What goes up must
come down!
Essential Question—How did
economic choices made in the 1920s
lead to the stock market crash and
the Great Depression?
Overview
 The
economic boom of the 1920s
collapses in 1929 as the United
States enters a deep economic
depression. Millions of Americans
lose their jobs, and president Hoover
is unable to end the downslide.
Main Idea
 As
the prosperity of the 1920s
ended, severe economic problems
gripped the nation.
Why it matters now?
 The Great Depression has had lasting
effects on how Americans view
themselves and their government
Critical Thinking
 How
did the economic trends of the
1920s help cause the Great
Depression? Pg. 670-672
– Industries in trouble
– Farmers struggle
– Consumers have less money
– Living on credit
– Uneven distribution of income
Crisis in the Farm District
 Farmers
struggled as a result of the
end of WWI.
 Prices fell with the decreased
demand after the war.
 Farmers began producing more
trying to sell more. Made problems
worse.
 Banks began to foreclose on land.
Old Decaying Industries
 Railroads,
textiles, steel making little
profits after the war.
 Trucks, buses and private cars hurt
the R.R. industries.
 New forms of energy hurt lumber
and coal.
 Improved technology made America
too productive.
Living on Credit
 By
the late 1920s consumers buying
less due to rising prices, stagnant
wages, unbalanced distribution of
income and consumer debt due to
credit.
 Many Americans lived beyond their
means. (wasteful spending)
Uneven Distribution of Income
 Rich
got richer while the poor got
poorer
 Unequal distribution of wealth meant
that Americans could not participate
fully in the economic advances of the
1920s
Tariffs and War Debts
 Hawley-Smoot
Tariff Act- highest
protective tariff in history designed
to protect American farmers and
manufactures. Reduced competition,
hurt exports, therefore creating loss
of jobs. Countries retaliated by
raising their tariffs as well.
 Reduced global trading
Dreams of Riches in the Stock
Market… p. 673
 The
stock market was the most visible
symbol of American prosperity in the
1920s.
 Define: Dow Jones Industrial Average,
“bull market”, speculation, buying on
margin
 Describe the financial climate of the
stock market during the 1920s.
The Stock Market Crashes
 The
“snowball effect”
– In 1929 stocks prices began to dip. This shook
peoples confidence and so they started to sell
their shares.
– This created a chain reaction that would cause
prices to plummet which encouraged more
people to sell.
– “Black Tuesday”—the day of financial collapse in
the stock market. (October 29, 1929) Investors
lost billions and those involved were stuck with
huge debt and lost savings.
Main Idea
The
stock market crash of
1929 signaled the Great
Depression-period of time in
which the economy
plummeted and
unemployment skyrocketed.
Skillbuilder—p 676
Unemployment vs. Income and
Spending
 What
conclusions can you draw by
comparing the two graphs.
Failure in the Economy (Banking)
 People
panicked and withdrew money
from banks. “run on the bank”
 Banks could not give all money back
because they invested in the stock
market
 By 1933 11,000 of the nations 25,000
banks closed. Millions of people lost
their savings
Failure in the Economy (business)
 The
nation’s total output of goods
and services was cut in half. Meaning
loss of jobs and investment
 90,000 business went bankrupt.
 Unemployment rose from 3% to
25% by 1933 (13 million workers)
 Hawley-Smoot Tariff further hurt
international trade further hurting
business.
Causes of the Great Depression
1.
2.
3.
4.
5.
Tariffs and war debt policies that cut
down the foreign market
A crisis in the farm sector
The availability of easy credit
Unequal distribution of income
Old Decaying Industries
Assignment
 How
do you think the Great
Depression changed people’s lives?
Write a diary entry from the point of
view of the man in this cartoon.
 Draw an original cartoon to illustrate
the impact of financial collapse
following the stock market crash.
Use the characters in this cartoon or
invent your own.
Main Idea
 During
the Great Depression,
Americans did what they had to do
to survive.
Why it matters now?
 Since the Great Depression, many
Americans have been more cautious
about saving, investing, and
borrowing.
Hardship and Suffering (Cities)
 Great
Depression brought hardship,
homelessness, and hunger
 People lost jobs and homes and were
forced to the streets or shantytowns
 Soup kitchens and bread lines
provided food for unemployed and
jobless
Hardship and Suffering (Rural)
 Thousands
of farmers lost their land
 1929-1932 400,000 farms were lost
 The drought and over planting
created the Dust Bowl which
destroyed the American Great Plains
region forcing many Americans to
migrate West abandoning the land.
 Okies were migrates from Dust bowl
states
Hardships and Suffering (Family)
 Making
ends meet was a daily
struggle, families broke apart.
 Men struggled with frustration from
becoming workers to wonderers.
Some men abandoned their families.
 Women battled to keep the family
together through budgeting,
shopping together, etc.
 Women were the backbone of the
American family during the Great
Depression.
Hardships and Suffering (Children)
 Poor
diets and lack of health care
lead to serious health problems.
 Schools were either forced to shorten
the school year or shutdown the
school.
 Boys and girls abandoned families
and were forced to ride the rails in a
free-for-all type atmosphere
Hardship and Suffering (Social)
1928-1932 suicide rates rose more than
30%
 Mental hospitals grew
 Economic problems forced people to make
sacrifices and readjust priorities
 Stigma of poverty and having to skimp
and save never disappeared.
 People depended on one another more.
 All of the effects of the Great Depression
shaped your Grandparents and has had
some affect on your upbringing.

Main Idea
 President
Hoover’s conservative
response to the Great Depression
drew criticism from many Americans.
Why it matters now…
 Worsening conditions in the country
cause the government to become
more involved in the health and
wealth of the people.
Hoover and the Depression
Hoover believed in rugged individualism
meaning people should succeed through
their own efforts.
 Should not depend on government to bail
them out. (welfare)
 Handouts would weaken peoples selfrespect and create a welfare state. (Sense
of entitlement)
 Hoover believed that the economy would
fix itself and rebound in time. (It did not)

Hoover and the Depression
Boulder Dam- public works project that
provided work relief, provide electricity,
and irrigation to CA, CO, UT, WY, & NM.
 Read 686—“Democrats Wind in 1930
Congressional Elections”
 Hoover began providing direct relief to
people.
– Federal Home Loan Bank Act- lowered
mortgage rates & refinanced farmer
loans
– Reconstruction Finance Corporation- $2
Million for banks, life insurance comp.,

Hoover and the Depression
 Why
was Hoover destined to lose the
Presidential Election of 1932 after
the Bonus Army incident?
– P. 688 &689
FDR and the New Deal
Franklin D. Roosevelt won the election of
1932.
 Prior to taking office, Roosevelt organized
the “Brain Trust”- who were a group of
advisers who formulated a set of policies
that would later become known as the
New Deal.
 From March 9 to June 16, 1933 the first
hundred days of FDR’s presidency he
passed 15 major legislations.
 First action conducted by FDR was to
declare a “bank holiday”
 First and Second New Deal (p. 706)

FDR and the Depression
 The
New Deal forced FDR to practice
deficit spending which meant
spending more money than the
government received in taxes.
 Supreme Court declared many New
Deal legislations unconstitutional
because they gave the Executive
Branch and the federal government
to much power over states and
people.
Impact of the New Deal
 Expanded
the government’s role in
the economy.
 Created the FDIC and the SEC.
 Social Security
 Tennessee Valley Authority built a
number of dams that improved an
depressed area of the country.
 Most importantly it restored hope.
New Deal Legacy





Labor- standard
wages and rights,
eliminated child labor
Farmers- price
support, improved
farming methods
Banking/Financereformed the stock
market, insurance on
bank accounts
Social Welfareexpand government
role to provide for
people
Environment- increase
protection of land





Wagner Act, Fair
Labor Standards,
National Labor
Relations Board
Soil Conservation
Service
Securities Exchange
Commission, FDIC
Social Security
CCC, Soil
Conservation Service,
Tennessee Valley
Authority