File - US History With Ms. Squires

The Great Depression
1928 - 1932
Causes of The Great
Intro Video
1. Uneven Distribution of
• Workers output increased 32%, wages
increased 8%
• Corporate profits increased 65%
• 60% of families earn less than $2,000/yr.
• The wealthy minority did not buy enough to
keep the economy going
2. Easy Credit
• People accumulated
more and more debt
each year
• 80% of all radios and
60% of all cars
purchased were bought
using credit
3. Stock Speculation/ Crash
• Soaring stock prices
were based on
confidence rather than
reality of profits
• Investors continued to
buy on margin
• These led to the Stock
Market Crash
Stock Market Crash
• October 23, 1929 – Dow Jones drops 21%
in 1 hour
• October 24, 1929 – Black Thursday,
Investors lost confidence and began to sell
• October 29, 1929 – Black Tuesday, the
Stock Market Crashed when over 16
million shares of stock were sold that day
• From 1921 to 1929, the Dow Jones rocketed
from 60 to 400
• In October 1929, the Dow sank from 400 to
• $140 billion of depositor money disappeared
because banks had invested depositors money
in stocks
• The Dow Jones finally surpassed its 1929
high, a full 26 years later in 1955.
• By October 27, 1929 RCA was trading at
$58.50 per share when the first wave of
selling on “Black Monday“, October 28,
1929 brought the shares down ($18.375) to
close at $40.25 per share on the day. By
August 11, 1932, RCA was trading at
$8.875 and hit a 1932 low of $2.50 per
• Stock prices on Sept. 3, 1929, Oct. 29,
1929 and Nov. 15, 1929
• General Electric- $396.25, $210.00,
• Hershey Chocolate-$128.00, $108.00,
4. Banks Collapse
• Depositors rushed to withdraw money from banks
• The Fed limited the money supply to discourage
• Banks did not have sufficient reserves
• 1929 – 641 banks failed
• 1930 – 1,350 banks failed
• 1931 – 1,700 banks failed
5. Tariffs
• Hawley-Smoot Tariff 1930
• Extremely high tax imposed on imported goods
• Destroyed international trade by closing off markets
Congress passed the Hawley-Smoot Tariff
to protect American manufacturers from
foreign competition.
The strategy was
a mistake. Other
nations retaliated
and raised tariffs
as well.
The resulting drop
in world trade only
made the glut of
American factory
and farm products
harder to sell.
6. Businesses Close
• When businesses
closed people lost
their jobs
• By 1933,
reached 25%
• The stock market crash didn’t start the Great
Depression by itself. Instead, it quickened the
collapse of the U.S. economy.
Effects of Great Depression in
Rural and Urban Areas
• Bread lines were
run by Churches
and Private
Poverty in Rural America
Crop prices fell
Drought in the Great Plains
One million farmers lost their farms
Some worked as tenant farmers
Dust Bowl struck the southern Great Plains
Dust Bowl
• Dust Bowl Video
• Families migrated out of the region to escape
the Dust Bowl and depression
• Dust Bowl refugees were called “Okies”
• Rural to Urban
• Went looking for jobs but found none
Poverty in America’s
• Loss of jobs, wages, and hours cut
• Many sold furniture, jewelry to get money
• Lost their homes
• Moved to Hoovervilles
• Shantytowns of shacks built on public land or
vacant lots
• Used scrap metal, glass, tin, lumber
• Used newspaper to keep warm
Hoover’s Response
• Voluntarily work toward common goals
• Asked business men to keep employment,
wages, and prices at current levels
• Called for tax reduction, lower interest rate,
and create public-works programs
• Asked wealthy to give money to charity
Volunteerism Fails
• Businesses continue to fail and lay off
• Local governments cannot provide jobs
Hoover Creates the RFC
• Reconstruction Finance Corporation gives
loans to big businesses and banks
• Businesses and banks were supposed to
hire new employees and give loans to more
• This policy is known as Trickle-down
• Was this effective?
RFC was ineffective
• Businesses do not hire workers
• Bankers keep money for themselves
• Unemployment remains high
Bonus Army
• WWI veterans marched on Washington
demanding their bonus congress had
promised them
• Congress passed a bill to pay the bonus early
• Hoover vetoed it
• General Douglass MacArthur and federal
troops were called to clear out the Bonus
• MacArthur used force without Hoover’s
Hoover’s Success
• Boulder Dam (Hoover
• Created much needed
jobs in Southwest
• Provided electricity
and irrigation
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