THE GREAT
DEPRESSION
BEGINS
Photos by photographer Dorothea Lange
Objectives
1. The learner will understand the causes and consequences of the
Great Depression and the futility of Hoover’s actions to limit the
damage.
2. The learner will summarize the critical problems threatening the
American economy in the late 1920’s.
3. The learner will describe the causes of the stock market crash and
Great Depression.
4. The learner will explain how the Great Depression affected the
economy in the United States and the world.
State Standards
7.7 Determine the possible factors that led to the economic collapse of 1929 (i.e., over production
of agriculture and industry, expansion of credit, financial speculation, agricultural crop failures, tariff
barriers, laissez- faire).
8.2 Recognize the negative patterns of an economic cycle (i.e., increase of unemployment,
decrease of price level, excess inventory, decrease of production, repossession, increase of
business failure, and bankruptcy).
8.4 Identify the changes in social and cultural life caused by the Great Depression and the Dust
Bowl (i.e., Hoovervilles, Bonus Army, migrations, worldwide economic depression, Democrat victory
in 1932, widespread poverty, unemployment, religious revivalism).
SECTION 1: THE NATION’S
SICK ECONOMY
American industries first began to show signs of economic trouble during the
1920’s.
One indicator of a weak economy in the late 1920’s was a decline in housing
starts
As the 1920s advanced, serious problems threatened the economy while
Important industries struggled, including:
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Agriculture
Railroads
Textiles
Steel
Mining
Lumber
Automobiles
Housing
Consumer goods
FARMERS STRUGGLE
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Photo by Dorothea Lange
No industry suffered as much as
agriculture
During World War I European
demand for American crops
soared
Causes of the farming crisis of the
1920’s included the fact that
demand for crops fell after World
War I.
After the war demand plummeted
Farmers increased production
sending prices further downward
so the government enacts price
support for certain crops.
Farmers’ debts increased in the
1920’s.
In an effort to curb the financial
loss farmers were suffering,
congress tried to pass the
McNary-Haugen bill, which
mandated Price support on key
crops.
Section 1
The Nation’s Sick Economy
Price support – the maintenance of a price at a certain level through
government intervention.
CONSUMER SPENDING
DOWN
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By the late 1920s, American
consumers were buying less
Rising prices, stagnant
wages and overbuying on
credit were to blame
Credit is an arrangement in
which consumers agree to
buy now and pay later for
purchases, often on an
installment plan that includes
interest charges.
Most people did not have the
money to buy the flood of
goods factories produced
Section 1
The Nation’s Sick Economy
Price support – the maintenance of a price at a certain level through
government intervention.
Credit – an arrangement in which a buyer pays later for a purchase, often on an
installment plan with interest charges.
GAP BETWEEN RICH &
POOR
• The gap between rich
and poor widened
• The wealthiest 1% saw
their income rise 75%
• The rest of the
population saw an
increase of only 9%
• More than 70% of
American families
earned less than $2500
per year
Photo by Dorothea Lange
HOOVER WINS
1928 ELECTION
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Alfred E. Smith was the
Democrat that lost the
presidential election of 1928.
Herbert Hoover was the
Republican who won the
presidential election of 1928.
Republican Herbert Hoover ran
against Democrat Alfred E.
Smith in the 1928 election
Hoover emphasized years of
prosperity under Republican
administrations
Hoover won an overwhelming
victory
Young Hoover supporter in 1928
THE STOCK MARKET
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By 1929, many Americans were
invested in the Stock Market
The Stock Market had become
the most visible symbol of a
prosperous American economy
The Dow Jones Industrial
Average was the barometer of
the Stock Market’s worth
The Dow Jones Industrial
Average is the name of the most
widely used measure of the
stock market’s health.
The Dow is a measure based on
the price of 30 large firms
Section 1
The Nation’s Sick Economy
Price support – the maintenance of a price at a certain level through
government intervention.
Credit – an arrangement in which a buyer pays later for a purchase, often on an
installment plan with interest charges.
Dow Jones Industrial Average – a measure based on the prices of the stocks of
30 large companies, widely used as a barometer of the stock market’s
health.
STOCK PRICES RISE
THROUGH THE 1920s
• Through most of the
1920s, stock prices
rose steadily
• The Dow reached a
high in 1929 of 381
points (300 points
higher than 1924)
• By 1929, 4 million
Americans owned
stocks
New York Stock Exchange
SEEDS OF TROUBLE
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By the late 1920s, problems with the
economy emerged
Speculation: Too many Americans were
engaged in speculation – buying stocks
& bonds hoping for a quick profit
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Margin: Americans were buying “on
margin” – paying a small percentage of
a stock’s price as a down payment and
borrowing the rest
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The Stock Market’s bubble was
about to break
Speculation refers to making extremely
risky business transactions on the
chance of making quick or considerable
profits.
Buying stocks on the chance of a quick
profit without considering risks is known
as speculation.
The stock market crash of 1929 was
fueled by speculation, unwise
investments that people hoped would
make them rich overnight.
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Buying on Margin refers to paying a
small percentage of a stock’s price as a
down payment and borrowing the rest.
Buying a stock on margin means
borrowing money to help pay for the
stock.
Section 1
The Nation’s Sick Economy
Price support – the maintenance of a price at a certain level through
government intervention.
Credit – an arrangement in which a buyer pays later for a purchase, often on an
installment plan with interest charges.
Dow Jones Industrial Average – a measure based on the prices of the stocks of
30 large companies, widely used as a barometer of the stock market’s
health.
Speculation – an involvement in risky business transactions in an effort to make
a quick or large profit.
Buying on margin – the purchasing of stocks by paying only a small percentage
of the price and borrowing the rest.
THE 1929 CRASH
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In September the Stock Market had
some unusual up & down
movements
On October 24, the market took a
plunge . . .the worst was yet to
come
On October 29, now known as
Black Tuesday, the bottom fell out
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Black Tuesday specifically refers
to the stock market crash of
October 29, 1929.
Black Tuesday was the day that the
stock market crashed.
16.4 million shares were sold that
day – prices plummeted
People who had bought on margin
(credit) were stuck with huge debts
Section 1
The Nation’s Sick Economy
Price support – the maintenance of a price at a certain level through
government intervention.
Credit – an arrangement in which a buyer pays later for a purchase, often on an
installment plan with interest charges.
Dow Jones Industrial Average – a measure based on the prices of the stocks of
30 large companies, widely used as a barometer of the stock market’s
health.
Speculation – an involvement in risky business transactions in an effort to make
a quick or large profit.
Buying on margin – the purchasing of stocks by paying only a small percentage
of the price and borrowing the rest.
Black Tuesday – a name given to October 29, 1929, when stock prices fell
sharply.
By mid-November, investors
had lost about $30 billion
THE GREAT DEPRESSION
Alabama family, 1938 Photo by Walter Evans
• The Stock Market crash
signaled the beginning of
the Great Depression
• The Great Depression is
generally defined as the
period from 1929 – 1940
in which the economy
plummeted and
unemployment
skyrocketed
• The crash alone did not
cause the Great
Depression, but it
hastened its arrival
Section 1
The Nation’s Sick Economy
Price support – the maintenance of a price at a certain level through
government intervention.
Credit – an arrangement in which a buyer pays later for a purchase, often on an
installment plan with interest charges.
Dow Jones Industrial Average – a measure based on the prices of the stocks of
30 large companies, widely used as a barometer of the stock market’s
health.
Speculation – an involvement in risky business transactions in an effort to make
a quick or large profit.
Buying on margin – the purchasing of stocks by paying only a small percentage
of the price and borrowing the rest.
Black Tuesday – a name given to October 29, 1929, when stock prices fell
sharply.
Great Depression – a period, lasting from 1929 to 1940, in which the U.S.
economy was in severe decline and millions of Americans were
unemployed.
FINANCIAL COLLAPSE
• After the crash, many
Americans panicked and
withdrew their money
from banks
• Banks had invested in
the Stock Market and lost
money
• In 1929- 600 banks fail
• By 1933 – 11,000 of the
25,000 banks nationwide
had collapsed
Bank run 1929, Los Angeles
GNP DROPS,
UNEMPLOYMENT SOARS
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Between 1928-1932, the
U.S. Gross National
Product (GNP) – the total
output of a nation’s
goods & services – fell
nearly 50% from $104
billion to $59 billion
90,000 businesses went
bankrupt
Unemployment leaped
from 3% in 1929 to 25%
in 1933
During the Great
Depression, the overall
unemployment rate was
about 25 percent.
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The U.S. was not the only
country gripped by the Great
Depression
Much of Europe suffered
throughout the 1920s
In 1930, Congress passed the
toughest tariff in U.S. history
called the Hawley- Smoot Tariff
It was meant to protect U.S.
industry yet had the opposite
effect
The Hawley-Smoot Tariff Act
reduced the flow of goods into
the United States and prevented
other countries from earning
American currency to buy
American exports.
An unintended effect of the
Hawley-Smoot Tariff was a
substantial decrease in U.S.
exports.
Other countries enacted their
own tariffs and soon world trade
fell 40%
Within a few years, the HawleySmoot Tariff Act led to a
dramatic drop in world trade.
HAWLEYSMOOT TARIFF
Section 1
The Nation’s Sick Economy
Price support – the maintenance of a price at a certain level through
government intervention.
Credit – an arrangement in which a buyer pays later for a purchase, often on an
installment plan with interest charges.
Dow Jones Industrial Average – a measure based on the prices of the stocks of
30 large companies, widely used as a barometer of the stock market’s
health.
Speculation – an involvement in risky business transactions in an effort to make
a quick or large profit.
Buying on margin – the purchasing of stocks by paying only a small percentage
of the price and borrowing the rest.
Black Tuesday – a name given to October 29, 1929, when stock prices fell
sharply.
Great Depression – a period, lasting from 1929 to 1940, in which the U.S.
economy was in severe decline and millions of Americans were
unemployed.
Hawley-Smoot Tariff Act – a law, enacted in 1930, that established the highest
protective tariff in U.S. history, worsening the depression in America and
abroad.
CAUSES OF THE GREAT
DEPRESSION
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Tariffs & war debt policies
U.S. demand low, despite
factories producing more
Farm sector crisis
Easy credit
Unequal distribution of income
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Tariffs on foreign goods, the
availability of easy credit, a
crisis in the farm sector were
causes of the Great Depression.
Both individuals and businesses
built up large debts because of
easy credit, the federal
government did not insure
people’s bank accounts, the
stock market crashed were
important causes of the Great
Depression.
Section 1
The Nation’s Sick Economy
Price support – the maintenance of a price at a certain level through
government intervention.
Credit – an arrangement in which a buyer pays later for a purchase, often on an
installment plan with interest charges.
Dow Jones Industrial Average – a measure based on the prices of the stocks of
30 large companies, widely used as a barometer of the stock market’s
health.
Speculation – an involvement in risky business transactions in an effort to make
a quick or large profit.
Buying on margin – the purchasing of stocks by paying only a small percentage
of the price and borrowing the rest.
Black Tuesday – a name given to October 29, 1929, when stock prices fell
sharply.
Great Depression – a period, lasting from 1929 to 1940, in which the U.S.
economy was in severe decline and millions of Americans were
unemployed.
Hawley-Smoot Tariff Act – a law, enacted in 1930, that established the highest
protective tariff in U.S. history, worsening the depression in America and
abroad.
Objectives
1. The learner will understand the causes and consequences of the
Great Depression and the futility of Hoover’s actions to limit the
damage.
2. The learner will describe how people struggled to survive during
the Depression.
3. The learner will explain how the Depression affected men,
women, and children.
State Standards
6.3 Identify major urban areas of the United States on a map (i.e., Northeast, upper Midwest,
Atlantic Coast, California).
8.4 Identify the changes in social and cultural life caused by the Great Depression and the Dust
Bowl (i.e., Hoovervilles, Bonus Army, migrations, worldwide economic depression, Democrat victory
in 1932, widespread poverty, unemployment, religious revivalism).
SECTION 2: HARDSHIPS
DURING DEPRESSION
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The Great Depression
brought hardship,
homelessness, and hunger to
millions
Across the country, people
lost their jobs, and their
homes
Some built makeshifts shacks
out of scrap material
Before long whole
shantytowns (sometimes
called Hoovervilles in mock
reference to the president)
sprung up
In calling shantytowns
“Hoovervilles”, people
conveyed their disgust with
Hoover
Section 2
Hardship and Suffering during the
Depression
Shantytown – a neighborhood in which people
live in makeshift shacks.
SOUP KITCHENS
• One of the common
features of urban areas
during the era were soup
kitchens and bread lines
– During the depression,
charitable organizations
tried to help the urban poor
by opening soup kitchens.
Unemployed men wait in line for food
– this particular soup kitchen was
sponsored by Al Capone
• Soup kitchens and bread
lines offered free or lowcost food for people
Section 2
Hardship and Suffering during the
Depression
Shantytown – a neighborhood in which people
live in makeshift shacks.
Soup Kitchen – a place where free or low cost
food is served to the needy.
Bread Line – a line of people waiting for free
food.
CONDITIONS
FOR MINORITIES
• Conditions for African
Americans and Latinos
were especially difficult
• Unemployment was the
highest among
minorities and their pay
was the lowest
• Increased violence (24
lynchings in 1933 alone)
marred the 1930s
• Many Mexicans were
“encouraged” to return
to their homeland
As conditions deteriorated,
violence against blacks
increased
RURAL LIFE DURING THE
DEPRESSION
Between 1929-1932 almost ½ million
farmers lost their land
• While the Depression
was difficult for
everyone, farmers did
have one advantage; they
could grow food for their
families
• Thousands of farmers,
however, lost their land
• Many turned to tenant
farming and barely
scraped out a living
THE DUST BOWL
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A severe drought gripped the
Great Plains in the early
1930s
Wind scattered the topsoil,
exposing sand and grit
The resulting dust traveled
hundreds of miles
Drought, high winds,
overproductions of crops.
were causes of the Dust
Bowl.
One storm in 1934 picked up
millions of tons of dust from
the Plains an carried it to the
East Coast
Kansas Farmer, 1933
Section 2
Hardship and Suffering during the
Depression
Shantytown – a neighborhood in which people
live in makeshift shacks.
Soup Kitchen – a place where free or low cost
food is served to the needy.
Bread Line – a line of people waiting for free
food.
Dust Bowl – the region, including Texas,
Oklahoma, Kansas, Colorado, and New
Mexico, that was made worthless for farming
by drought and dust storms during the 1930s.
Dust storm approaching Stratford, Texas - 1934
Storm approaching Elkhart,
Kansas in 1937
Dust buried cars and wagons in South Dakota
in 1936
HARDEST HIT REGIONS
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Boy covers his mouth to avoid
dust, 1935
Kansas, Oklahoma,
Texas, New Mexico,
and Colorado were the
hardest hit regions
during the Dust Bowl
Many farmers migrated
to California and other
Pacific Coast states
The farmers and
sharecroppers who left
the Dust Bowl to find
work in the west were
known as Okies.
Photographer Dorothea Lange captures a family
headed west to escape the dust storms
Effects on the American
Family
• Hardship and the
Family
– Family is source of
strength for most
Americans
– Some families break
apart under strain of
making ends meet
• Men in the Streets
– Many men used to
working, supporting
families have difficulty
coping
• cannot find jobs
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The 1930s created the term
“hoboes” to describe poor
drifters
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Hoboes was the name given to
the men and boys who rode the
rails as they searched for work.
300,000 transients – or hoboes
– hitched rides around the
country on trains and slept
under bridges (thousands were
teenagers)
Injuries and death was common
on railroad property; over
50,000 people were hurt or
killed
HOBOES
TRAVEL
AMERICA
Effects on the American
Family
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No federal system of direct
relief—cash or food from
government
Direct relief describes a
government system for giving
payments or food to the poor.
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President Herbert Hoover
opposed direct relief.
Women Struggle to Survive
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Homemakers budget
carefully, can food, sew
clothes
Women work outside home;
resented by unemployed men
Many women suffer in silence,
ashamed to stand in bread
lines
Section 2
Hardship and Suffering during the
Depression
Shantytown – a neighborhood in which people
live in makeshift shacks.
Soup Kitchen – a place where free or low cost
food is served to the needy.
Bread Line – a line of people waiting for free
food.
Dust Bowl – the region, including Texas,
Oklahoma, Kansas, Colorado, and New
Mexico, that was made worthless for farming
by drought and dust storms during the 1930s.
Direct Relief – the giving of money or food by the
government directly to needy people.
Effects on the American
Family
• Children Suffer
Hardships
– Poor diets, health care
lead to serious health
problems in children
• During the Depression,
many children suffered
from diet-related diseases
– Lack of tax revenue leads
to shortened school year,
school closings
– Teenagers leave home,
ride trains in search of
work, adventure
EFFECTS OF DEPRESSION
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Suicide rate rose more than 30%
between 1928-1932
– An example of the psychological
stress caused by the Great
Depression was the rise in the
number of people who committed
suicide.
Alcoholism rose sharply in urban
areas
Three times as many people were
admitted to state mental hospitals as
in normal times
Many people showed great kindness
to strangers
Additionally, many people developed
habits of savings & thriftiness
Many children had a poor diet, many
families became homeless, many
men became unemployed were
effects of the Great Depression.
One long-range effect of the Great
Depression was that many people
developed habits of saving and
thriftiness
Section 2
Hardship and Suffering during the
Depression
Shantytown – a neighborhood in which people
live in makeshift shacks.
Soup Kitchen – a place where free or low cost
food is served to the needy.
Bread Line – a line of people waiting for free
food.
Dust Bowl – the region, including Texas,
Oklahoma, Kansas, Colorado, and New
Mexico, that was made worthless for farming
by drought and dust storms during the 1930s.
Direct Relief – the giving of money or food by the
government directly to needy people.
Objectives
1. The learner will understand the causes and consequences of the
Great Depression and the futility of Hoover’s actions to limit the
damage.
2. The learner will explain Hoover’s initial response to the
Depression.
3. The learner will summarize the actions Hoover took to help the
economy and the hardship suffered by Americans.
4. The learner will describe the Bonus Army and Hoover’s actions
toward it.
State Standards
8.4 Identify the changes in social and cultural life caused by the Great Depression and the Dust
Bowl (i.e., Hoovervilles, Bonus Army, migrations, worldwide economic depression, Democrat victory
in 1932, widespread poverty, unemployment, religious revivalism).
SECTION 3: HOOVER
STRUGGLES WITH
THE DEPRESSION
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After the stock market
crash, President Hoover
tried to reassure Americans
He said, “Any lack of
confidence in the economic
future . . . Is foolish”
He recommended business
as usual
Herbert Hoover’s approach
to the Depression’s
economy was based on a
belief in voluntary
cooperation.
Herbert
Hoover
HOOVER’S PHILOSOPHY
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Hoover believed it was the individuals job to
take care of themselves, not the governments
Hoover was not quick to react
to the depression
After the stock market crash,
President Hoover tried to help
the economy by asking
businesses not to lay off
employees
He believed in “rugged
individualism” – the idea that
people succeed through their
own efforts
People should take care of
themselves, not depend on
governmental hand-outs
He said people should “pull
themselves up by their
bootstraps”
HOOVER’S SUCCESSFUL
DAM PROJECT
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Hoover successfully organized
and authorized the construction of
the Boulder Dam (Now called the
Hoover Dam)
Boulder Dam, now called Hoover
Dam became the world’s tallest
and second largest dam,
providing the region with
electricity, flood control, and a
regular water supply.
The $700 million project was the
world’s tallest dam (726 feet) and
the second largest (1,244 feet
long)
The dam currently provides
electricity, flood control and water
for 7 western states
Section 3
Hoover Struggles with the
Depression
Boulder Dam – a dam on the Colorado River—now called
Hoover Dam—that was built during the Great Depression as
part of a public-works program intended to stimulate business
and provide jobs.
HOOVER TAKES ACTION:
TOO LITTLE TOO LATE
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Hoover’s flurry of activity came
too late to save the economy or
his job
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Hoover gradually softened his position
on government intervention in the
economy
He created the Federal Farm Board to
help farmers
He also created the National Credit
Organization that helped smaller banks
His Federal Home Loan Bank Act and
Reconstruction Finance Corp were two
measures enacted to protect people’s
homes and businesses
Congress passed the Federal Home
Loan Bank Act to lower mortgage for
home owners and allows farmers to
refinance their loans.
The aim of the Federal Home Loan Bank
Act was to prevent farmers and
homeowners from losing their property
The main purpose of the Reconstruction
Finance Corporation was to give
emergency help to large businesses.
Section 3
Hoover Struggles with the
Depression
Boulder Dam – a dam on the Colorado River—now called
Hoover Dam—that was built during the Great Depression as
part of a public-works program intended to stimulate business
and provide jobs.
Federal Home Loan Bank Act – a law, enacted in 1931, that
lowered home mortgage rates and allowed farmers to
refinance their loans and avoid foreclosure.
Reconstruction Finance Corporation – an agency established in
1932 to provide emergency financing to banks, life-insurance
companies, railroads, and other large businesses.
BONUS
ARMY
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A 1932 incident further damaged
Hoover’s image
That spring about 15,000 World
War I vets arrived in Washington
to support a proposed bill
The Patman Bill would have
authorized Congress to pay a
bonus to WWI vets immediately
The Patman Bill was intended to
pump new life into the economy
by providing emergency financing
to various types of large
businesses.
The bonus was scheduled to be
paid in 1945 --- The Army vets
wanted it NOW
World War I veterans and their
families made up the Bonus Army
that marched on Washington.
Section 3
Hoover Struggles with the
Depression
Boulder Dam – a dam on the Colorado River—now called
Hoover Dam—that was built during the Great Depression as
part of a public-works program intended to stimulate business
and provide jobs.
Federal Home Loan Bank Act – a law, enacted in 1931, that
lowered home mortgage rates and allowed farmers to
refinance their loans and avoid foreclosure.
Reconstruction Finance Corporation – an agency established in
1932 to provide emergency financing to banks, life-insurance
companies, railroads, and other large businesses.
Bonus Army – a group of World War I veterans and their families
who marched on Washington, D.C., in 1932 to demand the
immediate payment of a bonus they had been promised for
military service.
BONUS ARMY
TURNED DOWN
Thousands of Bonus Army soldiers
protest – Spring 1932
• Hoover called
the Bonus
marchers,
“Communists
and criminals”
• On June 17,
1932 the Senate
voted down the
Putnam Bill
BONUS MARCHERS CLASH
WITH SOLDIERS
• Hoover told the Bonus
marchers to go home–
most did
• 2,000 refused to leave
• Hoover sent a force of
1,000 soldiers under the
command of General
Douglas MacArthur and
his aide Dwight
Eisenhower
AMERICANS SHOCKED AT
TREATMENT OF WWI VETS
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MacArthur’s 12th infantry gassed more than 1,000 marchers, including an 11-month old
baby, who died
Two vets were shot and scores injured
Hoover’s image suffered when he ordered the forced removal of 2,000 members of the
Bonus Army-World War I veterans who had built a shantytown within a sight of the
Capitol building.
Americans were outraged and once again, Hoover’s image suffered
The 1932 Election was on the horizon.
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Herbert Hoover and Franklin D. Roosevelt were the candidates that ran for president in 1932.
Hoover had little chance to be re-elected in 1932
Section 3
Hoover Struggles with the
Depression
Boulder Dam – a dam on the Colorado River—now called
Hoover Dam—that was built during the Great Depression as
part of a public-works program intended to stimulate business
and provide jobs.
Federal Home Loan Bank Act – a law, enacted in 1931, that
lowered home mortgage rates and allowed farmers to
refinance their loans and avoid foreclosure.
Reconstruction Finance Corporation – an agency established in
1932 to provide emergency financing to banks, life-insurance
companies, railroads, and other large businesses.
Bonus Army – a group of World War I veterans and their families
who marched on Washington, D.C., in 1932 to demand the
immediate payment of a bonus they had been promised for
military service.