3. The Great Depression Begins
Chapter 9

4. Learning Targets
Students will be able to explain the causes for the Great Depression
Students will be able to describe how life changed for many Americans in the early years of the Depression
Students will be able to explain President Hoover’s responses to the Depression

5. The Long Bull Market The Election of 1928 The Stock Market
Hoover versus Al Smith
Issues – Catholicism, Wet versus Dry
The Stock Market
Bull Market – long period of rising stock prices
Speculation – buying stocks in the hope of selling them quickly for a profit
Margin – buying stocks on small cash down payment. Rest of cost was interest-bearing loan
Margin Call – demanding immediate repayment of loan

6. The Great Crash Stock prices hit peak and started to fall
Investors sold more and more stock causing prices to fall further
Margin calls caused people to sell stocks at even lower prices – drove market into tailspin
October 1929 Black Thursday – market plummeted/many investors financially wiped out
Crash did not cause Great Depression but weakened US financial stability

7. The Great Crash Banks Market crash weakened banks
Banks had made loans to stock speculators and invested depositors’ money in stocks
To cover losses, banks drastically reduced loans – businesses and people unable to borrow money
Some banks forced to close – depositors lost all savings
Bank Run - depositors went to banks and withdrew all money
Withdrawals exceeded cash reserves causing more banks to fail
By 1932, 1 in 4 banks closed

9. Roots of the Great Depression
Factors Causing Great Depression
Wealth Gap – fewer people could buy products
Overproduction – Factories/farms produced more but low wages meant people bought less
Agriculture – farmers bought land & equipment during WWI’s high demand. End of war brought low prices wiping out many
Installment Plans (credit) – high cost items bought on credit. People stopped purchasing to pay off debt causing factories to cut production & lay off workers
Downturn caused ripple effect in economy

10. Roots of the Great Depression
No unemployment insurance or other safety nets
Stock speculation cut loans to foreign nations – foreigners could not buy American products
Hawley-Smoot Tariff – raised tariffs to historical high
Foreign nations retaliated w/high rates – fewer US products purchased
Federal Reserve – kept interest rates low encouraging risky loans. Businesses expanded when sales were falling. Reserve then raised interest rates which tightened credit

11. The Depression Worsens
Bank closures and business bankruptcies continued into 1932
People lost homes or were evicted from rentals – many built temporary houses out of trash on public lands -- shantytowns aka Hoovervilles (after President Hoover)
Hobos - homeless men and boys wandered across country looking for work or place to stay – many by railroad
Repatriation – some immigrants went back to home countries, some forced such as Mexicans. Many were actual American citizens

12. Hobo Hunt

13. The Dust Bowl
Large-scale agriculture on Great Plains caused erosion of topsoil
High winds and drought caused extreme dust storms
During 1930’s, about 50 dust storms hit prairie per year
Crops were buried, livestock and sometimes humans died due to dust-clogged lungs
Migration from affected areas mostly to California (“Okies”)

18. Arts and Entertainment
Emphasized American values
Grant Wood’s American Gothic
Literature
John Steinbeck – The Grapes of Wrath
Movies
Movie grew in popularity
Comedies, child stars, animation – escape from dreary life
Ordinary Americans celebrated as heroes such Mr. Smith Goes to Washington
Radio
Daily listening
Soap operas (dramas sponsored by laundry soaps)

19. Hoover’s Response
Hoover believed that American “rugged individualism” would keep US economy moving
Tried to get businesses to maintain employment/wages - effort failed
Funded public work projects – not enough jobs generated
Refused to spend money on direct relief – finally relented and signed Emergency Relief and Construction Act
Asked Federal Reserve to print more money – Fed refused
Set up Reconstruction Finance Corporation (RFC) to loan money to businesses – did not loan enough
Hoover and the Great Depression

20. Angry Mood People growing desperate
Increased instances of looting of grocery stores
Hunger marches sponsored by Communist Party
Communist Party saw biggest increase in membership during Great Depression
~One million farms foreclosed
Farmers destroyed crops to raise prices

21. Bonus March WWI veterans promised $1,000 bonus payable in 1945
Desperation caused large group (~15,000) to march on Washington DC and demand payment now
Marchers squatted in Hoovervilles in city – occupied government offices
Congress refused to pay bonus – Hoover ordered army to remove marchers from government buildings
General Douglas MacArthur cleared buildings and attacked/burned camps – two veterans killed
Hoover blamed for fiasco

22. Learning Targets
Students will be able to explain the causes for the Great Depression
Instability following WWI
High tariff - retaliation
Overproduction
Consumer indebtedness
Wealth gap
Stock market crash
Bank failures
Failure of Federal Reserve

23. Learning Targets
Students will be able to describe how life changed for many Americans in the early years of the Depression
High unemployment
Loss of homes
Migration of men looking for work (Hobo culture)
Dustbowl - migrations
Students will be able to explain President Hoover’s responses to the Depression
Coordination with businesses and labor
Public works projects
ERC and RFC
Lack of positive leadership

24. Quiz Why did the stock market crash lead to bank failures?
Many Americans made runs on banks and withdrew their money at the same time
Many businesses and consumers were able to borrow more money
Many Americans had not kept their money in banks because deposits were not insured
Many banks had not invested their depositors’ money in the stock market

25. Quiz
2. How did the Hawley-Smoot Tariff contribute to the Great Depression?
The high tariff protected American industry from foreign competition
The high tariff encouraged overseas trade and increased exports
The high tariff restricted foreign demand for American goods
The high tariff caused foreign countries to lower their tariffs

26. Quiz 3. Which of the following best completes this graphic organizer?
Increase in consumer spending
Overspeculation in the stock market
Decrease in military spending
Government subsidization of agriculture