7-January-2015
Great Depression
CAUSES & THE BEGINNING
The Great Depression 1929 – 1940
Economics will go through good times and bad times that regularly repeat
themselves
This is normal – the ups and down periods of business are known as the
business cycle (boom/bust cycle)
Bad times are called recessions or depressions
Depression: Characterized by business failures, high unemployment and falling
prices
The Great Depression: WORST depression in our nation’s history
Causes
MANY factors caused the economy to move from the prosperity of the 20s to
the severe depression of the 1930s
(Each of the following will have their own slide- you will have time to write it
down- promise)
Overproduction
Speculation
Shaky Banking
Restricted International Trade
Overproduction
Just how it sounds, guys.
Manufacturers were making and selling all sorts of new
products.
Many consumers couldn’t really afford to buy the goods
(they lacked the money to do so)
Manufacturers were soon producing more goods than they
could sell.
Speculation
We learned before break that the stock prices kept going up and up.
People wanted to “get rich quick” – this made buy more stocks and this drove the stock prices even higher.
Fun Fact: By 1929 stock prices had TRIPLED since 1920.
Each day the Speculative Boom on the stock market saw more people investing in Wall Street
Buying on Margin: In the 20s stocks could be purchased for a 10% down-payment (called a margin). An installment plan
for stocks. The remaining balance was financed by a loan from the stock broker. The buyer just promised to pay the rest
of the money back when the stock sold…
Even if the stock price FELL- the purchaser would still be responsible for the WHOLE price they promised to pay
As long as prices kept going up , this wasn’t a problem, but if the prices fell, buyers on margin often did not have the
money to cover the losses.
People were also invested in Real Estate with similar hopes of getting rich quickly.
The frenzy of the stock market & real estate speculation created an atmosphere of easy money
Shaky Banking
http://youtu.be/iPkJH6BT7dM
As shown in the video, banks generally collect money from depositors and then invest
these funds.
This enables them to earn money to pay interest on deposits. A lot of bank in the U.S. were
honest and followed banking practices, but some bankers invested their depositors money
into very unsound investments.
Government failed to regulate the banking system or the stock market.
People bought what they could not afford.
Everyone being so over extended on credit made the entire American economy extremely
vulnerable.
Restricted International Trade
American tariffs protected American Markets, but
they made it hard for producers to sell abroad since
other countries retaliated by setting up high tariffs of
their own.
1930: President Hoover signed the highest tariff in
U.S. History
The shrinking of the world trade contributed to the
Great Depression
The Great Depression Begins
When the New York Stock Market crashed in 1929, it set off a
chain reaction that toppled the American economy and quickly
spread to the rest of the world.
The New York Stock Market Crash
From Wall Street to Main Street
Human Impact of the Depression
The Dust Bowl
The Great Depression Begins –
New York Stock Market Crash
New York Stock Market Crashed – Black Tuesday – October 29,
1929.
Set off chain reaction that toppled the American economy and
quickly spread to the rest of the world
Stock prices started to fall the Thursday before and bankers got
together and bought stock to try and keep the prices above
current market price to try and stop the rapid decline in prices.
Stock prices fell to an all-time low on Black Tuesday
The Great Depression Begins –
The Human Impact
During the 1920s, many Americans had started to equate their self
worth with material possessions. When the Great Depression hit,
people felt worthless. 
People were fighting for daily survival
Businesses failed, farmers lost their farms, banks failed, and
millions were out of work – NO unemployment or bank deposit
insurance
Private charities were overwhelmed – Millions began to depend
on soup kitchens and bread lines for their food.
The Great Depression Begins –
Dorothea Lange
Photographer
The picture to the
right shows a
migrant mother
and her children.
The picture on
the far right
shows living
conditions of
those affected by
The Great
Depression.
Notice her face
and how dirty the
children are.
The Great Depression Begins –
John Steinbeck
http://youtu.be/xqaTv8cCWeg
Writer
Wrote a series of articles on the Oakies - Farmers from Oklahoma who moved to migrant worker camps
in California
Did research on migrant workers living in California during the Great Depression.
Famous for his novel The Grapes of Wrath
The Great Depression Begins –
The Dust Bowl : 1930s
Farmers on the Great Plains faced a natural disaster AND financial disaster
Farmers had been tilling the Great Plains, cutting the grasses covering the topsoil,
and tapping the underground water supply since the 1870s.
There was a series of droughts (long periods without rain) that dried up crops and
topsoil turning the topsoil to dust
The ground cover that had held the soil in place was now GONE, this lasted for
about a decade, and heavy winds carried topsoil across hundreds of miles, burying
homes, livestock and destroyed harvests
Farmers were forced to abandon their farms and many moved west to California
Over ONE MILLION farmers were driven from their lands by this “dust bowl”
The Dust Bowl
Mexican Repatriation
Mexican Repatriation Act
Immigration Act of 1920s imposed quotas on immigrants from Europe but nor from Mexico.
Mexicans freely entered the U.S. as long as they could pass a medical and literacy test and paid a small tax. Many
came to escape the turmoil in Mexico caused by the Mexican Revolution
In the U.S. they were generally willing to accept back breaking work for VERY low wages
Many settled in barrios (Mexican-American neighborhoods) in California, Texas, or the Southwest
Mexican Americans were barred from attending “white” public schools.
There was less demand for Mexican Labor during the Depression because white American farmers were in
DESPERATE need of work and sought jobs previously filled by Mexican Immigrants
Public hostility towards Mexican grew and it became more and more difficult for them to enter the U.S.
Only 33,000 were granted visas for the entire decade (compared to over half a million in the 1920s)
President Hoover authorized a special Mexican Repatriation Act to send Mexican immigrants back to Mexico during
the Depression. Many of them had ben lawful American citizens who were then separated from their families.