Chapter 7, Lesson 3 The Good Times End Mr. Julian’s 5th Grade Class Essential Question •What were the causes of the Great Depression? Places • New York, New York People • Herbert Hover Vocabulary • • • • Unemployment Stock market Great Depression Credit Beneath the Surface • When Herbert Hoover was elected to President in 1928, the U. S. economy was the best it had ever been. • However, many farmers had to borrow money to help feed the war effort during WW I. • After the war, less food needed to be produced, yet farmers need to sell the same amount of crops to pay their debt. Beneath the Surface • Factories were also producing more goods than people could buy. • Factories began to lay off workers to save money. • Unemployment is the condition of being out of work. • Other businesses were suffering as well. The Stock Market Crash • The good time ended when the stock market crashed on October 29, 1929. • Many people invest in companies in hope of making a profit. • These investments are called stocks and the stock market is located in New York, New York. The Stock Market Crash • In September 1929 prices began to fall slowly, causing many stockholders to sell their stocks. • The selling of stocks causes the entire market to drop. • In October with the market already down, the crash happened causing most investors to sell their stocks. • October 29, 1929 is known as “Black Tuesday.” The Stock Market Crash • As the stock market fell, billions of dollars were lost. Many people lost all of their money! Causes of the Depression • Within weeks of the stock market crash, the entire country entered the Great Depression. • The stock market crash was only one of the many causes of the depression. • One reason the crash caused panic was that people bought stocks on credit, or borrowed money. Causes of the Depression • The credit problem hurt many banks. When people could not pay back their loans, banks went broke as well. Many banks had to close. • People heard of the banks closing and they rushed to their bank to withdrawal their money. • These banks did not have enough cash for every customer and these banks had to close as well. Causes of the Depression • The last reason for the depression was the high tariffs placed on farming goods. • A tariffs is a tax placed on good that are produced in other countries and sold in the U.S. Hard Times • People began to cut back on their spending. • Because fewer people were buying goods, more businesses had to close placing more people out of work, which lowered the economy even further. • People that still had jobs had to take pay cuts. • Because fewer people were working the government received few taxes. • Some schools had to close because there was not any money to pay teachers. Surviving the Depression • The Great Depression changed the lives of millions. • Most people could not find jobs, people delayed getting married and having children. • Families struggled to survive. • Some children had to quit school to help the family earn money. Surviving the Depression • Charity groups and local governments struggled to help those in need. • Hungry people stood in line for hours to get a piece or two of bread and a bowl of soup. • Homeless people built shelters out of cardboard or other materials. • Groups of these shelters became known as “Hoovervilles.” Surviving the Depression • Empty pockets became know as “Hoover Flags” and newspapers were called “Hoover Blankets.” The Election of 1932 • Most people blamed President Hoover for the Great Depression. • Hoover believed that the economy would just fix itself. • Franklin Delano Roosevelt promised to take bold action to fight the depression. • FDR won the election and many people had hope for the first time since the beginning of the depression. Timeline • 1928 - Herbert Hoover was elected President • 1929 - Many people lost all of their money when the stock market crashed. • 1932 - More than 25 percent of workers in the U.S. were unemployed. • 1932 - Franklin D. Roosevelt was elected President after he promised bold action to fight the Great Depression. Writing Response • In two or more paragraphs, explain the reasons for the Great Depression.