1. The Great Depression

2. Causes of The Great Depression

3. 1. Uneven Distribution of Wealth
Workers output increased 32%, wages increased 8%
Corporate profits increased 65%
60% of families earn less than $2,000/yr.
The wealthy minority did not buy enough to keep the economy going

5. 2. Easy Credit People accumulated more and more debt each year
80% of all radios and 60% of all cars purchased were bought using credit

6. 3. Stock Speculation/ Crash
Soaring stock prices were based on confidence rather than reality of profits
Investors continued to buy on margin
These led to the Stock Market Crash

7. Stock Market Crash October 23, 1929 – Dow Jones drops 21% in 1 hour
October 24, 1929 – Black Thursday, Investors lost confidence and began to sell
October 29, 1929 – Black Tuesday, the Stock Market Crashed when over 16 million shares of stock were sold that day

8. From 1921 to 1929, the Dow Jones rocketed from 60 to 400
In October 1929, the Dow sank from 400 to 145
$140 billion of depositor money disappeared because banks had invested depositors money in stocks
The Dow Jones finally surpassed its 1929 high, a full 26 years later in 1955.

10. By October 27, 1929 RCA was trading at $58
By October 27, 1929 RCA was trading at $58.50 per share when the first wave of selling on “Black Monday“, October 28, 1929 brought the shares down ($18.375) to close at $40.25 per share on the day. By August 11, 1932, RCA was trading at $8.875 and hit a 1932 low of $2.50 per share

11. Stock prices on Sept. 3, 1929, Oct. 29, 1929 and Nov. 15, 1929
General Electric- $396.25, $210.00, $201.00
Hershey Chocolate-$128.00, $108.00, $68.00

13. 4. Banks Collapse Depositors rushed to withdraw money from banks
The Fed limited the money supply to discourage lending
Banks did not have sufficient reserves
1929 – 641 banks failed
1930 – 1,350 banks failed
1931 – 1,700 banks failed

15. 5. Tariffs Hawley-Smoot Tariff 1930
Extremely high tax imposed on imported goods
Destroyed international trade by closing off markets

16. Congress passed the Hawley-Smoot Tariff to protect American manufacturers from foreign competition.
The strategy was a mistake. Other nations retaliated and raised tariffs as well.
The resulting drop in world trade only made the glut of American factory and farm products harder to sell. 16

17. 6. Businesses Close When businesses closed people lost their jobs
By 1933, unemployment reached 25%

18. The stock market crash didn’t start the Great Depression by itself
The stock market crash didn’t start the Great Depression by itself. Instead, it quickened the collapse of the U.S. economy.

19. Effects of Great Depression in Rural and Urban Areas

21. Bread lines were run by Churches and Private Charities

23. Poverty in Rural America
Crop prices fell
Drought in the Great Plains
One million farmers lost their farms
Some worked as tenant farmers
Dust Bowl struck the southern Great Plains

25. Dust Bowl

27. Migration
Families migrated out of the region to escape the Dust Bowl and depression
Dust Bowl refugees were called “Okies”
Rural to Urban
Went looking for jobs but found none

28. Poverty in America’s Cities
Loss of jobs, wages, and hours cut
Many sold furniture, jewelry to get money
Lost their homes
Moved to Hoovervilles
Shantytowns of shacks built on public land or vacant lots
Used scrap metal, glass, tin, lumber
Used newspaper to keep warm

29. Hoovervilles

30. Hoover’s Response Voluntarily work toward common goals
Asked business men to keep employment, wages, and prices at current levels
Called for tax reduction, lower interest rate, and create public-works programs
Asked wealthy to give money to charity

31. Volunteerism Fails Businesses continue to fail and lay off workers
Local governments cannot provide jobs

32. Hoover Creates the RFC
Reconstruction Finance Corporation gives loans to big businesses and banks
Businesses and banks were supposed to hire new employees and give loans to more businesses
This policy is known as Trickle-down Economics
Was this effective?

33. RFC was ineffective Businesses do not hire workers
Bankers keep money for themselves
Unemployment remains high

34. Bonus Army
WWI veterans marched on Washington demanding their bonus congress had promised them
Congress passed a bill to pay the bonus early
Hoover vetoed it
General Douglass MacArthur and federal troops were called to clear out the Bonus Army
MacArthur used force without Hoover’s permission

36. Hoover’s Success Boulder Dam (Hoover Dam)
Created much needed jobs in Southwest
Provided electricity and irrigation