Transcript 32 Causes Depression

THE CAUSES OF THE GREAT
DEPRESSION
What is a
Depression?
Photos by photographer Dorothea Lange
THE GREAT DEPRESSION
Alabama family, 1938 Photo by Walter Evans
• period from
1929 – 1940 in
which the
economy
plummeted and
unemployment
skyrocketed
What is a depression?
Gross Domestic Product- total amount
of goods and services produced
within a country in a given year
Recession- a 6 month period when GDP
decreases
Depression- a severe long lasting
recession
GDP 1929-1950
350.0
250.0
200.0
Series2
150.0
100.0
50.0
0.0
19
29
19
31
19
33
19
35
19
37
19
39
19
41
19
43
19
45
19
47
19
49
Billions
300.0
Years
The Great Depression
GDP DROPS,
UNEMPLOYMENT SOARS
• Unemployment
leaped from 3%
in 1929 to 25% in
1933
• Unemployment
Rate today about
7.6%
The Cycle of Money
Good Business Cycle
Workers
make
money
Factories hire
workers
Factories
need
workers
to make
goods
Able to buy
goods
Bad Business Cycle
Workers
can’t afford
to buy
goods
Factories fire
workers
Factories
cut back on
production
Demand
Decreases
(leads to
surplus)
The Great Depression was a
worldwide event
GDP During the Great Depression
Causes of the Depression
Causes Of The Great Depression
Overproduction
Gambling On Stocks
Sinking
International Trade
Uneven distribution
of income
Poor banking system
Causes of the Depression
Causes Of The Great Depression
Overproduction
Farms and factories
were producing more
goods than were
being sold. No one
was willing to spend
their money.
Gambling On Stocks
People who bought
on credit couldn’t
repay what they
owed when the
market crashed.
Sinking
International Trade
High U.S. tariffs
forced other
countries to raise
tariffs. U.S.
Businesses couldn’t
sell goods overseas.
Uneven distribution
of income
For all the
prosperity, 1/2 of
America lived below
the poverty level
during the 20s
Poor banking system
Bankers put
depositors’ money
into unsound
investments. $$ was
gone and banks
closed when the
market crashed
STOCK PRICES RISE
THROUGH THE 1920s
• Bull Market
• By 1929, 4
million
Americans
owned stocks
New York Stock Exchange
SEEDS OF TROUBLE
Speculation
And
The Stock Market’s bubble was
about to break
Margin
Buying on Margin
Stock
Investor’s
initial cost
Investor 1
10
Shares
$7.50
Investor 2
50
Shares
Investor 3
100
Shares
Amount Broker Must
Borrow
$212.50
$75.00
Shares are being sold at $5.00 each. Initially, the investor owes 15%.
THE 1929 CRASH
• October 29, Black
Tuesday, the
bottom fell out
• 16 million shares
were sold.
• Prices plummeted
• $30 billion was lost
By mid-November, investors
had lost about $30 billion
Bank Closings
• Banks had invested
in the Stock
Market and lost
money
• By 1933 – 11,000
of the 25,000
banks nationwide
had collapsed
Bank run 1929, Los Angeles
HAWLEYHawleySMOOT
TARIFF
Smoot Tariff
• In 1930, toughest
tariff in U.S.
history
• Other countries
enacted their own
tariffs and soon
world trade fell
40%
Herbert Hoover
wins the 1928
election
• Hoover
emphasized
years of
prosperity under
Republican
administrations
HOOVER’S PHILOSOPHY
• rugged individualism
the idea that people
succeed through their
own efforts
Hoover believed it was the individuals job to
take care of themselves, not the governments
• People should take
care of themselves,
not depend on
governmental handouts
“people should
pull themselves
up by their
bootstraps”
“Have faith the
economy will get
better in 6
months”
6 months things were
worse
Hooverisms
Today’s term of destitution with my name in it is…
Hoovervilles
Hoovervilles
Hoover Flags
Hoover Blankets
Hoovervilles
Hoovervilles
Hoovervilles
Hoovervilles
Hoovervilles
Hoovervilles
Unemployment Lines
Unemployed people flocked to find jobs.
Unemployment Lines
Unemployment Lines
Bread Lines
Bread Lines
Bread Lines
Soup Kitchens
Soup Kitchens
Soup Kitchens
Soup Kitchens
The Great Depression
Dinner is served….turtle soup.
The Great Depression
Christmas on East 12th Street, New York City
TOO LITTLE TOO LATE
• public works projects
• Reconstruction
Finance Corporation –
created to strengthen
banks and businesses
through government
loans
Hoover’s flurry of activity
came too late to save the
economy or his job
• prosperity would
“trickle down” to the
average citizen
HOOVER’S SUCCESSFUL
DAM PROJECT
• The $700 million
project was the
world’s tallest dam
(726 feet) and the
second largest (1,244
feet long)
• The dam currently
provides electricity,
flood control and
water for 7 western
states
• 1932
• 15,000 World War I
vets arrived in
Washington to
support a proposed
bill
• Live in Hoovervilles
• Patman Bill would pay
the bonus
immediately instead of
1945
BONUS
ARMY
BONUS ARMY
TURNED DOWN
• Hoover called
them
“Communists
and criminals”
Thousands of Bonus Army soldiers
protest – Spring 1932
• On June 17,
1932 the
Senate voted
down the
Putnam Bill
BONUS MARCHERS CLASH
WITH SOLDIERS
• 2,000 refused
to leave
• Hoover sent a
force of 1,000
soldiers to force
them to leave
AMERICANS SHOCKED AT
TREATMENT OF WWI VETS
Army under General Douglas MacArthur and Major
Dwight D. Eisenhower use tear gas to break up the
marchers.
- An 11 month-old died, an 8 year-old boy was paralyzed, 2
were shot, many injured.
The Bonus Army
Hoover
reputation
is
destroyed
and has no
chance of
winning
re-election
THE DUST BOWL
• A severe drought
gripped the Great
Plains in the early
1930s
• Wind scattered the
topsoil, exposing
sand and grit
• The resulting dust
traveled hundreds of
miles
Kansas Farmer, 1933
Dust storm approaching Stratford, Texas - 1934
Dust buried cars and wagons in South Dakota
in 1936
HARDEST HIT REGIONS
Boy covers his mouth to avoid
dust, 1935
• Kansas, Oklahoma,
Texas, New Mexico,
and Colorado were
the hardest hit
regions during the
Dust Bowl
• Many farmers
migrated to
California and other
Pacific Coast states