Transcript The Roots of the Great Depression (cont.)

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Why It Matters
Prosperity in the United States seemed
limitless before the Great Depression
struck. Overproduction and agricultural
problems contributed to the economic
catastrophe. President Hoover looked to
voluntary business action and limited
government relief as solutions, but these
efforts failed. Meanwhile, millions of
Americans lost their jobs and life savings.
Artists and writers depicted this suffering,
and many people turned to lighthearted
films to escape their difficult lives.
Chapter Objectives
Section 1: Causes of the Depression
• Describe the characteristics of the 1920s
stock market. 
• Identify the causes of the Great Depression.
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Guide to Reading (cont.)
Section Theme
Economic Factors The Great Depression was
caused by a combination of various
economic problems and government policies.
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The Long Bull Market
• The stock market was established as a
system for buying and selling shares of
companies. 
• A long period of rising stock prices is
known as a bull market. 
• Prosperous times during the 1920s
caused many Americans to invest
heavily in the stock market.
(pages 657–658)
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The Long Bull Market (cont.)
• As the bull market continued to go up,
many investors bought stocks on margin,
making a small cash down payment. 
• This was considered safe as long as
stock prices continued to rise. 
• If the stock began to fall, the broker
could issue a margin call demanding
that the investor repay the loan
immediately.
(pages 657–658)
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The Long Bull Market (cont.)
• In the late 1920s, new investors bid
prices up without looking at a company’s
earnings and profits. 
• Speculation occurred when investors
bet on the market climbing and sold
whatever stock they had in an effort
to make a quick profit.
(pages 657–658)
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The Great Crash
• By late 1929, a lack of new investors in
the stock market caused stock prices to
drop and the bull market to end. 
• As stockbrokers advised their customers
of margin calls, customers responded by
placing their stocks up for sale, causing
the stock market to plummet further. 
• Stock prices fell drastically on October
29, 1929, Black Tuesday, resulting in
a $10 to $15 billion loss in value.
(pages 658–659)
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The Great Crash (cont.)
• While this did not cause the Great
Depression, it did undermine the
economy’s ability to hold out against its
other weaknesses. 
• The stock market crash weakened the
nation’s banks. 
• Banks lost money on their investments,
and speculators defaulted on loans. 
• Because the government did not insure
bank deposits, customers lost their money
if a bank closed.
(pages 658–659)
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The Great Crash (cont.)
• Bank runs resulted as many bank
customers withdrew their money at the
same time, causing the bank to collapse.
• The Federal Reserve could have
provided extra cash to meet customers’
demands while keeping the bank open,
but did not in many cases
(pages 658–659)
The Roots of the Great
Depression
• Efficient machinery led to overproduction,
and Americans could not afford to buy all
the goods produced. 
• The uneven distribution of wealth in the
United States added to the country’s
economic problems. 
• In 1929 the top 5 percent of American
households earned 30 percent of the
country’s income. 
• More than two-thirds of the nation’s
families earned less than $2,500 a year.
(pages 659–660)
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The Roots of the Great
Depression (cont.)
• Low consumption added to the economic
problems. 
• Worker’s wages did not increase fast
enough to keep up with the quick
production of goods. 
• As sales decreased, workers were laid
off, resulting in a chain reaction that
further hurt the economy.
(pages 659–660)
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The Roots of the Great
Depression (cont.)
• Many Americans bought on the
installment plan, making a down
payment and paying the rest in monthly
installments. 
• Paying off installment debts left little
money to purchase other goods. 
• The Hawley-Smoot Tariff intensified the
Depression by raising the tax on imports. 
• Americans purchased less from abroad
because of the high cost.
(pages 659–660)
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The Roots of the Great
Depression (cont.)
• In return, foreign countries raised their tariffs on
American products, causing
fewer to be sold overseas. 
• Instead of raising interest rates to stop
speculation, the Federal Reserve Board made
the mistake of lowering the rates. 
• This encouraged banks to make risky loans
and misled business owners into thinking the
economy was still expanding.
• When the economy was declining, the Federal
Reserve raised interest rates, which tightened
up credit and prevented needy businesses and
(pages 659–660)
families from getting loans
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Main Idea
Explain the causes of the Great Depression.
1.
Stock Market Crash of 1929 undermined the economy’s ability
to recover from other other weaknesses.
2.
Banks lost money in the stock market crash and depositors lost
their savings when banks closed due to bank runs
Production of goods remained high while consumption
decreased, leading to overproduction of goods. Low
consumption led manufacturers to cut production and lay off
employees
3.
4.
5.
6.
Uneven distribution of income: Purchasing goods by installment
plans left Americans in debt
High tariffs made it harder for companies and farmers to sell
their goods overseas
The Federal Reserve did not provide the cash to meet bank
customers’ needs, this closing banks. The Fed kept interest
rates low, encouraging banks to make risky loans, and then
raised interest rates when the economy was declining,
tightening up credit when it was needed.
Chapter Objectives
Section 2: Life During the Depression
• Describe how the Great Depression affected
American families. 
• Discuss how artists portrayed the effects of
the Depression.
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Guide to Reading (cont.)
Section Theme
Culture and Traditions Radio and motion
pictures provided ways to escape the worries
that plagued people during the Depression’s
early years.
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The Depression Worsens
• By 1933 thousands of banks had closed
and millions of American workers were
unemployed. 
• Unemployed workers often stood at
bread lines to receive free food or at
soup kitchens where private charities
gave a free meal to the poor. 
• Americans unable to pay their
mortgage or rent lost their homes.
(pages 661–663)
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The Depression Worsens (cont.)
• Many of the homeless built shacks in
shantytowns, which they referred to as
“Hoovervilles” because they blamed the
president for their financial trouble. 
• Hobos, or homeless Americans who
wandered around hitching rides on railroad
cars, searched for work and a better life.
(pages 661–663)
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The Depression Worsens (cont.)
• As crop prices dropped in the 1920s,
many American farmers left their fields
uncultivated. 
• A terrible drought in the Great Plains,
beginning in 1932, caused the region
to become a “Dust Bowl.” 
• Many Midwestern farmers and Great
Plains farmers lost their farms. 
• Many families moved west to California
hoping to find a better life, but most still
faced poverty and homelessness.
(pages 661–663)
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Chapter Objectives
Section 3: Hoover Responds
• Evaluate President Hoover’s attempts to
revive the economy. 
• Analyze the limitations of Hoover’s recovery
plans.
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Guide to Reading (cont.)
Section Theme
Groups and Institutions President Hoover
began using new government agencies to
improve the nation’s slumping economy.
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Promoting Recovery
• President Herbert Hoover increased
public works–government-financed
building projects.
• Hoover asked the nation’s governors
and mayors to increase public works
spending. 
• Hoover refused to increase federal
government spending or taxes. He
feared that deficit spending and higher
taxes would delay an economic
recovery.
(pages 668–670)
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Pumping Money Into the Economy
(cont.)
• President Hoover tried to persuade the
Federal Reserve Board to put more
currency into circulation, but the Board
refused. 
• Hoover opposed the federal government’s
participation in relief–money that went
directly to very poor families. 
• He felt relief was the responsibility of
state and local governments and it
would destroy individuals’ efforts to
provide for themselves 
(page 670)
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In an Angry Mood (cont.)
• In 1924 Congress enacted a $1,000
bonus to be paid to WWI veterans in
1945. 
• In 1931 a bill was introduced in the
House that authorized early payment
of the bonus.
• In 1932 the “Bonus Army” marched to
Washington, D.C., to ask Congress to
approve the legislation. 
(pages 670–672)
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In an Angry Mood (cont.)
• After Hoover refused to meet with the
Bonus Army and the Senate voted the
new bonus bill down, some of the
marchers left. 
• Some marchers stayed, moving into
deserted buildings in Washington, D.C. 
• When Hoover ordered the buildings
cleared, disputes between the remaining
people and the police (and later the army)
resulted in several deaths.
(pages 670–672)
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Close
Analyze the limitations of Hoover’s recovery
plans.
Reviewing Key Terms
Define Match the terms on the right with their definitions on
the left.
__
A 1. a long period of rising stock
prices
A.
bull market
B.
margin
__
F 2. a poor section of town
consisting of crudely built
dwellings usually made of wood
C.
margin call
D.
installment
__
C 3. demand by broker that investors
pay back loans made for stocks
purchased on margin
E.
bailiff
F.
shantytown
__
G 4. nickname given to shantytowns
in the United States during the
Depression
G.
Hooverville
H.
Dust Bowl
I.
public works
J.
foreclose
__
I 5. projects such as highways,
parks, and libraries built with
public funds for public use
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Reviewing Key Terms (cont.)
Define Match the terms on the right with their definitions on
the left.
__
D 6. buying an item on credit with a
monthly plan to pay off the value
of the good
A.
bull market
B.
margin
__
B 7. buying stock by paying only a
fraction of the stock price and
borrowing the rest
C.
margin call
D.
installment
E.
bailiff
F.
shantytown
G.
Hooverville
H.
Dust Bowl
I.
public works
J.
foreclose
__
H 8. name given to the area of the
southern Great Plains severely
damaged by droughts and dust
storms during the 1930s
__
J 9. to take possession of a property
from a mortgagor because of
defaults on payments
__
E 10. minor officer of the courts
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Reviewing Key Facts
What was the character of the stock
market in the late 1920s, and what
caused it to crash?
It was a bull market that crashed
because stocks were overvalued
and many people had purchased
stocks on margin.
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Reviewing Key Facts (cont.)
How did artists and writers capture the
effects of the Great Depression?
They focused on pictures and stories
of the homeless and unemployed.
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Reviewing Key Facts (cont.)
Why did “Okies” migrate to California
during the Great Depression, and what
happened to them once they got there?
They migrated searching for work.
Many ended up working as homeless
migrant laborers.
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Reviewing Key Facts (cont.)
What three major initiatives did
President Hoover take to try to help
the economy of the United States?
Hoover initiated the National Credit
Corporation, the Reconstruction Finance
Corporation, and the Emergency Relief
and Construction Act.
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Reviewing Key Facts (cont.)
What did World War I veterans do to try
to get their service bonuses early?
They marched to Washington to petition
Congress and then became squatters in
unoccupied buildings.
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Critical Thinking
Analyzing Themes: Culture and
Traditions Many people in the United
States were impoverished during the
Depression, yet 60 to 90 million weekly
viewers paid to see movies. Why do you
think movies were so popular?
Movies gave people an escape from
their own lives.
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Critical Thinking (cont.)
Evaluating Do you think President
Hoover could have done more to end
the Great Depression? Why or why
not?
Answers will vary.
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Economics and History
The graph below shows changes in crop prices from 1910
to 1935. Study the graph and answer the questions on the
following slides.
Economics and History (cont.)
Interpreting Graphs
What trend does this
graph show about
wheat and corn
prices in the 1930s?
They declined
sharply in the early
1930s, then rose
steadily.
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Economics and History (cont.)
Analyzing Between
which 10-year span
did the greatest
increase and
decrease in farm
prices occur?
The ten-year period in which there was the
greatest overall difference in farm prices was
between 1910 and 1920. This was found by
adding the price points of all three crops and
figuring the difference.
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Directions: Choose the phrase that best completes the following
sentence.
A major reason for the collapse of the American economy
after 1929 was
A
high interest rates.
B
decreased farm production.
C
low tariffs at home and abroad.
D
overproduction of consumer goods.
Test-Taking Tip If you are not sure of the answer, use the
process of elimination. For example, farmers were not
prosperous in the 1920s because their huge crops forced
down agricultural prices. Therefore, answer B is incorrect.
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What does the phrase “Dust Bowl”
refer to?
Starting in 1932, a prolonged drought
caused great clouds of dust to blanket
the region from Texas to the Dakotas.
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Explore online information about the topics
introduced in this chapter.
Click on the Connect button to launch your browser and go to
The American Vision Web site. At this site, you will find interactive
activities, current events information, and Web sites correlated
with the chapters and units in the textbook. When you finish
exploring, exit the browser program to return to this presentation.
If you experience difficulty connecting to the Web site, manually
launch your Web browser and go to http://tav.glencoe.com
Economics The growing gap between the rich
and poor in the 1920s revels that many
business leaders had forgotten Henry Ford’s
insight into the importance of paying workers
enough so that they could buy the products
they were making.
Music The music of Woody Guthrie gave an
uplifting voice to people who struggled through
the Depression. Unlike swing or big-band
songs. Guthrie’s lyrics told of rough living and
fighting back. The guitarist drew upon the
traditional times of farmers and workers to write
the workers’ anthems for decades to come.
Hobo Signs The hundreds
of thousands of hobos who
roamed the country
developed intricate symbols
that they wrote on trees,
fences, or buildings to warn
or inform other hobos. Many
became a part of American
folklore.
At the height of the Great
Depression there may have
been as many as 250,000
teenage hobos.
Manufacturing Output
Financiers and the Panic
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By 1932 the nation’s manufacturing output
stood at 47 percent of its 1929 level.
Some of the country’s leading financiers had
tried to avert the crash by pumping money into
the market, but others wanted to profit from the
panic. The president of Chase National Bank
sold 42,506 shares of his own bank’s stock,
bought them back later in the year at a lower
price, and made a profit of $4 million.
Monopoly
Rockefeller Center
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Ironically the board game Monopoly was invented
during the Depression. Charles Darrow was an
unemployed Pennsylvania engineer when he
designed the famous game in the early 1930s.
In 1931 a Christmas tree was placed amid the
rubble from some demolished buildings.
Workers who still had jobs decorated the tree
with tin cans and paper. A few years later at the
same site, the official Rockefeller Center tree
tradition was inaugurated.
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Building a Database
Do you have a collection of sports cards, CDs,
or DVDs? Have you ever kept a list of the
names, addresses, and phone numbers of
friends and relatives? If you have collected
information and kept it in a list or file, then
you have created a database.
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Building a Database
Learning the Skill
An electronic database is a collection of facts that are
stored in a file on a computer. The information is
organized in fields. 
A database can be organized and recognized in any way
that is useful to you. By using a database management
system (DBMS)–special software developed for record
keeping–you can easily add, delete, change, or update
information. You give commands to the computer that tell
it what to do with the information, and it follows these
commands. When you want to retrieve information, the
computer searches through the file, finds the information,
and displays it on the screen.
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Building a Database
Practicing the Skill
The Great Depression is a well-known period in
American history. Follow the steps on the following slides
to build a database containing the events that led to the
Great Depression and its effects on the country.
Building a Database
Practicing the Skill (cont.)
1. Determine what facts you want to include in your
database.
Facts should surround the events of the Great
Depression.
2. Follow instructions to set up fields in the DBMS that
you are using. Then enter each item of data in its
assigned field.
Identify fields that will fit with the facts you have
gathered.
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Building a Database
Practicing the Skill (cont.)
3. Determine how you want to organize the facts in the
database–chronologically by the date of the event, or
alphabetically by the name of the event.
Data can be sorted in various ways. You are
encouraged to experiment with different choices.
4. Follow the instructions in your computer program to
place the information in the order you selected.
Data can be sorted in various ways. You are
encouraged to experiment with different choices.
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Brother, Can You
Spare a Dime?
Objectives
After viewing “Brother, Can You Spare a Dime?,” you should: 
• Recognize how difficult the Depression was for ordinary
people. 
• Understand that the stock market
crash led to the closing of banks
and factories, which in turn led to
the unemployment of millions. 
• Know that programs such as the
WPA and CCC and the distribution
of basic necessities attempted to
help people.
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Brother, Can You
Spare a Dime?
Discussion Questions
What were some of the economic institutions that
faltered, which lead to the Great Depression?
The stock market and the banks failed.
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Brother, Can You
Spare a Dime?
Discussion Questions
What were some sources of food for
hungry people?
Bread lines provided food for many, and
the government passed out basic
necessities such as sugar and flour.
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Causes
Cyclical Effect
Stock Prices, 1920–1932
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