2. Essential Questions: 1) What were the short term and long term causes of the Great Depression? 2) What were the effects of the G.D. on the American people? 3) How did President Hoover respond to the Great Depression?

3. Definition of Depression  A depression is a long- term downturn of economic activity  They are characterized by:  Large increases in unemployment  A banking crisis  Shrinking output  Decrease in demand  Bankruptcies and foreclosures  Significantly reduced amounts of trade Photo by Dorothea Lange

4. What is a Stock? One way companies grow is by selling stock, or portions of their company One way companies grow is by selling stock, or portions of their company People like to purchase stocks because they can make a profit People like to purchase stocks because they can make a profit

5. 1920s Stock Market Boom Leads to Overconfidence From 1922 to 1929, the Stock Market rose dramatically (Bull Market) From 1922 to 1929, the Stock Market rose dramatically (Bull Market) “foolproof” way to get rich “foolproof” way to get rich Investors bought stocks on margin (borrowed $) Investors bought stocks on margin (borrowed $) Pay $1 upfront for $10 worth of stock, counting on Stock Market rise to pay for loan Pay $1 upfront for $10 worth of stock, counting on Stock Market rise to pay for loan

6. Stock Market Crash Black Thursday: October 24, 1929  rumors began that the market was on the verge of collapse, a few nervous investors began selling stocks, others followed Black Thursday: October 24, 1929  rumors began that the market was on the verge of collapse, a few nervous investors began selling stocks, others followed Stock prices fell as selling continued and the market flooded with stocks  PANIC! Stock prices fell as selling continued and the market flooded with stocks  PANIC! Black Tuesday: October 29  stock values fell $10-15 billion Black Tuesday: October 29  stock values fell $10-15 billion

7. The Effects of the Crash on Investors Investors who bought stocks on margin lost original investment AND could not repay loans Investors who bought stocks on margin lost original investment AND could not repay loans Many lost their fortunes overnight Many lost their fortunes overnight

8. Effect of the Crash on Banks Investors borrowed from banks to buy stocks Investors borrowed from banks to buy stocks Crash  banks could not collect from investors Crash  banks could not collect from investors Depositors rushed to withdraw their savings (run on banks) Depositors rushed to withdraw their savings (run on banks)

9. Effect of the Crash on Businesses Banks were unwilling/unable to lend money to businesses Banks were unwilling/unable to lend money to businesses Consumers stopped purchasing goods Consumers stopped purchasing goods Companies shrink and lay off workers Companies shrink and lay off workers

10. Talk to your neighbor: 1) What led to the stock market crash of October 1929? 2) What were the effects of the crash on investors, banks, and businesses?

11. Seeds of Decline

12. Decline in Farming during 1920s Farmers profited during WWI Farmers profited during WWI Prices for ag. products decreased after WWI Prices for ag. products decreased after WWI Farmers defaulted on loans, and farms were seized by the banks Farmers defaulted on loans, and farms were seized by the banks

13. Unequal Distribution of Wealth Richest 5% received 34% of income Richest 5% received 34% of income More than 40% of Americans lived under the poverty line More than 40% of Americans lived under the poverty line

14. Overproduction Frederick W. Taylor’s worker motion studies Frederick W. Taylor’s worker motion studies Assembly line helps w/ mass production Assembly line helps w/ mass production Production increased by over 60% in a ten year period Production increased by over 60% in a ten year period

15. Overuse of Credit 1920s consumers bought on credit  credit bills mounted 1920s consumers bought on credit  credit bills mounted Consumers stopped spending in order to pay off credit Consumers stopped spending in order to pay off credit This led to decreased demand This led to decreased demand

16. Protective Tariffs Congress passed Hawley-Smoot Tariff Congress passed Hawley-Smoot Tariff Foreign countries responded with their own protective tariffs Foreign countries responded with their own protective tariffs decrease in US sales abroad decrease in US sales abroad International trade decreased 30% by 1933! International trade decreased 30% by 1933!

17. Talk to your neighbor: What were the roots of the Great Depression?

18. Effects of the Great Depression on the American People

19. American Families

20. Hobos Hobo Signs

21. Teenagers

22. Women

23. African-Americans

24. Mexican-Americans

25. Bread and Soup Lines

26. Hoovervilles

27. The Dust Bowl

28. Okies

29. Hoover Responds to the Great Depression Conservative Conservative Asked for companies to cooperate voluntarily Asked for companies to cooperate voluntarily Reconstruction Finance Corporation Reconstruction Finance Corporation

30. In 1924, Congress approved a bonus for WWI vets Over 20,000 veterans marched to Washington D.C. to ask for early bonuses Camped out in D.C. Hoover had federal troops disperse veterans Bonus Army