1. The Great Depression: Causes and Effects
6.3: Explain the causes and consequences of the Great Depression, including the disparities in income and wealth distribution; the collapse of the farm economy and the effects of the Dust Bowl; limited governmental regulation; taxes, investment; and stock market speculation; policies of the federal government and the Federal Reserve System; and the effects of the Great Depression on the people.

2. Black Tuesday Stock Market Crash October 29, 1929 Result not Cause
Signals the start of the Great Depression
*Only WWII gets America out of the Great Depression, not New Deal

3. Causes of the Great Depression
1. Disparity of Incomes
2. Buying on Credit
3. Farm Economy Collapse
4. laissez-faire policy and the end of Progressivism
5. Taxes
6. Stock Market Speculation
7. Federal Reserve

4. 1. Disparity of income
Roaring 20’s: good times; high employment and no inflation
However, Gap between rich and poor was very large
Majority of workers lived below poverty line ($2500 in 1929)
Companies were making lots of money, but did not share this with their employees

5. 2. Buying on Credit
At some point creditors will stop giving people credit
Consumers cannot buy anymore
Drop in consumer spending = lay-offs
Layoffs = less spending, which then = more lay-offs

6. 3. Farm Economy farmers produce too much farm prices fall
farmers produce more to keep up
prices fall even more
farmers cannot pay their loans, default
defaulting puts banks out of business

7. 4. laissez-faire policy and the End of Progressivism
Big Business allowed to do whatever they want - laissez-faire
tariff raised on foreign goods to help protect US industry
child labor and minimum wage overturned
Is this an end of Progressivism? Who does the tariff hurt?

8. 5. Taxes taxes on the wealthy are slashed
so who is paying taxes to the government?
Wealthy spend money on luxury items, not items produced by the common factory worker
Or the tax money saved was put in the stock market rather than their companies (R&D, factories, or workers), so why give a tax break?
**then the companies saw the excess inventories and started pulling money out of the Market**

9. 6. Stock Market Speculation
“get rich quick”
buy on margin - investor allowed to borrow the money to buy stocks now
People had to sell, which drove the price down even further
Black Tuesday - some wealthy tried to prop up the Stock Market, but to no avail

10. 7. Federal Reserve
charged low interest and businesses would borrow - goes to workers who buy products
charge high interest people don’t borrow - discouraged lending
**If government, would have cut interest rates the Great Depression would have been as intense or long lasting**

11. Government to the aid
1. because of influence of Big Business the Government issues a tariff - which made goods high
other Countries can’t sell their goods in America and therefore cannot buy American
Also impose their own tariff on American goods
2. President Hoover urges companies to voluntarily maintain wages and hours - companies do the opposite
3. Advocates “rugged individualism”

12. Impact on the People 25% Unemployment
People lost their homes - took to the streets
People that still had jobs had their hours and wages cut
People only bought necessities - further led to lay- offs
“Runs” on banks
people fear losing money and take all their money out of banks

14. Images Soup Kitchens Bread Lines Hoovervilles Dust Bowls Okies
Bonus Army

15. People people undernourished schools closed
Abandonment increases – Men leave families for work or shame
Suicide rate increases sharply
birthrate fell –
Men no longer the head of the household
People looked to the government for help

16. Birth Rates in U.S.