1. GREAT DEPRESSION & DUST BOWL (1930s)

2. The Great Depression 1929-1940 Economies historically pass through good and bad periods that regularly repeat themselves. These ups and downs are referred to as the business cycle. The bad times are called a depression – these usually include: –Business failures –High unemployment –Falling prices The Great Depression was the worst in our nation’s history!

3. 3 The Great Depression 1929-1940 1. STUDY THE IMAGE SHOWN BELOW. 2. WHAT DO YOU THINK THE SIGN MEANS? 3. WHY?

4. 4 The Great Depression 1929-1940 CAUSES OF THE GREAT DEPRESSION INCLUDE: 1. Problems in Industry 2. Problems in Agriculture 3. Increased Consumer Debt 4. Uneven Income Distribution 5. Poor Investment Practices 6. Ineffective Government Response

5. PROBLEMS IN INDUSTRY The 1920s saw a rapid economic expansion as manufacturers made and sold new products like cars, radios, refrigerators and numerous other consumer items. By the end of the 1920s many consumers lacked the money to buy all these new products. Manufacturers were soon producing more good than they could sell, no matter how low they priced their goods. Lack of demand for many goods feel, factories laid off workers...

6. 6 PROBLEMS IN AGRICULTURE Raw materials from the WEST were used to manufacture goods in the EAST. Overproduction by farmers (due to Industrial Revolution) contributed to prices falling. Resulted in foreclosure of many farms.

7. 7 PROBLEMS IN AGRICULTURE 1. STUDY THE IMAGES ABOVE. 2. WHAT WAS A POSITIVE CONTRIBUTION OF THE MOLINE UNIVERSAL TRACTOR TO AMERICA? 3. DISCUSS THE NEGATIVE RESULT OF THE MOLINE UNIVERSAL TRACTOR TO AMERICA.

8. 8 INCREASED CONSUMER DEBT Due to the extension of credit, many Americans lived beyond their means. Easy credit (buy now, pay later) on installment plans increased debt for many families. When financial difficulties struck, many families cut back on spending BUT were still unable to pay their debts and lost EVERYTHING!

9. 9 UNEVEN INCOME DISTRIBUTION Not ALL Americans shared in the prosperity of the 1920s! During the 1920s, income of wealthiest Americans families rose much more than the average family. The poor got poorer and could not afford to buy all the goods factories produced. 9

10. 10 UNEVEN INCOME DISTRIBUTION 1. STUDY THE IMAGE BELOW. 2. DISCUSS HOW THIS IMAGE REFLECTS THE ECONOMIC GROWTH GAP DURING THE GREAT DEPRESSION.

11. In the 1920s stocks soared in value as people ‘speculated’ meaning they bought stocks hoping to “get rich quick”. This speculation caused the price of stocks to rise higher and higher each day as more people invested in Wall Street. By 1929 the price of stocks had tripled since 1920. POOR INVESTMENT PRACTICES

12. In the 1920s, stocks could be purchased for a 10% down payment called buying on margin. The rest of the price of the stock was financed by a loan from a stock broker or a bank. If a stock’s price fell, the purchaser was still responsible for the whole price of the stock. As long as the price of stock went up there was no problem, but if the stock prices decline there is no way to pay off the borrowed money. People also invested in real estate (land or buildings) with a similar hope of getting rich quick. POOR INVESTMENT PRACTICES

13. Banks work by using money from depositors that they then loan to businesses, the money they earn they use to pay interest to these depositors. Most banks in the 1920s were honest and followed good banking guidelines, however there were some who invested their depositors money in unsound investments. The government failed to regulate the banking system or the stock market. Unlike today, deposits in banks or the stock market were NOT insured. POOR INVESTMENT PRACTICES

14. 14 INEFFECTIVE GOVERNMENT RESPONSE FEDERAL RESERVE MONETARY POLICY FOUNDED: 1913 (Pres. Wilson) PURPOSE: Serve as the nation’s central bank; loaned money & set interest rates for smaller banks. RESPONSE: Concerned about speculation, the Federal Reserve raised interest rates on loans in 1928 to discourage “bad” investing & bring down inflated stock prices. RESULT: Slowdown in economic activities with high interest rates, was likely the most important source of the stock market crash in October 1929.

15. During the early years of the Great Depression the government did not give direct relief. (cash or food directly to the poor). Despite rising unemployment, Pres. Hoover refused to get the government involved. Hoover remained true to the idea of a laissez- faire economy or no government involvement in the economy. Hoover feared government intervention would reduce the incentive to work and undermine ‘rugged individualism’ that he believed had made America great. INEFFECTIVE GOVERNMENT RESPONSE

16. Hoover issued tax cuts, created a federal agency to buy excess farm crops, and increased federal spending on public projects like Hoover Dam. Hoover also established the ‘Reconstruction Finance Corp.’ that gave emergency loans to banks and businesses hoping to increase business. Hoover hoped money would soon ‘trickle down’ to the people. But, Hoover’s efforts were too little too late and Americans had grown frustrated by the depression. Many viewed Hoover as a cold, heartless leader. INEFFECTIVE GOVERNMENT RESPONSE

17. The government also imposed tariffs (a tax on goods imported) making foreign imported goods more expensive. Foreign nations retaliated by passing tariffs on American made goods imported into their nations. INEFFECTIVE GOVERNMENT RESPONSE

18. 18 The effect was that it made it harder for U.S. businesses to sell their products to other nations. This shrinking of world trade contributed to the Great Depression. INEFFECTIVE GOVERNMENT RESPONSE

19. Shantytowns sprang up everywhere and were called Hoovervilles, a sign of disrespect to Hoover. By this time over 100,000 businesses had failed and 25% of the population was out of work. Hoover stuck to his idea of ‘rugged individualism’, but he was nearing the end of his political life. In 1932, Hoover would lose re-election by a landslide to Franklin D. Roosevelt. INEFFECTIVE GOVERNMENT RESPONSE NEWSPAPERS WERE CALLED “HOOVER BLANKETS”

20. The Stock Market Crash On Black Thursday, October 24 the stock market began to decline Bankers tried to stop the decline by buying stocks, but they were able to only delay the drop. Five days later on October 29, 1929, aka Black Tuesday, the stock market crashed. As stock prices dropped, people couldn’t pay back their loans and frantically tried to sell their stocks driving the price of stocks down.

21. 21 After the stock market crashed, people panicked and withdrew their money from banks. These bank runs forced many banks to close their doors. When a bank closed its doors, the people who had money deposited there lost their money. By 1933, 11,000 of the nation’s 25,000 banks had failed. 90,000 business went bankrupt and unemployment rose to 25% by 1933. The Stock Market Crash DID NOT cause the Great Depression, but it did make it WORSE! Effects of the Stock Market Crash

22. As more banks closed, so did more businesses. As businesses closed, people lost their jobs, and soon their homes and farms. This caused a decrease in the demand for goods causing more businesses to fail leading to more people going broke. Effects of the Stock Market Crash

23. Instead of the optimism of the 1920s, people began to feel worthless. Soup kitchens and bread lines appeared across the nation. Churches and charities did what they could to feed the hungry. With no ‘safety net’ such as unemployment insurance, hundreds of thousands were living on the streets. Effects of the Great Depression 1933, “Sleeping homeless boy”

24. 24 MEXICAN REPATRIATION ( the process of returning a person to their place of origin or birth) Immigration Acts of the 1920s limited European immigration, BUT did NOT limited immigration from Mexico. Mexican immigrants were allowed to enter the U.S., as long as they passed a medical exam, a literacy test (given in Spanish), & piad a small fee. Many left Mexico to escape the Mexican Revolution & took labor intense, low paying jobs. Effects of the Great Depression

25. As competition for work increased so did prejudice and discrimination. In order to free up jobs for Americans, Pres. Hoover signed the Mexican Repatriation Act which authorized the forced deportation of approximately 250,000 Mexican immigrants. Over the next 10 years, the Mexican population in the U.S., dropped by 40%. Pres. Roosevelt would end federal support of Mexican repatriation, but many state & local governments continued their efforts. Effects of the Great Depression

26. 26 Estimates now indicate approximately 60% of the people deported were children who were born in America and others who, while of Mexican descent, were legal citizens. Effects of the Great Depression

27. STAAR Practice – Political Cartoons What event in American history is this political cartoon referring too? A.World War I spending B.Independence of flappers C.Bank failures caused by buying on margin D.Effects of the Dust Bowl

28. The Dust Bowl Since the 1870s farmers had been plowing up the Great Plains to grow crops. Decades of harsh farming destroyed the protective layer of prairie grass which held down topsoil. In the early 1930s, a severe drought (a long period without rain) hit the Great Plains region. Wind storms simply blew a swath of dust across the Great Plains from Texas to North Dakota.

29. The winds of the Dust Bowl blew for years! The Dust Bowl

30. 30 The Dust Bowl

31. 31 The Dust Bowl COULD THE U.S. EXPERIENCE ANOTHER “DUST BOWL”?

32. 32 2011, PHOENIX, AZ

33. Farmers packed up their belongings and headed west to California looking for work. So many of these migrants came from Oklahoma, that as a group these people became known as Okies. This is another example of the mass migration of people, much like the Great Migration of African Americans out of the South or miners to the West. Effects of the Dust Bowl

34. 34 1. STUDY THE IMAGE TO THE LEFT. 2. WHAT ECONOMIC BASE WAS MOST DIRECTLY AFFECTED BY DUST STORM DAMAGE? 3.WHAT WERE THE LONG-TERM EFFECTS OF THE DUST BOWL?

35. The Stories of the Great Depression John Steinbeck wrote “The Grapes of Wrath” telling the story of Okies as they became migrant workers in California.

36. 36 Dorthea Lange, a photographer captured the faces and desperation of the Great Depression / Dust Bowl in the 1930s. The Stories of the Great Depression