1. Road to the Great Depression

2. Was the US really prosperous?
Gaps in prosperity
Farmers, iron and railroads not as prosperous and auto industry
Gap between wealthy and poor
Farmers overproduced (produce too much)- lead to price of food and crops going down (farmers in debt)
Buying on installment plans
Buying on credit- low down payment and make monthly payments until paid for
Many people could not afford what they bought and were overextending their credit
Beginning of credit cards and personal debt for overuse

3. Magazine Advertisement
Installment plans
Magazine Advertisement

4. Causes Farmers in trouble Industries in trouble- RR, steel, textiles
Credit- People buying in credit and installment plans
Buying on the Margin
Lead to stock market crash
Laissez-faire
Govt does very little to help

5. Farmers Overproduction Debt
Farmers produce more which leads to price of crops going down
Debt
Increase debt and foreclosures on farmers loans
Hurt banks because farmers can’t make payments and foreclose

6. Industry Auto industry was booming Other industries failing
Assembly line will make cars affordable
Henry Ford and Ford Motor Company
Other industries failing
Steel, coal mining, railroads, textiles, lumbering, other mining
Lead to workers losing jobs and debt

7. Election of Hoover 1928- Elected as Republican “Rugged Individualism”
Belief that individuals should help themselves and government should not get involved to help people

8. Buying on Credit
People buy new things (sewing machines, washers, etc) on credit or installment plan
Low down payment and pay off in small payments
Lead to more personal debt as people can’t afford to pay for these things

9. Crash of 1929 “Buying on the Margin”
Way to buy stocks where you pay part of the money up front and banks finance the rest
Example- you buy a $100 stock but only pay $20 because bank finances other $80
When stocks doing good- fine
When stocks drop- people lose $20 and can’t pay back the other $80
Leads to panic and people selling stocks for whatever they can get

10. Crash of 1929 October 29, 1929 Bank Failures “Black Tuesday”
People sell stocks in record numbers and stock market drops dramatically
People lose entire savings and investments
Bank Failures
Following collapse, people rush to banks to withdraw money
Many banks couldn’t pay because they lose in stock market crash
Leads to bank closings and people losing investments in banks

11. Other Effects High Unemployment as businesses fail Worldwide Effects
3% n 1929 to 25% in 1933
Worldwide Effects
Many European investors lost money in US stock market crash
European economies effected
Hard to sell American farm goods overseas

12. Great Depression Unemployment

13. Hoover’s Reaction Cautious “Rugged Individualism”
1929- Boulder Dam (Hoover Dam)
Provide electricity and control floods in Nevada and California (today provides water to Las Vegas and Los Angeles)
Finally Hoover acts
Federal Home Loan Bank Act- reduce mortgage rates for homeowners
Reconstruction Finance Corporation- $2 billion in emergency funds for banks and other businesses

14. Life in Great Depression
Dorothea Lange- pictures of life during Depression
Life in Great Depression
Hoovervilles
Named after President Hoover
Settlements of poor and unemployed
Built homes from boxes, scrap metal, whatever they could find
Dust Bowl
Caused by drought and overproduction
Extreme drought conditions
Huge storms of dust and wind- drive many farmers to leave (for California)
Dust storms- could not see, spread disease, winds causes destruction
Will be referred to as Oakies
From

15. Bonus Army March Bonus Army (1932)
WWI veterans wanting bonus (Govt. had promised to pay this in 1945)
Wanted it earlier- due to depression
Hoover refused
Most left Washington DC- about 2,000 stayed
US Army forced to act- gassed about 1,000 people (some died, including 11month old baby)
Hoover’s image and reputation will suffer

16. Election of 1932 Franklin Roosevelt (FDR) wins
Promise to use government spending to help economy
First action in 1932 will be to close all bank and declare a banking holiday
Pass the Emergency Banking Relief Act
Sound banks can reopen
Those that needed help would get loans
Programs will become known as the New Deal
He will win re-election in 1936, 1940, and 1944

17. 1932

18. 1936

19. 1944