1. U3C11 The Great Depression Begins
U.S. History

2. Main Idea
The boom times of the 1920s had never reached into all sectors of the economy. Much of the prosperity rested on shaky foundations. In the economy’s underlying weaknesses were exposed. The stock market collapsed, and the nation plunged into the worst economic depression in its history.

3. Essential Question
What were the causes and effects of the Great Depression?

4. 1. The Great Crash: The Appearance of Prosperity
between 1922 & 1928 GNP rose 30%
1 in 5 owned an auto in 1929
Unemployment very low between 1923 & 1929: 3%
Stock market expansion: stocks quadrupled from
Faith in business and government: public confidence in government and pro-business policies remained high
The election of 1928: Hoover won an easy victory against Al Smith

6. Economic Weaknesses
Wealth distribution: 1% of the population grew income 60% from
Credit and the stock market: “buying on margin” allowed investors to borrow from stockbrokers
The Federal Reserve: tried to deter margin loans

8. Causes of the 1929 Stock Market Crash
Economic Factors
Financial factors
Stock markets rise in mid-1920s
Speculation in stock increases
Margin buying encouraged by Federal Reserve policies
Stock prices rise to unrealistic levels
Poor distribution of wealth
Many consumers relied on credit
Credit dried up
Consumer spending dropped
Industry struggled

9. The Effects of the Crash
The impact on individuals: huge fortunes disappeared; as stock prices fell borrowed money had to be paid back, shares sold for less than paid
Effects on banks: people rushed to withdraw money, banks had invested in stocks also, could not pay, went bankrupt
Effects on business: struggling businesses could not rely on banks, consumers were not spending
Effects overseas: struggling Europe after WWI was thrown backward; high tariff did more harm than good

12. 2. Americans Face Hard Times: The Development of the Great Depression
Bank failures: as a result of the stock market crash, banks lost money; many lost their savings because accounts were not insured. By 1933 U.S. bank failures lost billion of dollars of savings on top of crash.
Farm failures: people couldn’t afford food, prices dropped. By 1933 prices were 50% of 1929 levels. Many farms faced foreclosure due to inability to pay back bank loans.
Unemployment: reached 25%, 50% in Harlem. GNP down 40% pre crash levels.

15. The Human Impact of the Great Depression
Hoovervilles and hoboes: A Hooverville is a shantytown for newly homeless, named for President Hoover. Hoboes were mostly men than traveled from town to town, looking for food and work, often traveling by train, not well received by others
The emotional toll: begging brought shame that lasted a lifetime. Suicide rates rose in 1930s.

18. Dorothea Lange's Migrant Mother depicts destitute pea pickers in California, centering on Florence Owens Thompson, age 32, a mother of seven children, in Nipomo, California, March 1936.

27. Devastation in the Dust Bowl
Mother nature added to the economic disaster; lack of rain in Great Plains
The great dust storms: lack of grasses in the region caused top soil to blow hundreds of miles away. Hardest hit areas known as “Dust Bowl”: Oklahoma, Kansas, Colorado, New Mexico, Texas
Fleeing the Plains: 2.5 million left great plains for migrant work in California, known as “Okies”. Woody Guthrie songs and John Steinbeck’s novel describe the disaster.

28. "Heavy black clouds of dust rising over the Texas Panhandle, Texas", c

29. A farmer and his two sons during a dust storm in Cimarron County, Oklahoma, April Iconic photo taken by Arthur Rothstein.

30. A dust storm approaches Stratford, Texas, in 1935.

31. Buried machinery in a barn lot; Dallas, South Dakota, May 1936

32. Map of states and counties affected by the Dust Bowl between 1935 and 1938 originally prepared by the Soil Conservation Service. The most severely affected counties are colored  .

33. A migratory family from Texas living in a trailer in an Arizona cotton field

34. 3. Hoover as President: Herbert Hoover’s Philosophy
Rugged individualism: Hoover favored a federal government that played as little a role as possible in the affairs of business. Yet he believed that is was vital for the nation’s well being not to destroy people’s belief in their own responsibility and power.
The associative state: Hoover’s vision of voluntary partnerships between business associations and government.

35. Hoover’s Response to the Great Depression
Hoover believed government should not provide direct aid. It should find ways to help people help themselves.
Voluntary cooperation: Cooperative is an organization that is owned and controlled by its members, who work together for a common goal. Hoover urged groups to not fire or lay off people for the sake of the economy.
Direct action: In 1932 Hoover created Reconstruction Finance Corporation (RFC) -$2 billion in government loans, many citizens thought it was too little too late.
The Smoot-Hawley Tariff Act: Hoover effort backfired badly in Act raised cost of imported goods. European nations responded by raising tariffs; trade plummetted.

36. The Nation Responds to Hoover
The president loses favor: Hoover’s optimistic claims, “I am convinced, that we have passed the worst,” (when the worst was yet to come) upset voters. They couldn’t understand why he was willing to help banks and businesses and not individuals.
Bonus march: WWI veterans wanted a bonus that was promised them, Congress refused to pay. Hoover wanted to balance the budget, so he raised taxes in 1932, highly unpopular.
The voters react: Hoover did not campaign until October, a month before the election.