1. What is a “Snowball Effect” Can you give an example???

2. Great Depression: The period between 1929-1941 of economic hard times that followed the crash

3. The stock market crash did NOT cause the Depression BUT it shook people’s confidence of the economy
People were shocked & confused as to how the 20s prosperity vanished

4. Causes: Overproduction
Factories & farms produced vast amount of products
Wages didn’t keep up with prices = workers could NOT afford to buy goods
Farmers had little $$ for cars & other items
Factories/ farms produced more goods than people were buying
As orders slowed, factories closed or fired people

5. Unemployment Rate

6. Causes: Weakness of the banking system Banks made “unwise” loans
Banks lent $$ to people who invested in the stock market
When the market crashed, borrowers could not repay their loans
Without the $$ from loans, the banks could not give depositors their $$ when they needed it
Result: many banks were forced to close

7. Bank Closures 5,000+ banks closed between 1929-1932
If bank closed – depositors lost the $$ that they had deposited
Often, a family’s life savings vanished overnight

8. A Good Old Timey Bank Run

9. The Snowball Effects of the GD

10. After the crash, the economy slid downhill at a fast pace
Stock market crash  ruined investors  no $$ from investors  businesses could NOT grow or expand  businesses could NOT get loan $$ from banks
BECAUSE the crash landed banks in trouble too

11. Bankrupt: when businesses are unable to pay debts
Factories cut back on production  wages were cut  people were fired  unemployed workers had little $$ to spend  the demand for goods fell further  businesses went bankrupt & closed  more people were fired from working

12. WW1 Loans
After WW1, U.S. had loaned large amounts of $$ to European nations to pay off war debts…stock market crash  U.S. banks stopped making loans as they were hemorrhaging $$  U.S. banks demanded repayment of European loans  European banks began to fail

13. Hard Times
When the crash happened, millions of Americans lived in cities and worked in factories
When factories closed, the jobless had no $$ for food & no land to grow any on

14. Rising Unemployment As depression spread, unemployment rate soared
¼ workers were jobless
Millions worked shortened hours or took pay cuts so people literally worked themselves to death

15. Rising Unemployment The jobless lost their homes
Streets filled with peddlers, beggars, scavengers
Shoe shiners
Apple stands
Those who were rich now experienced how the other half lived

16. The Human Cost Marriage & birth rates dropped
Hungry people searched through dumps
Many families split up as men & boys left to find work & hopefully one day return

17. The Human Cost
Many “rode the rails” living in railroad cars & hitching
A return to tenement housing & slum situations
Families starting canning to preserve food
The Great Depression shook the belief in an American identity – total failure replaced confidence

18. Hoover was deeply concerned as well as confused BUT didn’t think the gov’t should become directly involved in helping to end the business crisis
He thought that would cause gov’t to become too powerful
We just fought with other countries led by dictators
He felt it was up to businesses to work together to end the downslide

19. Government Relief Programs: programs to help the needy
At first, Hoover was against these & he urged business leaders to keep workers employed/ maintain wages
Hoover called on private charities to help the needy
Churches set up soup kitchens: places where the hungry could get a free meal

20. More Gov’t Relief
Ethnic communities organized their own relief efforts
Conditions grew worse
Hoover realized other steps were needed
He set up public works: projects built by the gov’t for public use
Gov’t hired workers to build schools, dams & highways

21. More Gov’t Relief By providing jobs, it enabled people to earn $$
Hoover asked Congress to approve the Reconstruction Finance Corporation (RFC): 1932 – loaned money to banks, railroads & insurance companies to help them stay in business
The hope was that by saving these businesses, he would save thousands of jobs