1. Causes and Effects of the great depression
EQ: How did the Great Depression happen, and how did Americans respond to it?

2. The Great Depression the worst economic crisis in American history
in the past, the government did little or nothing and the economy got better
Not the first time US had bank runs
the nation had to rethink the relationship between government and the welfare of regular people

3. Overview of Causes Overproduction of goods
Under-consumption of agriculture
Uneven Distribution of Income
Consumer Debt
Widespread stock market speculation
Political Decisions (Hoover Years)

4. 1. Overproduction of goods
Manufacturing continued at wartime rates
Consumers were not purchasing goods at the same rate which they were being manufactured
The value and price of goods declined, hurting businesses

5. Under-consumption of agriculture
demand for farm produce fell after WWI
farmer’s couldn’t pay their loans
thousands of farms were seized by banks

6. Uneven Distribution of Income
poor families couldn’t afford to buy goods
rich families didn’t buy enough to help the economy
1% made over $10,000
5% made $5,000 – 9,000
29% made $2,000 – 5,000
65% made under $2,000

7. real estate speculation
Consumer Debt
real estate speculation
Florida land grab – people sold land actually in the ocean
average people had no safety net when the depression began
80% of radios purchased on credit
60% of cars purchased on credit

8. Widespread stock market speculation
Buying on “margin’ was the idea of buying stocks on credit.
When the price of the stocks dropped people went in to debt and lost their life savings.

9. Hoover Years Overconfidence in the nations wealth and economy
“By adherence to the principles of decentralized self government, ordered liberty, equal opportunity, and freedom to the individual, our American experiment in human welfare has yielded a degree of well-being unparalleled in all the world. It has come nearer to the abolition of poverty, to the abolition of fear of want, than humanity has ever reached before.” —Herbert Hoover, campaign speech, 1928
Overconfidence in the nations wealth and economy
Little to no government interventions

10. Black Tuesday – October 29, 1929
JP Morgan himself tried to buy enough stock to stop the crash
16 million shares were sold in one day
Thousands lost their jobs
within two months stocks dropped $40 billion about the cost of WWI
GE dropped from $400 to $283 a share
11.6.1

11. Overview - Effects of the Depression
Banks and businesses fail
Unemployment soars
Personal income shrinks
High tariffs = less trade with other countries
World trade declines
American loans to Europe stop
Global depression – all major economies are impacted

12. Banks and Business Fail
“Crisis in confidence”
Step 1
People Panic and take all of their money out of banks
People stop spending money
Step 2
Banks start fail – out of money
Try to collect on loans owed to them
Step 3
Business struggle to keep doors open
People loose their jobs – increase in unemployment
Step 4
People can’t pay their loans and stop buying goods
Businesses begin to fail
Unemployment increases even more
Step 5
Federal government limits money supply
More people can’t pay loans, loose homes and land

13. American life during the depression
Consistent bank runs and banks failures
High unemployment
Hooverville's
Bread lines

14. Unemployment rates

15. BANKRUN’s and business failures
People panicked and pulled out their entire life savings from the banks
This forces banks to fail
This happens regularly until 1933
Leads to large numbers of business failures

16. A boy asleep in a cardboard box in a Ca, Hooverville, 1933
Hooverville's
A boy asleep in a cardboard box in a Ca, Hooverville, 1933
a shantytown built by unemployed and destitute people during the Depression of the early 1930s.
Named this as an insult to President Hoover

17. As if economic depression wasn’t enough…. The dust bowl
Manmade and Natural Disaster
Over development of land
Long drought in the Mid-West
Farmers went bankrupt
Huge, deadly dust storms took away top soil
100 mille/hour winds blew dirt 8,00 feet into the air
Dirt blew as far as Boston
Okies – farmers moving out of Dust Bowl
Most weren’t from Oklahoma
Black Sunday, April 1935
Oklahoma 1933