1. The Great Depression Begins
Chapter 9

2. Learning Targets
Students will be able to explain the causes for the Great Depression
Students will be able to describe how life changed for many Americans in the early years of the Depression
Students will be able to explain President Hoover’s responses to the Depression

3. The Long Bull Market The Election of 1928 The Stock Market
Hoover versus Al Smith
Issues - Catholicism
The Stock Market
Bull Market – long period of rising stock prices
Speculation – buying stocks in the hope of selling them quickly for a profit
Margin – buying stocks on small cash down payment. Rest of cost was interest-bearing loan
Margin Call – demanding immediate repayment of loan

4. The Great Crash Stock prices hit peak and started to fall
Investors sold more and more stock causing prices to fall further
Margin calls caused people to sell stocks at even lower prices – drove market into tailspin
October 1929 Black Thursday – market plummeted/many investors financially wiped out
Crash did not cause Great Depression but weakened US financial stability

5. The Great Crash Banks Market crash weakened banks
Banks had made loans to stock speculators and invested depositors’ money in stocks
To cover losses, banks drastically reduced loans – businesses and people unable to borrow money
Some banks forced to close – depositors lost all savings
Bank Run - depositors went to banks and withdrew all money
Withdrawals exceeded cash reserves causing more banks to fail
By 1932, 1 in 4 banks closed

6. STAARS Question
Stock speculation most directly contributed to the Great Depression by
Increasing the worth of only a small percentage of companies
Artificially inflating the value of publicly traded stocks
Allowing corporations to make risky loans to consumers
Pushing regulators to clamp down on financial companies

7. STAARS Question
How did bank failures most directly contribute to the onset of the Great Depression?
By laying off a substantial part of the workforce
By forcing the Federal Reserve to assume heavy debts
By initiating the growing home and farm mortgage crisis
By wiping out the savings of millions of Americans

8. Roots of the Great Depression
Factors Causing Great Depression
Wealth Gap – fewer people could buy products
Overproduction – Factories/farms produced more but low wages meant people bought less
Agriculture – farmers bought land & equipment during WWI’s high demand. End of war brought low prices wiping out many
Installment Plans (credit) – high cost items bought on credit. People stopped purchasing to pay off debt causing factories to cut production & lay off workers
Downturn caused ripple effect in economy

9. Roots of the Great Depression
No unemployment insurance or other safety nets
Stock speculation cut loans to foreign nations – foreigners could not buy American products
Hawley-Smoot Tariff – raised tariffs to historical high
Foreign nations retaliated w/high rates – fewer US products purchased
Federal Reserve – kept interest rates low encouraging risky loans. Businesses expanded when sales were falling. Reserve then raised interest rates which tightened credit

10. The Depression Worsens
Bank closures and business bankruptcies continued into 1932
People lost homes or were evicted from rentals – many built temporary houses out of trash on public lands (shantytowns). People called them Hoovervilles after President Hoover
Hobos - homeless men and boys wandered across country looking for work or place to stay – many by railroad
Repatriation – some immigrants went back to home countries, some forced such as Mexicans. Many were actual American citizens

11. Hobo Hunt

12. The Dust Bowl
Large-scale agriculture on Great Plains caused erosion of topsoil
High winds and drought caused extreme dust storms
During 1930’s, about 50 dust storms hit prairie per year
Crops were buried, livestock and sometimes humans died due to dust-clogged lungs
Migration from affected areas mostly to California (“Okies”)

17. STAARS Question Which of the following best completes the diagram? ?
New farming techniques are introduced
Farmers overplant and do not rotate crops
High winds carry dust over long distances
Settlers establish homesteads across the region
Physical Factor:
Lasting drought dries up the soil and kills crops
Human Factor: ?
Formerly fertile land becomes unstable and desertified

18. STAARS Question
What is the one issue that helped lead to the creation of shantytowns known as Hoovervilles during the Great Depression?
Rapid economic expansion in cities had caused a lack of affordable housing options
Resentment over the income gap between the rich and poor led to widespread protests
Widespread unemployment and bank failures led many people to lose their homes
Dissatisfaction with the government’s welfare programs in certain states led to high internal migration

19. Arts and Entertainment
Emphasized American values
Grant Wood’s American Gothic
Literature
John Steinbeck – The Grapes of Wrath
Movies
Movie grew in popularity
comedies, child stars, animation – escape from dreary life
Ordinary Americans celebrated as heroes such Mr. Smith Goes to Washington
Radio
Daily listening
Soap operas (dramas sponsored by laundry soaps)

20. Hoover’s Response
Hoover believed that American “rugged individualism” would keep US economy moving
Tried to get businesses to maintain employment/wages but most failed
Funded public work projects – not enough jobs generated
Refused to spend money on direct relief – finally relented and signed Emergency Relief and Construction Act
Asked Federal Reserve to print more money – Fed refused
Set up Reconstruction Finance Corporation (RFC) to loan money to businesses – did not loan enough

21. Angry Mood People growing desperate
Increased instances of looting of grocery stores
Hunger marches sponsored by Communist Party
Communist Party saw biggest increase in membership during Great Depression
~One million farms foreclosed
Farmers destroyed crops to raise prices

22. Bonus March WWI veterans promised $1,000 bonus payable in 1945
Desperation caused large group (~15,000) to march on Washington DC and demand payment now
Marchers squatted in Hoovervilles in city – occupied government offices
Congress refused to pay bonus – Hoover ordered army to remove marchers from government buildings
General Douglas MacArthur cleared buildings and attacked/burned camps – two veterans killed
Hoover blamed for fiasco