1. The Great Depression Begins
Chapter 17, Section 1

2. The Long Bull Market What is the Stock Market? What is a Bull Market?
Prosperous times in the 1920s caused many Americans to invest heavily in the stock market.

3. Long Bull Market
As the bull market continued, many investors bought stocks on margin.
(This was considered safe as long as stock prices continued to rise)
If stock began to fall, the broker could issue a margin call demanding the investor repay the loan immediately.
In the late 20s, investors bought stock blindly,
without looking at a company’s earnings & profits.
Speculation occurred when investors bet on
the market climbing & sold whatever stock
they had to try to make a quick profit.

4. The Great Crash
By 1929, a lack of new investors in the stock market caused stock prices to drop & the bull market to end.
As stockbrokers advised their customers of margin calls, investors responded by putting their stocks up for sale, causing the stock market to plummet further.

5. The Great Crash
October 29, 1929: BLACK TUESDAY –stock prices fell drastically, resulting in a $10 to $15 billion loss in value.
This did NOT cause the Great Depression, it did make the economy unable to handle other problems.

6. Banks in a Tailspin
The stock market crash weakened the nation’s banks.
Banks lost money on their investments & speculators defaulted on loans.
The gov’t did not insure deposits, so customers lost their money if a bank closed
Bank runs: When all the
customers run to the bank
to withdraw their money at
the same time—forcing the
bank to collapse.

7. Reasons for the Great Depression
Overproduction—efficient machinery caused more goods to be produced than Americans could afford to buy.
Uneven Distribution of Wealth—1929, the top 5% of American households earned 30% of the country’s income. More than 2/3 of the nation’s families earned less that $2500 a year.
Low Consumption—Worker’s wages didn’t increase fast enough to keep up with the production of goods.
As sales decreased, workers were laid off, a chain reaction followed that hurt the economy

8. Reasons for the Great Depression (Cont’d)
Installment Plan—huge debts left families unable to purchase other goods.
Hawley-Smoot Tariff—raised tax on imports which intensified Depression. Other countries raised tariffs against American products in return, so fewer products could be sold overseas.
Interest Rates—Instead of raising interest rates to stop speculation, the Federal Reserve Board made the mistake of lowering rates.
This encouraged banks to make risky loans & misled business owners into thinking the economy was still expanding.

9. Life During the Depression
Chapter 17, section 2

10. The Depression Worsens
By 1933, thousands of banks had closed & millions of American workers were unemployed.
Unemployed workers often stood in Bread Lines to receive free food or at Soup Kitchens where private charities gave a free meal to the poor.

11. Shantytowns Americans unable to pay their mortgage faced foreclosure.
Bailiffs escorted unwilling families out onto the streets.
Many new homeless ppl built shacks in shantytowns, or “Hoovervilles” bc they blamed Pres Hoover for their trouble.
Hobos, hitched rides on railroads searching for a better life.

12. The Dust Bowl
As crop prices dropped in the 20s, many American farmers left their fields uncultivated.
A terrible drought in the Great
Plains caused the region to become
a Dust Bowl.

13. Dust Bowl Many Midwestern & Great Plains farmers lost their farms.
Many families moved west to California hoping to find a better life, but most still faced poverty & homelessness.

14. Escaping the Depression
Americans escaped their hardships by going to the movies & listening to the radio. Stories tended to be about overcoming hardships & achieving success.
Walt Disney produced the first feature-length animated film, Snow White & the 7 Dwarfs.
Other films: Wizard of Oz, Gone with the Wind were about beating adversity & having a better life.

15. Escaping the Depression
Families gathered around the radio daily to hear news or listen to comedy shows like the Lone Ranger.
Dramas called soap operas became very popular with housewives. (makers of laundry soap sponsored them)

16. Hoover Responds
Chapter 17, Section 3