The Great Depression: Causes and Effects

Black Tuesday Stock Market Crash October 29, 1929 Result not Cause Signals the start of the Great Depression *Only WWII gets America out of the Great Depression, not New Deal

1. Disparity of income Roaring 20’s: good times; high employment and no inflation However, Gap between rich and poor was very large Majority of workers lived below poverty line ($2500 in 1929) Companies were making lots of money, but did not share this with their employees

2. Buying on Credit At some point creditors will stop giving people credit Consumers cannot buy anymore Drop in consumer spending = lay-offs Layoffs = less spending, which then = more lay-offs

3. Farm Economy farmers produce too much farm prices fall farmers produce more to keep up prices fall even more farmers cannot pay their loans, default defaulting puts banks out of business

4. laissez-faire policy and the End of Progressivism Big Business allowed to do whatever they want - laissez-faire tariff raised on foreign goods to help protect US industry child labor and minimum wage overturned

5. Stock Market Speculation “get rich quick” buy on margin - investor allowed to borrow the money to buy stocks now People had to sell, which drove the price down even further Black Tuesday - some wealthy tried to prop up the Stock Market, but to no avail

Impact on the People 25% Unemployment People lost their homes - took to the streets People that still had jobs had their hours and wages cut People only bought necessities - further led to lay- offs “Runs” on banks people fear losing money and take all their money out of banks

Images Soup Kitchens Bread Lines Hoovervilles Dust Bowls Bonus Army

People people undernourished schools closed Abandonment increases – Men leave families for work or shame Suicide rate increases sharply birthrate fell – Men no longer the head of the household People looked to the government for help

Birth Rates in U.S.