1. Ch. 25 The Great Depression
The Perfect Storm

2. Causes of the Great Depression Unfortunately, the same practices that caused economic prosperity also created deeper problems.
Decline in Demand: construction and automobiles were the most profitable industries during the 1920s
Industries built massive plants for production – but demand had dropped dramatically
Overproduction: companies left with warehouses full of goods they couldn’t sell.
Misdistribution of wealth: supply side wealth did not trickle to the lower classes
Created a pyramid of wealth
Unemployment fell during the 20’s, but wages did not rise

3. Percentage of People in America Percentage of $ Each Group Has
Pyramid of Wealth
Percentage of People in America
Percentage of $ Each Group Has
3% Upper Class
92% Low Class
or below poverty
5% Middle Class
92% of the People
only get 2%
of the money
Middle class controls
8% of the Money
Upper class controls
over
90% of the Money

4. 5. Declining Exports: Yankee imperialism destroyed European ability to trade
As debts piled and American banks failed the depression spread to Europe as well.
6. Plight of Farmers : Many had to take loans to grow crops and keep up with agricultural technology
Poor growing seasons and volatile markets caused many to lose their farms

5. The Stock Market Crash Market continuously rose over 8 years.
values more than tripled between 1925 & 1929.
Speculation became a popular: buy stocks low and then sell them high.
Many investors bought stocks On Margin since markets seemed stable.
Most stocks were purchased with money investors didn’t actually have.

6. Banks folded as investors defaulted on their debts.
Brokers knew the markets were inflated – panic ensued as they sold everything
Investors lost over $30 Billion nationwide on Black Tuesday
Banks folded as investors defaulted on their debts.
The biggest tragedy of Black Tuesday -many people who never bought stocks lost all their savings too.

7. Banking Collapse
9,000 banks either went bankrupt or closed their doors to avoid bankruptcy.
Run on banks compounded the problems
Federal Reserve raised interest rates to protect their own interests - worsened flow of money further.
Unemployment rose above 25% during the depression and never went below 15% for ten years.

8. Unemployment and Relief
Many laborers had been accustomed to layoffs, but never so quickly and drastic.
Shame and helplessness became epidemic - poverty reflected personal responsibilities.
Local relief was ill-equipped to handle demands.
Many felt public welfare programs would not only harm the gov’t budgets, but also harm public morale.

9. The Dust Bowl
One of the worst droughts in the nation’s history also hit beginning in 1930.
Lack of geographical protection created massive dust storms
The dust bowl extended from north Texas all the way to the Dakotas.
Plagues of grasshoppers and locusts followed droughts the next year

10. Social Structure of the U.S. during depression
Birth rate and divorces went down during the Depression.
This is because families couldn’t afford either.
More strict child labor laws were created
The gov’t protected jobs for older Americans who were supporting families.
High School enrollment increased – no jobs for teenagers

11. The Role of Women
More women entered the work force as the need for money increased for each family.
Easier to find work as a housekeeper or nurse than a factory worker
Gender role reversal in many homes

12. Literature of the Depression
Serious situations of the depression inspired powerful literature
John Steinbeck: Grapes of Wrath and Of Mice and Men.
Grapes of Wrath: Oklahoma farmers leaving the Dust Bowl during the depression.
Of Mice and Men: migrant farmhands trying to find work during the depression.
Margaret Mitchell: Gone with the Wind.
rebuilding life in the South after the Civil War.
Scarlet Ohara’s inner strength symbolized American spirit

13. Entertainment Americans idolized glamorous movie stars
Mae West, Clark Gable, Shirley Temple, Ginger Rogers, and Fred Astaire
Movies about happy and wealthy celebrities and fairy tales became popular
most people wanted to escape reality.
The first soap operas were created over the radio

14. Mae West

15. Clark Gable

16. Fred Astaire and Ginger Rogers

17. Snow White and the Seven Dwarfs
First full length animated feature film by Walt Disney.

18. Crime of the Depression
Bank robbers became famous - Americans resented the banks after the stock market crash.
John Dillinger, “Baby Face Nelson”, Bonnie and Clyde, and Machine Gun Kelly
FBI would be granted interstate jurisdiction to combat the problem.

19. George “Babyface” Nelson

20. The Hoover Administration
More or less the wrong man at the wrong time.
Initially tried to fund relief, but not enough
Tried to raise tariffs - protect American business
Felt too much direct gov’t relief would teach Americans dependency.
Proposed raising taxes when some of the programs cost the gov’t more money.

21. Hoover’s RFC Reconstruction Finance Corporation: Problems with the RFC
Designed to give $1.5 Billion gov’t funding directly into industries to provide jobs.
Gov’t loans to banks, railroads and businesses.
Problems with the RFC
Never fully used all the money
Only gave money to institutions they felt would return on the investment.

22. Hoovervilles & Bonus Army
Hoovervilles: shacks, and shantytowns where many struggling Americans were forced to live when they lost their homes.
term of resentment towards Herbert Hoover.
Bonus Army:WWI veterans petitioned the gov’t to give them bonus checks early because of the depression.
Blamed Hoover when Congress refused
2,000 had to be violently removed by National Guard