Essential Question: What caused the Great Depression & how did the federal government respond? Lesson plan for Friday, February 6, 2009: Warm-Up Question: Causes of the Great Depression & Dust Bowl Group Activity, Begin Causes of the Great Depression Notes

The Great Depression Begins

The Great Depression The Great Depression that began in 1929 came as a shock to Americans: The consumer goods revolution gave a false sense of long-term prosperity When the stock market crashed, business closings and unemployment caused Americans to look to the government for unprecedented support. Consumers buying new products on credit- spent more money than actually had The Great Depression came as a shock to Americans, but there were warning signs: In 1927, the economy had a recession but gov’t & business leaders failed to respond The Federal Reserve lowered interest rates for loans to stimulate the economy, but this easy credit led speculators to buy stock “on-the-margin” Needed direct relief ($) and programs to help them get jobs and find housing

Causes of the Great Depression 1. Overproduction of consumer durable goods & agriculture 2. The post-war conditions in Europe decreased foreign trade 3. Unequal distribution of wealth, high consumer debt, stock market over speculation led to an overall decrease in consumer purchase power By the end of 1920s, consumers already owned durable goods & were not buying more Farmers had already been producing too much after WW1 in 1920s Europe couldn’t afford goods; hurt business and farmers more Economic conditions in Europe, Agricultural decline since 1919, corporate mismanagement, excessive speculation all contributed to the GD as well Rising stock prices didn’t reflect actual value of businesses People’s ability to buy things

The Stock Market Crash of 1929 A recession in 1927 was an early warning sign for the depression But gov’t & business leaders ignored warning signs The Federal Reserve lowered interest rates for loans to stimulate the economy, but this easy credit led speculators to buy stock “on-the-margin” Govt. organization in charge of banking system Low interest rates = cheaper money The Great Depression came as a shock to Americans, but there were warning signs: In 1927, the economy had a recession but gov’t & business leaders failed to respond The Federal Reserve lowered interest rates for loans to stimulate the economy, but this easy credit led speculators to buy stock “on-the-margin” On margin = using credit (Take out a loan to buy stock)

The Stock Market Crash of 1929 An initial stock market crash on Oct 24, 1929 (Black Thursday) and panic on on Oct 29 (Black Tuesday) sparked the Great Depression: Some people and businesses lost large amounts of money as a result of this crash. This led to business failures and bank closings which led to people losing their jobs. Without a job, consumers spent less which then caused more business/bank closings. Bank & business failures continued for 4 years; unemployment reached 25% by 1933 When prices fell, investors sold stock to try to get as much $ as possible (before they went down further) . But mass amounts of people selling stock just caused prices to plummet even further. Stock market only had about 3 million active buyers & sellers but the spillover into the greater economy led to the Great Depression

The U.S. stock market had only about 3 million active buyers & sellers but the spillover into the greater economy led to the Great Depression

Unemployment, 1929-1942 This downward spiral continued for 4 years; By 1932 unemployment was at 25%

In 1929, the total market debt of the USA was 210% of the value of GDP By 1934, U.S. debt rose to 265% of GDP In 2005, the value of U.S. debt was 303% of GDP

Effects of the Great Depression The Depression hit all classes: Many families lost their homes or farms & were forced to live in “Hoovervilles” The U.S. saw unprecedented poverty & suicide rates; fathers abandoned their families; lawlessness ensued The U.S. gov’t offered direct relief to the unemployed and volunteers and churches started bread lines Shantytowns or homeless neighborhoods named after Hoover $ Free meals for homeless/unemployed

Effects of the Great Depression African-Americans and Mexican-Americans were laid off first The middle class was hit hard: Refused relief checks & charity Many lost their homes Couldn’t afford expensive health care declined; doctor & dentist visits were “luxuries” Result of racism and anger over Great Migration/immigration from Mexico Seen as shameful Doctor and dentist visits were seen as “luxuries”

Employment Agencies & Relief-Check Lines

Soup Kitchens & Breadlines

Mortgage Foreclosures

These 4 potatoes are Christmas Dinner

Where’s daddy?

“Hoovervilles” & “Hoover Flags”

President Hoover Reacts- “Rugged Individualism” Fails to End the Depression

Hoover and Voluntarism President Hoover’s initial response was to reassure Americans that prosperity would return Hoover rejected bold gov’t action, believed in rugged individualism & called for volunteerism among charities, local gov’t, & business As the depression worsened, Hoover called for gov’t projects like the Reconstruction Finance Corps (RFC) which loaned money to failing businesses and created Hoover Dam which gave Americans jobs Idea of “self reliance” (Americans should take care of themselves) Problems of poverty best left to volunteers, not federal govt. Too little, too late

The Hoover administration initiated job-creation programs, like building the Hoover Dam Boulder Dam was renamed Hoover Dam

Hoover and Voluntarism In 1932, Hoover’s presidency suffered two final blows: When 22,000 war veterans marched to the capital to demand their WW1 bonus checks early, Hoover ordered this Bonus Army to be forcibly removed The steady rise of bank failures led to a complete collapse of the U.S. banking system Result: Violence erupted; Hoover’s image destroyed Americans no longer trusted banks- withdrew $ and didn’t put any back in

Bonus Army Douglas MacArthur Dwight Eisenhower

Bank Failures, 1929-1933

Dust Bowl Dust Bowl (1931-1939) worsened the effects of the Depression and left farmers in extremely hard circumstances Result: Many “Okies” and “Arkies” left farms and headed out west Oklahoma, New Mexico, Texas, Colorado, Kansas Great Plains area affected by severe drought No other option

The Dust Bowl (1931-1939) worsened the effects of the Depression “Okies” & “Arkies” Areas Affected by the Dust Bowl drought Woody Guthrie

Fighting the Depression The inability of Republicans to resolve the economic depression opened the door for a Democratic takeover in politics Once in power, Democrats succeeded in relieving some suffering, restored hope, & created an unprecedented level of gov’t intervention in the process

Conclusions The Depression of the 1930s came as a shock to Americans: The consumer revolution led to confidence that 1920s economic prosperity would continue When the stock market crashed in 1929, businesses closed & millions were unemployed Americans began to look to the gov’t for unprecedented support