble paying off their growing debts.

15. Faced with debt, consumers cut back on spending

16. Businesses suffered
The nation’s economy also suffered
Today:

17. Uneven Distribution of Income
The rich got richer
The poor got poorer
75% 9%

18. Annual Income
70% of nation’s families – $2,500/year ($2,500 was considered the poverty line)
Today:

19. Consumer Spending
Some families earning 2X more than $2,500 could not afford household goods being produced
Result: many products went unpurchased
Businesses were left with unsold products

21. Stock Market Speculation
People were engaging in “speculation”
Bought stocks and bonds on the chance of a quick profit
Many ignoring the risk

22. The Reality of the Stock Market
Buying on margin-buying on credit
Paying only a down payment for the stocks you wanted and borrowing the rest
If stock price fell many could not pay the outstanding amount owed

23. Typical Stock
Today

24. BLACK TUESDAY

25. October 29, 1929- stock prices fell and investors raced to get their money out of the market
Many were unsuccessful at getting out without huge losses
Some investors lost their life savings

27. Worldwide Effects Europe gripped by Depression also
Europeans can’t pay back their American debts (Germany)
Europeans can’t buy American farm products or consumer goods
Americans are forced to place high taxes on imported goods (Hawley-Smoot Tarrif)

28. Hoover struggles with the Depression
Hoover believed that Americans could help themselves through the Depression
“Rugged individualism”-people should succeed through their own efforts

29. Cautious Steps
“Any lack of confidence in the economic future…is foolish.” -Herbert Hoover
brought together key leaders in business, banking, and industry to find solutions to economic problems

30. Employers
Asked to NOT lower wages
Asked to NOT lay-off workers

31. Labor Unions Asked to NOT Demand Higher wages
Asked to NOT go on strike

32. Charities
Hoover created an organization to help private charities generate contributions for the poor

33. Results of Hoover’s Cautiousness
Shanty Towns-(Hooverville)
Shrinking economy
High unemployment (and rising)
Business and Bank failures
Soup kitchens and bread lines more common
Hoboes continued to roam the nation

34. Projects approved by Hoover
Boulder Dam-generates electricity and provides water for cities like Las Vegas and Los Angeles

35. “Mellon pulled the whistle Hoover rang the bell Wall Street gave the signal And the country went to hell.”

37. Hoover forced to action
Depression deepens

38. Hoover’s programs Federal Farm Board- organization of farm
cooperatives
-raise crop prices
National Credit Corporation-loaned money to banks
-to stave off bankruptcy

39. More Hoover programs Federal Home Loan Bank Act-
lowered mortgages and allowed farmers to
refinance
-fewer foreclosures
Glass-Steagall Banking Act-
Separated investment banking and
commercial banking
-to prevent another crash

40. Still More Hoover programs
Reconstruction Finance Corporation-emergency financing for banks, life insurance companies, railroads, and other large businesses ($2 billion)
-trickle down to average citizens through job growth and higher wages

41. Indirect Intervention by Hoover
Hoover encouraged cities and charitable
organizations to have:
Bread lines
Soup lines
Direct relief

42. Footnote or Endnote
G. Wayne Miller, King of Hearts: The True Story of the Maverick Who Pioneered Open Heart Surgery
(New York: Times, 2000) 245

43. Bibliography
Miller, G. Wayne. King of Hearts: The True Story of the Maverick Who Pioneered Open Heart Surgery.
New York: Times, 2000.

44. Comparing Footnotes/Endnotes and a Bibliography
G. Wayne Miller, King of Hearts: The True Story of the Maverick Who Pioneered Open Heart Surgery (New York: Times, 2000) 245.
Miller, G. Wayne. King of Hearts: The True Story of the Maverick Who Pioneered Open Heart Surgery. New York: Times, 2000.