1. The Great Depression The Grapes of Wrath

2. Black Tuesday The start of the Great Depression usually is cited as Monday, October 28, 1929 and Tuesday October 29, 1929 when the DOW Jones dropped nearly 25% in a 48 hour period. – This was after the market had already dropped 11% the week before! – The amount of shares traded and sold during that time period were record amounts that would not be broken for nearly 40 years. – The causes for the stock market crash were overbuilding and rampant speculation by investors buying on credit during the “Roaring 20s”, fraud by investors, and uncertainty over Congressional legislation. After some slight stabilizations, the stock market continued to drop from April 1931 to July 1932, reaching an all-time low of 41.22 or a mere 11% of it’s previous high on July 8, 1932. – The stock market would not close at a level higher than it did in 1929 until November 23, 1954.

3. Bank Runs and Bank Failures Because so many investors were buying on credit (meaning buying with loans), when their investments were wiped out, banks called their loans. Almost all investors could not repay their loans (most were buying stocks with up to 100% bank loans and had no money of their own in the stock market). – However, to get a loan, they had to have some assets to use as collateral to get the loan. – Assets are things of value such as a house, a car, jewelry, that banks will take if you fail to repay your loan. As people lost all their property, banks became flooded with assets and did not have enough cash to cover their investments. – Most banks had invested their money in the stock market or had loaned it out, and those loans and investments were worthless meaning banks didn’t have enough money to cover their deposits.

4. Bank Runs and Bank Failures In 1930, 10 times the average number of banks failed. By the end of 1931, over 20% of all the banks in the United States had failed. As banks failed (meaning they went bankrupt), hundreds of billions of dollars were in assets and investments were wiped out. – In 1934 alone, over $130 billion were wiped out by bank failures. – The total amount lost in bank failures in today’s dollars is hard to estimate, but would be well over $10 trillion dollars. In total, there were 4 main bank runs, although many small ones happened throughout the end of the Great Depression. – Over 9,000 banks closed.

5. Unemployment and Productivity As banks failed, businesses could not get loans to buy materials to produce or to make payroll. – Most businesses operate on credit for most of the year and only sell items in peak periods. As a result, businesses slashed payrolls, and unemployment immediately jumped up to over 20% of the country unemployed. – By 1932, 23.6% of all people were unemployed. – By 1933, over 25% of the country was unemployed. – This was the highest and longest period of unemployment in our country’s history. – By comparison, during the Great Recession, unemployment has been between 10 and 14% of the population.

6. The Dust Bowl To make the Great Depression even worse, starting in 1934, the first of 3 major droughts hit the midwest. As immigrants had come to the U.S. in the 1910s and 1920s, many of them had settled in the midwest and got farms through the Homestead Act. – As more and more immigrants came, they got less and less desirable land. During the 1920s, unusually large rainfall made the areas seem great for farming. – So more and more land was used for farmland, making the land less stable. Eventually the dust storms were so big, that single dust storms could stretch from Texas to Washington, D.C. This caused millions of farmers to become displaced and move to California. In many places, up to 50% of all topsoil was lost during the dust bowl.