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Depression: Unemployed: The Unemployed Union: marchers south on Broadway:
Camden New Jersey typical scene reflecting large population of unemployed in
desperate need of work and looking for jobs. (Circa 1935)
Section 1 Causes of the Depression
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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
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Rural farmers produced huge surpluses of
food that depressed prices.
Farmers could not afford to buy goods or
repay their loans.

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While factory
workers’ wages
rose 8%, factory
output increased
by 32%.
As a result,
worker incomes
rose modestly,
while rich
investor incomes
skyrocketed
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Easy credit and
installment buying
lead people to
purchase goods
they can’t pay for.
By 1929, Americans
racked up more than
$6 billion in personal
debt — more than
double the 1921
level.
- What is Wall Street?
- Why do people buy stocks and
shares?
- Wall Street is where all the
stocks and shares of every kind
can be bought and sold.
The main reason people buy
stocks and shares are because
they think that what they
invest would multiply and they
would gain a lot of income.
=
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Until September 1929, the
stock market continued to
rise.
Many people borrowed
money to buy stock,
assuming prices would
continue to go up. - They
would then make more money
and then would return it.
Some economists feared
that stocks were overpriced
STOCK MARKET
HANDOUT
- In 1929, Wall Street
crashes
-On October 29th, the
stock market went into a
free fall as investors
tried to sell at any price.
- prices plunge
- By mid Nov.
stockholders lose $30
billion
- stock losses exceed
cost of US involvement
in WWI
Companies
3rd September
1929
13. Nov
1929
American Can
182 cents
86 cents
Anaconda Copper
162 cents
70 cents
Electric Bond and Share
204 cents
50 cents
General Electric
396 cents
168 cents
General Motors
182 cents
36 cents
New York Central
256 cents
160 cents
Radio
505 cents
28 cents
United States Steel
279 cents
150 cents
Westinghouse E&M
313 cents
102 cents
Woolworth
251 cents
52 cents
The stock market crash didn’t start the Great
Depression ,it merely hastened (sped up) its
arrival.
The Great Crash
was a hallmark
of the nation’s
business cycle.
The economy
periodically
grows and then
contracts.
• In growth periods,
workers are hired, wages
rise, and demand for
products increases.
• In contraction periods,
workers are fired, wages
drop, and demand for
products falls.

The Great Depression is generally defined as the
period from 1929 – 1940 in which the economy
plummeted and unemployment skyrocketed
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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
Banking System Breakdown
• When the stock market crashed, people could not repay their
loans to the bank.
• Therefore, banks couldn’t give depositors their money and
banks closed.
• Many
people lost
their life
savings.
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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
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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 (tax
on imports) in U.S. history called the HawleySmoot Tariff
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It was meant to
protect U.S.
industry yet had
the opposite
effect
Other countries
enacted their own
tariffs and soon
world trade fell
40%

As international trade falls, a global drop
in business leads to a worldwide
depression.
 Tariffs
& war debt policies
 U.S. demand low, despite
factories producing more
 Farm sector crisis
 Easy credit
 Unequal distribution of
income