7-January-2015 Great Depression CAUSES & THE BEGINNING

The Great Depression 1929 – 1940 Economics will go through good times and bad times that regularly repeat themselves This is normal – the ups and down periods of business are known as the business cycle (boom/bust cycle) Bad times are called recessions or depressions Depression: Characterized by business failures, high unemployment and falling prices The Great Depression: WORST depression in our nation’s history

Causes MANY factors caused the economy to move from the prosperity of the 20s to the severe depression of the 1930s (Each of the following will have their own slide- you will have time to write it down- promise) Overproduction Speculation Shaky Banking Restricted International Trade

Overproduction Just how it sounds, guys. Manufacturers were making and selling all sorts of new products. Many consumers couldn’t really afford to buy the goods (they lacked the money to do so) Manufacturers were soon producing more goods than they could sell.

Speculation We learned before break that the stock prices kept going up and up. People wanted to “get rich quick” – this made buy more stocks and this drove the stock prices even higher. Fun Fact: By 1929 stock prices had TRIPLED since Each day the Speculative Boom on the stock market saw more people investing in Wall Street Buying on Margin: In the 20s stocks could be purchased for a 10% down-payment (called a margin). An installment plan for stocks. The remaining balance was financed by a loan from the stock broker. The buyer just promised to pay the rest of the money back when the stock sold… Even if the stock price FELL- the purchaser would still be responsible for the WHOLE price they promised to pay As long as prices kept going up, this wasn’t a problem, but if the prices fell, buyers on margin often did not have the money to cover the losses. People were also invested in Real Estate with similar hopes of getting rich quickly. The frenzy of the stock market & real estate speculation created an atmosphere of easy money

Shaky Banking As shown in the video, banks generally collect money from depositors and then invest these funds. This enables them to earn money to pay interest on deposits. A lot of bank in the U.S. were honest and followed banking practices, but some bankers invested their depositors money into very unsound investments. Government failed to regulate the banking system or the stock market. People bought what they could not afford. Everyone being so over extended on credit made the entire American economy extremely vulnerable.

Restricted International Trade American tariffs protected American Markets, but they made it hard for producers to sell abroad since other countries retaliated by setting up high tariffs of their own. 1930: President Hoover signed the highest tariff in U.S. History The shrinking of the world trade contributed to the Great Depression

The Great Depression Begins When the New York Stock Market crashed in 1929, it set off a chain reaction that toppled the American economy and quickly spread to the rest of the world. The New York Stock Market Crash From Wall Street to Main Street Human Impact of the Depression The Dust Bowl

The Great Depression Begins – New York Stock Market Crash New York Stock Market Crashed – Black Tuesday – October 29, Set off chain reaction that toppled the American economy and quickly spread to the rest of the world Stock prices started to fall the Thursday before and bankers got together and bought stock to try and keep the prices above current market price to try and stop the rapid decline in prices. Stock prices fell to an all-time low on Black Tuesday

The Great Depression Begins – The Human Impact During the 1920s, many Americans had started to equate their self worth with material possessions. When the Great Depression hit, people felt worthless.  People were fighting for daily survival Businesses failed, farmers lost their farms, banks failed, and millions were out of work – NO unemployment or bank deposit insurance Private charities were overwhelmed – Millions began to depend on soup kitchens and bread lines for their food.

The Great Depression Begins – Dorothea Lange Photographer The picture to the right shows a migrant mother and her children. The picture on the far right shows living conditions of those affected by The Great Depression. Notice her face and how dirty the children are.

The Great Depression Begins – John Steinbeck Writer Wrote a series of articles on the Oakies - Farmers from Oklahoma who moved to migrant worker camps in California Did research on migrant workers living in California during the Great Depression. Famous for his novel The Grapes of Wrath

The Great Depression Begins – The Dust Bowl : 1930s Farmers on the Great Plains faced a natural disaster AND financial disaster Farmers had been tilling the Great Plains, cutting the grasses covering the topsoil, and tapping the underground water supply since the 1870s. There was a series of droughts (long periods without rain) that dried up crops and topsoil turning the topsoil to dust The ground cover that had held the soil in place was now GONE, this lasted for about a decade, and heavy winds carried topsoil across hundreds of miles, burying homes, livestock and destroyed harvests Farmers were forced to abandon their farms and many moved west to California Over ONE MILLION farmers were driven from their lands by this “dust bowl”

The Dust Bowl

Mexican Repatriation

Mexican Repatriation Act Immigration Act of 1920s imposed quotas on immigrants from Europe but nor from Mexico. Mexicans freely entered the U.S. as long as they could pass a medical and literacy test and paid a small tax. Many came to escape the turmoil in Mexico caused by the Mexican Revolution In the U.S. they were generally willing to accept back breaking work for VERY low wages Many settled in barrios (Mexican-American neighborhoods) in California, Texas, or the Southwest Mexican Americans were barred from attending “white” public schools. There was less demand for Mexican Labor during the Depression because white American farmers were in DESPERATE need of work and sought jobs previously filled by Mexican Immigrants Public hostility towards Mexican grew and it became more and more difficult for them to enter the U.S. Only 33,000 were granted visas for the entire decade (compared to over half a million in the 1920s) President Hoover authorized a special Mexican Repatriation Act to send Mexican immigrants back to Mexico during the Depression. Many of them had ben lawful American citizens who were then separated from their families.