1. Great Depression
USH-6.3

2. I. Underlying Problems
Declining demand and overproduction were the main causes
1920s seemed good w/high employment
Production & per capita income rose
Distribution of income was uneven with rich and poor getting farther apart
Workers didn’t get profits

3. I. Underlying Problems A bad cycle started Workers stop buying goods
Company make less $
Company lays off workers
Fewer workers buy goods
Company makes less $
Company lays off more workers
Etc…

4. I. Underlying Problems Farm economy collapsed
Farmers expanded during WWI with big markets
Lost markets after WWI
Couldn’t make payments on land & equipment
Grew more crops to make up the difference
Foreclosures on land caused lots of banks to close BEFORE the stock market crash
Less money to loan others

5. II. Republicans
In 1920s, Republican administrations gave up on limiting Big Business
More laissez-faire made companies more powerful
Raised tariffs
Tax on imports
Supreme Court overturn child labor laws & female minimum wages

6. II. Republicans Income taxes on the wealthy were cut
They spent more on luxury items
Didn’t make up for everyone else NOT spending
Spent their money on stocks instead of new factories
Drove up stock speculation
“Will I be able to sell before the price falls?”

7. III. Stock Market Stocks could be bought on margin
Investors could borrow using the stock they owned to buy more stock
Speculation led to inflated stock values and the crash
Lots of sellers in October of 1929

8. III. Stock Market Firms began to call in margin loans
Investors had to sell at low prices to pay back loans
Stock prices plunge
“Black Tuesday” October 29, 1929, the bottom fell out
WAS NOT THE CAUSE OF THE GREAT DEPRESSION!!!

9. IV. Deeper in debt Federal Reserve began in 1913 as a national bank
Fed is to regulate money supply by making loans to banks
Low interest rates in early 1920s and raised them over the decade
Even tighter after the crash
Less lending when more was needed
If the Fed had lowered interest rates, the Depression MIGHT have been easier*

10. IV. Deeper in debt Congress passed the Hawley-Smoot tariff in 1930
Very high tariff
Meant to make Americans buy US goods
Makes other countries stop buying our goods
Less profit and the spiral continues*

11. V. Government reaction US gov’t had always been pretty laissez-faire
Wait and the economy will fix itself
Hoover actually asked business owners to not lower wages or layoff workers
Lower demand made this not possible
“Prosperity is just around the corner.”
Bonus Army
WWI vets march to DC to get a bonus to be paid in 1941
US Army disbands them*

12. VI. Dust Bowl The Great Plains are damaged by:
Overgrazing
Overplanting
Drought
Top soil dries up and blows away
Darkens the sky along east coast
Creates migrant workers
Many “Okies” move to California for work*

13. VII. Daily life Unemployment rate reached 25%
No unemployment insurance
People lose homes and farms
Hobos hop on trains to travel to find work
Live in shantytowns called Hoovervilles
Those with jobs have wages cut
Demand drops farther*

14. VII. Daily life Runs on banks Charities try to help
People go to the bank to get their money out
People who are late get no money b/c it is already gone
Charities try to help
Too many poor and not enough money*

15. VII. Daily life Families are hit hard Marriages are delayed
Birth rates fall
Men often abandoned
Unemployed men lose status and wife and kids go get any work to survive*