Why might the cartoonist have chosen a squirrel to represent a “wise economist”? What does this cartoon imply about who was to blame for the Great Depression? Were the individuals the ones to blame? What is the message of this cartoon?

The Causes of the Great Depression Photos by photographer Dorothea Lange

The Rise of Herbert Hoover By the late 1920s, Herbert Hoover was very popular Hoover was became a hero during World War I for his leadership guiding the Food Administration Hoover was Secretary of Commerce under both Warren G. Harding and Calvin Coolidge during the ‘20s “Given the chance to go forward with the policies of the last eight years, we shall soon with the help of God, be in sight of the day when poverty will be banished from this nation.” – Herbert Hoover, 1928

Hoover Becomes President Hoover defeats Democratic nominee Alfred E. Smith in the Election of 1928 Prohibition and Religion big factors Hoover was for Prohibition and was a Protestant; Smith was against Prohibition and was a Catholic

Warning signs There was an uneven distribution of wealth. There were numerous warning signs in the late 1920s that the economy was beginning a downward turn: There was an uneven distribution of wealth. Large companies dominated economy. Too many Americans were buying on credit. Overproduction of goods. People gambling on the stock market

THE NATION’S SICK ECONOMY 1920s  serious problems threatened the economy while Important industries struggled Agriculture Railroads Textiles Steel Mining Lumber Automobiles Housing Consumer goods

FARMERS STRUGGLE Farmers had to rent the land or move No industry suffered as much as agriculture WWI  European demand for American crops soared After the war, demand plummeted Farmers were producing more than American consumers were consuming Some farmers lost so much money they couldn’t pay the mortgage on their farm. Farmers had to rent the land or move Photo by Dorothea Lange

Mass Advertising Advertisers, reaching millions of American consumers on a daily or weekly basis Mass advertising promoted new products Mass advertising reflected the general acceptance of buying by installment as a way to finance consumption.

Overproduction in Industry Factories were producing products, however wages for workers were not rising enough for them to buy the goods Too few workers could afford to buy the factory output The surplus products could not be sold overseas due to high tariffs and lack of money in Europe Companies produced more goods than could be sold. Businesses had to lay off workers. Prices of goods being sold declined.

UNDERCONSUMPTION Late 1920s  American consumers were buying less Rising prices stagnant wages overbuying on credit Most people lacked the income to purchase goods being produced, which drives up unemployment.

Uneven distribution of income The gap between rich and poor widened people were either really rich or really poor. The wealthiest 1% saw their income rise 75% The rest of the population saw an increase of only 9% Not everyone who wanted consumer goods could afford them. Most of the Americans were living below the poverty line. Photo by Dorothea Lange

High Tariffs and War Debts European nations owed $10 billion ($115 billion in current dollars) to the U.S. in reparations Their economies were devastated and had no way of paying the money back U.S. insisted on repayment. This forced the allies to demand Germany pay reparations imposed by Treaty of Versailles Europe could no longer purchase goods from the U.S. 1922, U.S. passed the Hawley-Smoot Act Meant to protect U.S. industry Had the opposite effect Other nations enacted their own tariffs and soon world trade fell 40%

The Stock Market The stock market is a system for buying and selling shares of stock in a company, thus owning a small piece of the company. By 1929, many Americans were invested in the Stock Market 4 Million Americans owned stocks.

The Stock Market’s bubble was about to break SEEDS OF TROUBLE Late 1920s  problems with the economy emerged Speculation: buying stocks & bonds hoping for a quick profit “Buying on Margin”: paying a small % of a stock’s price as a down payment and borrowing the rest The Stock Market’s bubble was about to break

Banks Banks loaned stock brokers money for the margin loans, they used the savings people had deposited in the bank for these loans. The savings was not insured.

THE 1929 CRASH During the Summer of 1929, stock prices started to fall. By September, there was serious problems. More and more investors began to sell. The sell-off of stocks began on Oct 21. As more investors saw the value of stock fall, more investors sold their stocks. On October 24, the market took a plunge . . .the worst was yet to come As prices drop, brokers call in their loans Investors do not have the cash to payoff the loans Brokers enforce sales of stock to payoff the loans Prices drop more, causing panic sales of stock On October 29, now known as Black Tuesday, the stock market crashed 16.4 million shares were sold that day – prices plummeted People who had bought on margin (credit) were stuck with huge debts

What caused the Stock Market Crash? 1929  The Wall Street Crash was caused by a number of factors including: US Economic Boom was a time of financial prosperity with increases in productivity, sales and wages. There was a rising demand for new consumer products leading to massive profits for American businesses.  Rise of American Consumerism encouraged the acquirement of goods and services in ever-increasing amounts.  Overproduction of consumer goods Easy credit schemes and increased debt The Stock Market boom As US industry boomed, so did company shares on the Wall Street stock market. Prices of shares went up year after year, and investors made substantial profits. and the 'Long Bull Market‘ A Bull Market is a long period of rising stock prices Buying stocks "on margin" (buying shares with loaned money)

Alabama family, 1938 Photo by Walter Evans THE GREAT DEPRESSION The Stock Market crash signaled the beginning of the Great Depression The Great Depression is generally defined as: period from 1929 – 1940 economy plummeted unemployment skyrocketed The crash alone did not cause the Great Depression But it accelerated its arrival Alabama family, 1938 Photo by Walter Evans

Bank Failures After the crash, many Americans panicked & withdrew their money Banks had invested in the Stock Market & lost money. No insurance against bank closings Thousands of banks close By 1933, 11.000 of the 25.000 banks nationwide had collapsed 1933

GNP DROPS, UNEMPLOYMENT SOARS Between 1928-1932, the U.S. Gross National Product (GNP) – the total output of a nation’s goods & services – fell nearly 50% from $104 billion to $59 billion 90,000 businesses went bankrupt Unemployment leaped from 3% in 1929 to 25% in 1933

CAUSES OF THE GREAT DEPRESSION Tariffs & war debt policies U.S. demand low, despite factories producing more Farm sector crisis Easy credit Unequal distribution of income

RURAL LIFE DURING THE DEPRESSION While the Depression was difficult for everyone, farmers did have one advantage; they could grow food for their families Thousands of farmers, however, lost their land Many turned to tenant farming and barely scraped out a living Between 1929-1932 almost ½ million farmers lost their land

The Dust Bowl Drought and overfarming dry up land 1930-1940 Drought and overfarming dry up land Huge dust storms spread across the US

Huge dust storms covered the Great Plains and blew dust as far away as the East Coast

Darkness came when it hit us Darkness came when it hit us. Picture taken from water tower one hundred feet high. Yours Truly, Chas. P. Williams." Photo: Massive Dark cloud approaching village  

Many came from Oklahoma, so migrant workers were often called Okies Many farmers packed up their belongings & headed for California to look for work Many came from Oklahoma, so migrant workers were often called Okies