1. Causes of the Great Depression

2. Prosperity Hides Troubles
Throughout the 1920s, the U.S. had experienced economic prosperity with two Republican presidents.
When likeable Herbert Hoover was chosen as the Republican candidate in 1928, he promised “…a chicken in every pot, a car in every garage.”
Hoover had held numerous gov. positions previously and excelled in them, such as head of the Food Administration during WWI and Secretary of Commerce.

3. Prosperity Hides Troubles
Underneath the prosperity, though lurked several problems that compounded throughout the decade.
Farmers had increased production, bought more land, and purchased machinery on credit during WWI. However, production did not immediately decrease after the war. Farmers were unable to sell their abundant crops, pushing them further into debt.

4. Prosperity Hides Troubles
When industrial wages rose steadily, their output increased at a much greater rate; management made more. The rich Americans did not make up for the lack of purchasing power of the lower-wage Americans.
This is known as an uneven distribution of wealth.
Buying on credit compounded with each year. More and more Americans bought what they could not afford.

5. Prosperity Hides Troubles
These problems boiled over on October 29th, 1929 when the stock market crashed. It became known as Black Tuesday.
However, this was part of the business cycle– a series of expansions and recessions in the economy.

6. The Great Depression Begins
The reaction to the stock market crash signaled the start to the Great Depression.
Stock market speculation too many people had put money into the stock based on what could happen, and not real information (known as speculation);
Banks collapse when people lost money on the stock market, they feared they would lose their money in the banks, so they withdrew it.

7. The Great Depression Begins
The government attempted to protect American products, by passing the Hawley-Smoot Tariff. It raised taxes on imported goods, crippling international trade.
European difficulties with reparations and war debt payments worsened when the U.S. could not lend money to European countries.

8. Misery and Despair Grip American Cities
Massive unemployment as a result of the economic collapse led to widespread homelessness and poverty.
This led to the ‘construction’ of American shantytowns, made from cardboard boxes.
They were known as Hoovervilles because many saw the blame for the collapse as belonging to the president.

9. Closing Question
Which of the causes discussed today contributed most to the Great Depression? Provide two examples to support your answer.