1. The Great Depression Begins
MOD 9
US History

2. The Nation’s Sick Economy:
Business was booming
1920’s = life was prosperous
New inventions (radios, Model T, Refrigerators)
But…everyone was buying on credit.
Take home now, pay later
Houses were cheap, cars and appliances were cheap
But…No one could pay back their debts
Decreased wages, loss of jobs
Let’s look at the main reasons that lead to the Great Depression

3. Main Causes for the Crash
Farmers are hurt
Too many crops during the 1920’s
Rampant Speculation
The stocks will always be great… not
Buying on Credit/ over speculation
Buy now, Pay later
People will always buy products… not
Gap between Rich and Poor
Economy was uneven
Bank Failures
Harding, Coolidge and Hoover

4. #1: Farmer’s Struggle: No industry suffered as much as agriculture
Post WWI
Demand for crops fell post WWI
Deflation – decrease in price for goods
Farmers increased production sending prices further downward
Couldn’t pay off debts
Foreclosed on homes / farms
Local rural banks start to fail

5. #2: Consumer Spending Down:
American consumers were buying less
Rising prices
Stagnant wages (wages)
Overbuying on credit
Most people did not have the money to buy the flood of goods factories produced
= over production

6. #3: Living On Credit: Credit
Many Americans were living beyond their means.
Credit
an arrangement in which consumers agreed to buy now and pay later for purchases.
Many businesses encouraged credit purchases (sound familiar?)
Consumer debt started to pile on.
Lower wages + lost income = can’t afford debt
Buy now and pay later
Increased consumerism

7. #4 -Gap Between Rich And Poor:
The gap between rich and poor widened
Rich got richer
Poor got poorer
Most American's could not participate in 1920’s
The wealthiest 1% saw their income rise 75%
The rest of the population saw an increase of only 9%

9. Hoover Takes the Nation
Election of 1928
Herbert Hoover
Prosperity of 1920’s – Republicans
“rugged individualism”
Individual achievement lead to prosperous economy not the government
Stock Market
DOW – Dow Jones Industrial Average
Stock market’s health
1920’s stocks constantly rise
3% of America owned stocks

10. Herbert Hoover won the presidency in 1928
Herbert Hoover won the presidency in He thought the economy would “fix” itself.

11. Why might this be a problem?
Seeds Of Trouble:
By the late 1920s, problems with the economy emerged
Speculation:
buying stocks & bonds hoping for a quick profit
Margin:
paying a small percentage of a stock’s price as a down payment and borrowing the rest
Buying stock
EX: cost of stock $100
Person paid $25
Borrows $75
Pays 20% interest
Why might this be a problem?

12. 1929 Crash: Black Tuesday, - Oct 29, 1929 Start of Great Depression
Stock Market Crash
People who had bought on margin (credit) were stuck with huge debts
Start of Great Depression
1929 – 1940 in which the economy plummeted and unemployment skyrocketed
Important: The crash alone did not cause the Great Depression, but it hastened its arrival

15. Financial Collapse: Banks Fail
People withdrawal money from banks
Invested in Stock Market
Government did not insure banks
People couldn’t pay their mortgages = banks lost money and forced to close
In banks fail
By 1933 – 11,000 of the 25,000 banks nationwide had collapsed
90,000 businesses went bankrupt
Unemployment leaped from 3% in 1929 to 25% in 1933
It’s now at about 7%-6%

16. Hawley-Smoot Tariff: #5 Cause of Great Depression
World Wide Impact
Much of Europe suffered throughout the 1920s
Europe had to repair after WWI
Germany forced to pay reparations
Hawley- Smoot Tariff
High tariffs on imported/exported goods
Intended to protect US producers
Hurt economy - couldn’t ship to other countries
Increased unemployment

17. The Great Depression Begins
Analyze Data Which two countries' tariff rates grew the most between 1928 and 1932? How would the rise in tariff rates affect the price of goods imported from these countries?

18. Summary of some of the causes of the Great Depression
Overproduction in farming and manufacturing
Buying on Credit and Margin
Too much in profits, not enough in wages for people (gap between rich and poor)
Hawley-Smooth tariff hurt Europe
Trigger – Stock market crash
World Economic problems (Europe war debt)

19. Section 2 Hardship & Suffering

20. Hardships During Depression:
The Great Depression brought hardship, homelessness, and hunger to millions
Loss of Jobs, Wages, Homes
25% Unemployment
African Americans + Latinos affected
Racial Discrimination and competition for jobs.
Hoboes- Unemployed men who wandered the country
Men started to leave their homes
Shantytowns - small shack-like towns
“Hoovervilles”

21. Soup Kitchens:
One of the common features of urban areas during the era were soup kitchens and bread lines
Soup kitchens and bread lines offered free or low-cost food for people
Even successful businessmen could be found trying to get free food.
Unemployed men wait in line for food – this particular soup kitchen was sponsored by Al Capone

22. Women and Children in the Depression
New types of work and involvement
Work outside of the home
Earned less money than men
Share groceries with neighbors
Children/Teenagers
Poor nutrition/health problems
“Hoover Tourists”
Ride trains

23. The Dust Bowl:
Over farming during the war lead to poor soil quality (no nutrients)
In addition, a severe drought gripped the Great Plains in the early 1930s
Wind scattered the topsoil, exposing sand and grit, carrying it 100’s of miles
The Great Plains became called the Dust Bowl – plains region that became worthless for farming

28. Effect Of Depression: Negatives:
Suicide rate rose more than 30% between
Alcoholism rose sharply in urban areas
Three times as many people were admitted to state mental hospitals as in normal times
Positives:
Many people showed great kindness to strangers
Additionally, many people developed habits of savings & thriftiness

29. Section 3: Objectives By the end of this lesson, I will be able to:
1. Explain Hoover’s initial response to the Depression.
2. Summarize the actions Hoover took to help the economy and the hardship suffered by Americans.
3. Describe the Bonus Army and Hoover’s actions towards it.

30. Section 3: Hoover Struggles With The Depression:
Main Idea: President Hoover’s conservative response to the Great Depression drew criticism from many Americans.
Why it Matters Now: Worsening conditions in the country caused the government to become more involved in the health and wealth of the people.
Key Terms / Names:
Herbert Hoover
Boulder Dam

31. Hoover’s Philosophy on the Great Depression:
Herbert Hoover was not quick to react to the depression
He believed in “rugged individualism”
People should take care of themselves, not depend on governmental hand-outs
Laissez-Faire
Free or direct handouts would hurt the American people
Rely on the Government to fix their problems
He said people should “pull themselves up by their bootstraps”

32. Hoover’s Steps to Recovery:
Hoover successfully organized and authorized the construction of the Boulder Dam (Now called the Hoover Dam)
This created jobs…but when it was done, there were no jobs
He also talked with companies and encouraged them to keep wages the same and not go on strike

34. Hoover Responds to the Depression
Not Good..
Did not offer any direct relief to the people
Raised Taxes (doesn’t make sense… people are unemployed…)
Well some progress…
Federal Home Loan Bank Act
Lowered mortgages rates
Reconstruction Finance Corporation
Emergency financing
Banks, life insurance companies, RR and large Businesses

35. Hoover’s Mistakes Hawley-Smoot Tariff Bonus Army
Highest tariff until this time in US History
Prevented other European countries to import their goods
Bonus Army
WWI Veterans – promised cash bonus for serving in WWI
Hoover sends the Army to disband the Bonus Army

36. Hoover Takes Action: Too Little, Too Late:
Hoover tried to help farmers and banks and also provided loans for people to pay for their homes
He started to realize that it was going to take some time for recovery.
The people were growing impatient