Chapter 13 The Great Depression
Michigan Standards
7.1 Growth Crisis of Industrial Capitalism & Responses
7.1.2 Causes & Consequences of the Great Depression
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OPEN BOOKS to page 416
Thursday morning at 10am, Wall Street was
Jammed.
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A crowd of thousands gathered outside the New
York Stock Exchange, waiting for news.

Traders shouted out their orders to sell, sell, sell.

Few were willing to buy stocks, shares in business
ownership whose price & value constantly fluctuate,
so prices plunged steeply in the stampede.
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At noon, fives of the nation’s leading bankers met in
the building across the street from the stock
exchange.
Trying to stabilize the plummeting market, these
men pledged to put undisclosed millions into the
stock market.
They hoped that buying stocks, would make the
stock prices rise.
At the closing of the market that day, the stock
prices started to rebound from the morning’s slump.
This was short lived!
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The following Monday, the stock market
opened with a bunch of sales, which
wiped out the prior weeks gains.
The bankers met again, this time….. They
decided to do NOTHING.
Tuesday – Oct. 29, 1929
 Stock market continued to fall because of the
flood of sales
Stock Market Crashes!!!!!!!
Summer
1929
Brokers lent out more than $6
billion to customers
Brokers started calling in their margins

"Margin" is borrowing money from your
broker to buy a stock and using your
investment as collateral.

Investors generally use margin to increase
their purchasing power so that they can
own more stock without fully paying for it.
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But margin exposes investors to the
potential for higher losses.
As long as stock
prices kept going up,
brokers were happy
to lend more to
speculators.
Speculators are
people who gamble
with short-term
investors.

Brokers started calling in their margins

Many investors didn’t have the $$ to pay for
their stocks

Result: Brokers forced to sell stocks
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All this selling makes stock prices go down.
Stock
Prices

Investors started noticing the price decline.
Stock
Prices
PANIC !!!!
 They TOO started to Sell their Stocks
75% in a few
months!
in 1929, the stock bought
on margin lost value,
leaving investors unable
to pay their brokers
back.
Savings deposits weren’t federally
insured …..
People who put all their money &
savings in banks, found their savings
gone!
After the stock market crash
of 1929 ….
savings in banks vanished
because banks had lent
their cash reserves to
stockbrokers.
The policy that the
Federal Reserve
followed dried up
credit.
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Period of severely reduced economic activity

Characterized by a sharp rise in
unemployment as people lose their jobs and
are unable to find ones

Oct. 1929 Depression
 The most devastating economic downturn in
the nation’s history. (The Great Depression)
Was the most
devastating economic
downturn in U.S.
history.
 Depressed Farms & Industries
 Farmers’ incomes fell
 Textile, limber, mining, & railroad
industries declined
 Automobile & Construction Industries
declined in the months prior to the crash
 Farmers
& Workers Incomes Cut
 They couldn’t afford the
manufactured goods that the
nation’s industries had been putting
out in the 1920s.
▪ Resulted in another weakness of the
economy.

Wealth Distribution
 Growing Gap in Wealth
▪ Between the Rich & Average Americans.
 Even though many business profits rose in
the 1920s, not all workers received much of
these profits.
▪ Result: Reduction of Consumer Buying Power
▪ By late 1920s:
 Radios, telephones, refrigerators, washing machines, &
other goods were piling up in warehouses across the
country.
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Monetary Policy
 Contributed to crash

Federal Reserve System
 After crash
▪ Was supposed to regulate the amount of money
in circulation
▪ Follows a restrictive policy that dried up credit.
▪ Policy left the country with a supply of money in
circulation that wasn’t large enough to allow the
economy to bounce back after the crash.
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Decline in Foreign Trade
 Late 1920s
▪ Americans began pouring money into the stock market.
▪ Bank funds for loans to other nations dried up.
▪ International trade slowed down because without
American loans
▪ other nations had less money to spend on our nation’s goods.
 High Tariffs (taxes on imported products)
▪ Further blocked international trade.
 Economic Slowdown Scared Everyone!
The following could be considered causes
of the Great Depression:
 Overconsumption
 Dust
of Goods
Storms in the Great Plains
 Overproduction
of Goods

Initial Reaction to the Depression
 He told American in May 1930 that: “We have now
passed the worst.” (trying to be positive)
 Met with business leaders
▪ Asked them not to cut wages or production of goods.
 Suggested that city & state governments help their
local economy by funding building projects to
provide new jobs.
 Helped aid farmers with the Agricultural Marketing
Act.
Despite Hoover’s efforts to help farmers & others
 Business Conditions Worsen in the 2 Years
after the crash.
▪ Approx. 23,000 businesses failed in 1929
▪ 1932 – 32,000 businesses failed
 Average Family’s Annual Income Dropped
▪ From $2,300 in 1929 to $1,600 in 1935.
 Unemployment Rose
▪ From 5% in 1929 to almost 25% in 1932.
Men would
walk the
Streets
advertising
themselves for
the hope of a
Job!
Many opportunities for
employment were open to
women because jobs that
traditionally went to
women didn’t greatly
decline.
In Major Cities Bread
Lines stretched for
blocks, as people waited
for one little meal a day.

Hoover’s government programs failed
 By early 1932, he had to admit failure.

Reconstruction Finance Corporation (RFC) (Feb. 1932)
 Largest federal program of economic aid
▪ Authorized for $2 Billion in loans
▪ Banks
▪ Insurance Companies
▪ Railroads
 Hope it would stimulate industry & create more jobs
(trickle-down).
Goal was to
stimulate industry
& create jobs.
 Emergency Relief Act (July 1932)
 Enabled the RFC to distribute
▪ Additional $300 million in loans to state
governments for unemployment relief.
▪ Only qualified it they were on the verge of
bankruptcy.
▪ Only ½ of its available money was given out.
To the economic crisis of the
early 1930s was ….
Voluntary Action By
Business & Local
Governments.

With Wages Dropping, Unemployment Growing,
& so Little Money going into relief measures,
resentment grew among the people beaten
down by the Depression.
 Great War (WWI) Veterans
▪ Came together to get aid for themselves & their families.
▪ Government Promised Them a BONUS for serving in the war.
▪ Veterans wanted bill early
▪ Congress denied them the Bonus early
Veterans slowly left but not fast enough
 Hoover saw them as hostile
▪ Dispatched Army Chief MacArthur & aide Eisenhower to
clear them out.
▪ Cavalry units, tanks, infantry with fixed bayonets, & a
machine gun detachment went after the unarmed
veterans.
▪ Veterans fled in terror to the Bonus Army Camps
 MacArthur went after the veterans & torched the camp.
▪ More than 100 people injured, and a baby died suffocated by tear
gas.
▪ Press appalled (shocked) at the Brutal Attack, commented:
“What a pitiful spectacle is that of the great American Government , mightiest
of the world, chasing unarmed men, women, and children with Army
Tanks.”
Organizers of
the BONUS
ARMY
published this
to explain
their purpose
& to recruit
marchers.
Public already thought Hoover was cold & and
unfeeling because he refused to pay for
unemployment relief.
The last nail in Hoover’s political coffin is what he
did to the Bonus Army.
Hoover stayed in Washington through most of the
campaign.
 When he did make public appearances he was booed
 On Election Day, on his way to vote, people threw stink
bombs at his car.
Franklin D. Roosevelt
won the presidency
by a landslide.
Chapter 13 The Great Depression
Michigan Standards
7.1 Growth Crisis of Industrial Capitalism & Responses
7.1.2 Causes & Consequences of the Great Depression

Farmers got severely low prices for crops
 Made it impossible for them to pay their
mortgages.
▪ Houses (property) would go into foreclosure.
▪ Early years of the depression
 thousands of farmers lost their land.
Foreclosure – a bank would take back ownership of
the property without letting the farmer (owner)
pay off the rest of the mortgage.
An oversupply of
crops will result in
lower (decreased)
prices!
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Penny Auctions
 Staged sales property for pennies to friends,
who simply return it later.
 Helped some farmers stay on their land.
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Drought-Ridden Plains
 7 years were crops were destroyed
 Thousands of Farmers had to abandon their
land.
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Went through all of their savings
Only took what they could carry
Went were they thought they could find work
 Many went to California
▪ Faced More Hard Times
▪ Very Few Jobs & Lots of Competition.
▪ Driven by hope & False rumors
▪ More kept coming
▪ Great for California Farm Owners
▪ Could lower wages to near starvation levels & still find people
to work.
They Found Intense
Competition for
Agricultural Jobs.
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Don’t own the land that they farm
Extremely vulnerable (at risk) to changes in the
farm economy during the thirties.
 During the Depression
▪ The government started paying land owners to
NOT plant crops.
▪ Resulted In:
 Tenant farmers losing their jobs
 Thrown off the land where some lived & worked for many years
 Tenant farmers & their families traveled to look for work
 Left behind many possessions of a lifetime.
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Faced discrimination during the Depression
 Even though many where in the U.S. for generations
 Many California farm owners welcomed them
▪ To help keep wages low during harvest season
 City Officials wanted to send them back to Mexico
▪ 1931 – 1934 Los Angeles officials sent 12,000 back to Mexico
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By 1933
 1 out of every 4 people
▪ Were out of Work
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Jobless Rate above the National Level
 Buffalo – 30%
 Chicago – 50%
 Cleveland – 50%
 Toledo – 80%
Apple Sellers
Some people sold apples on
the streets.
They would buy a surplus of
apples on credit from the
Pacific Coast apple growers &
hoped to sell the apples on
the street for a small profit.
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Many factories laid off workers
 1 or 2 years after the start of the decline.
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Layoff Pattern
1) African Americans & Minorities
2) Full-time Employees asked to share their jobs
with others.
3) Scaled down Jobs Cut.
One out of four
Americans were
unemployed.
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Many people moved in with relatives to
reduce living expenses.
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Apartment Built for 2 or 3 people
 Would house as many as 15 people
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Evictions were common
People Loss
 Jobs
 Homes
 Most Possessions
The most damaging
loss during the
Depression was that
of hope and pride.
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Evidence of mans adaptability & survival
skills.
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Were Makeshift Cities
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People named these communities
Hoovervilles.
1932 –
Estimated about 2 million people were on
the road, job seekers & their families
looking for work & a place settle.
Many had made temporary or not-sotemporary shelters in Hoovervilles.
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Even well-to-do people had to sometimes
depend on the aid & charity of their
neighbors during the depression.
People that were wealthy before the
depression, had a better chance of making
it out of it with minimal financial damage.
Very small amount of people took
advantage of the rock bottom prices
during the depression.
The number of
registered automobiles
in the U.S. increased by
8 million.
The loss of money & material
possessions wasn’t nearly as
damaging as the sense of lost
hope & pride brought on by
years of unemployment &
underemployment.
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In Families
 The dad (traditional provider)
▪ Lost status & self-esteem during the Depression
▪ Loss of Income
▪ Many couldn’t support their families
▪ Maintain their former lifestyles.
▪ Some went out daily to seek work
▪ Some did things to keep themselves busy
▪ One child remember that her dad spent 2 years painting their
house.
▪ Trying not to lose their self respect.
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Women
 traditionally homemakers.
 experienced less disturbance of their daily
life during the years of the depression.
 Their families depended on them even more
▪ Thriftiness kept their families from starving.
▪ Canned Food
▪ Dried Food
▪ Sewed Clothes
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Started Home Businesses
 Doing Laundry
 Selling Baked Goods
 Renting Out Rooms to Boarders
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Many Ran the Household & Held a Job
Outside the Home.
 Faced
Increasing Discrimination
 In Professional Fields
 Jobs
that traditionally went to
women didn’t decline as bad as
jobs that traditionally went to
men.
 Women’s Traditional Jobs
 Clerical Work
 Retail Sales
 Men’s Traditional Jobs
 Professional Jobs
 Manufacturing Jobs
While the depression torn some
families apart ….
the hard times of the depression
actually brought some families
closer together.
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Many people stayed home & avoided socializing
 Ashamed
▪ of worn clothes
▪ Decline of Fortune

Young People Waited to Get Married

Married Couples Avoided Having Children.
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Domestic Upheaval (or sudden change)
 Unemployed Fathers
 Mothers working long hours for low wages.
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Many of the Hoboes who hitchhiked
across the country on freight trains were
unemployed men who at 1st set out to find
work in other parts of the country.
 Many Hoboes
 Unsuccessful & Ashamed to
Return Home
 Deserted Their Families
 Lived Together in Hobo Camps
Unemployed men called
hoboes hitchhiked across
the country on freight
trains & set up camps
beside railroad tracks.
Chapter 13 The Great Depression
Michigan Standards
7.1 Growth Crisis of Industrial Capitalism & Responses
7.1.2 Causes & Consequences of the Great Depression
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June 30, 1936 – Smashes Sales Records
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Instant Success During the Depression.
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By: Margaret Mitchell
 Never written a full book before

About Scarlett O’Hare & Rhett Butler in
plantation Georgia, during and after the Civil
War.

Reading books became an emotional escape
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People felt like they could physically
escape their problems with
automobiles.
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Americans romance with cars
continued in 1930s.
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A new car was a status symbol – a sign
of wealth or great prestige.

People saw their cars as a status symbol.
 Even if they couldn’t afford fuel to drive their cars,
they still saw their cars as one of their most prized
possessions.

Some kept their cars & kept driving them,
whether if they could afford it or not.
 Thousands of restless people went out on the
highways during the depression.
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Mid-1930s
 Bunch of two lane roads in U.S.
▪ People took off on these roads for new unknown
places.
▪ Some were
 Job Hunting
 Seeking Adventure
 Road Trip – Family Vacation
▪ Tourism was the 3rd largest industry
▪ Ex: in 1935 – 35 Million Vacationers on the Road
Automobile Industry Kept Growing
 1933
 24 million
 1937
 32 million
Car was Ultimate Machine for Escape!
Number of Registered
Cars in the U.S.
increased by
8 Million.

Began in the 1920s

As more houses were wired with
electricity, the market for new household
appliances grew.

Refrigerator
 Most sought after appliance.

Washing Machine & Electric Iron
 Made household chores easier

For a child in the 1930s
 10 Cents Would Buy
▪ Round Trip Fare on a Street Car
▪ 2 Apples from a Corner Vendor
▪ Malt at a Drugstore Fountain
▪ Afternoon at the Movies
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Many adults & children went without
afternoon snacks & saved their $ for the
movies.

“Talkies” or Movies with Sound
 Became More Common.

Gave People a Well Needed Escape

Color Film Technology
 Added Appeal to the Movies
 More & More Movie Makers switched (from Black & White)
 1939 – Gone with the Wind
▪ Converted many who preferred black & white to color.
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1930s - Radio was a Huge Piece of
Furniture

Gathering Place for Hours of
Entertainment

1929 – More than 10 million families
owned a radio.

Radio Served Many Purposes
 Link to the Outside World
 Housewife’s Companion as she did her Daily
Chores.
 Gave Unemployed the Comfort of Company
 Occupied Young Children After School
 Entertained Families during Long Winter
Evenings.

The Grapes of Wrath
 By John Steinbeck
 Was one of the Most Famous Novels in the 1930s.
 Focused on an Okie family driven from their land.

Documentary Photography
 Showed the Depression stripped hopes & dreams.
 Photos Included:
▪ Poor Migrant Workers from Alabama
▪ Evicted Wheat Farmers from the Dust Bowl
▪ Hungry Children in Hoovervilles
 Photos quickly showed how the Depression
affected people.
Depression Shattered the Lives of Many Americans!
Photos showed displaced
farm families and
migrant workers during
the Great Depression.