Lesson #1- Causes of the Great Depression

Lesson #1- Causes of the Great Depression

1920s- The Age of Prosperity

- The 1920s were a decade of consumer spending and the economy looked healthy... on the surface.

- Income did increase in the 1920s, but there were severe problems with the US economy.

- In October 1929, the "Roaring Twenties" came to an end and the Great Depression began... why?

Over Production and under-consumption

By the end of the 1920s, factories produced too many durable goods (known as over-production).

- People did not need as many appliances and cars by the end of the decade (Under-Consumption).

- Too much inventory, not enough buyers.

Problems for Farmers and Industry

The end of WWI led to a decline in demand for agricultural products and a 40% decline in crop prices.

- Farmers could not pay back loans and many had their farms foreclosed.

- Railroads, Textiles, coal were losing money and faced competition from cars, synthetic fibers, and natural gas.

Increasing American Debts

Many Americans used credit to live beyond their means, generate large debts, and had to cut back on spending by the end of the decade

Open Ended

How does consumer debt in the 1920s compare to today?

Uneven Distribution of Wealth

The decade was not as wealthy as it appeared; despite rising wages, the gap between the rich and poor grew wider in the 1920s.

- 70% of Americans were considered "poor" so most of the spending was done by 30% of the population.

Stock Market Speculation

- The stock market soared throughout the 1920s and people speculated by borrowing money to pay for stocks (called buying on margin.)

- The stock market was not regulated which allowed some companies to alter their stock values to increase profits... this created a "bubble" in the stock market.

The spark...

The spark that triggered the Great Depression was the Stock Market Crash in October 1929.

- On October 29, 1929 (Black Tuesday) the stock market crashed.

- People rushed to sell, stock prices dropped, and investors lost a total of $30 billion.

- Speculators who bought on margin, could not pay off their debts.

After the Crash

- People tried to withdraw their money from their banks.

- When banks could not produce money for all their customers, the banks failed.

- This led to a "run on banks" across the US. Hundreds of banks failed and thousands of people lost their savings.

- The banking failure and stock market crash led to the collapse of thousands of businesses.

Unemployment Grows

When the Great Depression began, millions of people lost their jobs or took pay cuts to keep their jobs.

- From 1929-1932, unemployment grew to 12 million people.

- Americans lacked confidence in the future so they tried not to spend money.

- The decline in consumer confidence made the depression drag on until the 1940s.

A Global Catastrophe

The Great Depression led to a global depression in Europe, Asia, and Latin America.

- World trade fell by 40%.

- To encourage citizens to buy from US companies (not foreign competitors) the government passed new high tariffs (Taxes on imported goods).

- European nations responded with their own tariffs which made it difficult for US companies to sell their goods overseas.

The Great Depression led to a collapse of the American Financial System by 1933

Bank Failures

Americans lost confidence in banks as 25,000 banks failed; The lack of banking meant there was no more money for investment.

Business Failures

The lack of spending and stock market crash led to failure of 90,000 businesses

Unemployment

Unemployment peaked at 25% of all Americans; People lost their homes, farms, and businesses

Income and Spending

The USA had record poverty and suicide rates and healthcare declined; Charities offered soup kitchens and breadlines to help.

Multiple Choice

How did "bank runs" impact the American people during the Great Depression?

• Banks eventually ran out of money to loan, and people's life savings were gone.
• Banks made loans throughout the Great Depression, helping people pays bills until they could find work.
• Banks were able to people's deposits safe, but they could not loan out any more money.
• Banks were not at all involved in the Great Depression because people did not use them.

Multiple Choice

Buying products with money loaned from a bank; Makes it possible to buy expensive items without saving up for them.

• Debit

• Finance

• Credit

Multiple Choice

This cause led many businesses to close, because they were producing more goods than consumers were willing to buy.

• Overproduction 
• Underconsumption 
• Buying on Credit 
• Stock Speculation 

Multiple Choice

This is making a very risky investment in the stock market, in hopes of earning a large profit

• Speculation 
• Buying on Margin 
• Bank Run 
• Bull Stock 

Multiple Choice

When the purchase of goods and services is at a lower level then the supply (not enough goods are being purchased by consumers)

• Underconsumption
• Overproduction 
• Speculation 
• Buying on Margin 

Multiple Choice

When a large number of customers line up to withdraw cash from deposit accounts from a financial institution

• Speculation 
• Black Friday 
• Bank Run 
• Underconsumption 

Multiple Choice

This is the idea that the rich become richer, while the poor become poorer

• Black Tuesday 
• Speculation 
• Unequal distribution of wealth
• Buying on Credit 

Multiple Choice

Which of the following statements best describes what happened on Black Tuesday?

• Stock prices fell and the stock market crashed.

• Bank runs forced many banks to close their doors.

• Federal troops attacked the Bonus Army marchers.

• The Supreme Court ruled that the NRA was unconstitutional.

Multiple Choice

Which of the following statements best describes what happened on Black Tuesday?

• Stock prices fell and the stock market crashed.

• Bank runs forced many banks to close their doors.

• Federal troops attacked the Bonus Army marchers.

• The Supreme Court ruled that the NRA was unconstitutional.

Breadlines

Soup Kitchens

Mortgage Foreclosures

Poverty in the Great Depression

The Dust Bowl

The effects of the depression were made worse by the Dust Bowl.

- Decades of over-farming and droughts in the Plains led to windstorms that swept away soil and made farming impossible.

Okies and Arkies

Farmers in the Plains (Okies- Oklahoma; Arkies- Arkansas) left their farms and searched for work or for better land in the West Coast states

Multiple Choice

Farm wokers were constantly moving looking for work. Since they were always moving they became known as

• Immigrant Emplyees

• Immigrant Workers

• Migrant Employees

• Migrant Workers

Multiple Choice

What part of the soil, which has all the nutiants, was starting to be blown away?

• Topsoil

• Bottomsoil

Multiple Choice

The major problem with wheat is that the _______ were not deep enough to hold onto the soil.

• Leafs

• Water

• Seeds

• Roots

Multiple Choice

What were the people called who left the Dust Bowl area and went to other places?

• migrants
• travelers
• Okies
• loners

Multiple Choice

Identify a negative consequence of the Dust Bowl on farmers.

• Farmers had no consequences

• Farmers didn't have to work very hard anymore

• Farmers could't pay their bills and possibly lost their farms

• Farmers were worried there was too much rain

Multiple Choice

What human activity was a part of the cause of the Dust Bowl?

• Driving

• Building

• Baseball

• Overplowing

Multiple Choice

Choose the answer that best describes the Dust Bowl.

• When people get a lot of dust in their plates and bowls.

• A period of time where a large part of the US experienced drought and huge dust storms.

• When a dust storm came through Lubbock last year.

• A general term for when objects become dirty.

Multiple Choice

During the 1930s, poor land management and severe drought conditions across parts of the Midwest resulted in the

• formation of the United States Department of Agriculture
• creation of wheat surpluses
• growth of the Populist movement
• development of Dust Bowl conditions on the Great Plains

Multiple Choice

Choose the picture that best fits with the Dust Bowl

Multiple Choice

What other natural disaster lead to the destruction of Georgia's farm land?

• Drought

• Fire

• Hurricane

• Sand Storm

Multiple Choice

What other natural disaster lead to the destruction of Georgia's farm land?

• Drought

• Fire

• Hurricane

• Sand Storm

Hoover

When the Great Depression began, Republican President Herbert Hoover tried to solve America's economic problems.

- He believed that America could overcome the depression through "rugged individualism" (Using hard work and perserverance).

- He Encouraged private charities to help (Volunteerism).

- He also encouraged business growth, wanted to keep taxes low, and avoided direct government intervention.

The Depression Worsens

- Hoover called for more direct government action to eas peoples' suffering.

- Under Hoover, the government issued relief checks to help the unemployed.

- Congress created the Reconstruction Finance Corporation (RFC) to loan money to save failing businesses.

Hoover Dam

Congress approved new building projects to put Americans back to work like the Hoover Dam.

Lost Faith

The efforts by Hoover did not end the depression and many citizens lost faith in President Hoover.

- Americans who lost their homes lived in shantytowns nicknamed "Hoovervilles"

Bonus Army Debacle

- 1932, A group of WWI veterans marched on Washington demanding that the government issue promised bonuses and benefits for their service immediately.

- Hoover refused to meet with them, then ordered the army to remove them form public areas of DC.  Gen. Douglas MacArthur used force, burning their tents.  4 killed, over 1000 injured.  Destroyed Hoover’s chances of re-election.

New Leadership

By the election of 1932, Americans were looking for new leadership and a president who could save them from the Great Depression

Multiple Choice

This president thought the federal government should not get involved in the economy. As a result, many Americans blamed him for the Great Depression. This caused him to lose the election in 1932.

• Franklin Delano Roosevelt
• Theodore Roosevelt
• Herbert Hoover
• Calvin Coolidge

Multiple Choice

Consumer who borrowed money to buy more stocks were buying on

• a whim

• guarantees

• their feet

• margin

Multiple Choice

What was the main reason the federal government built this dam?

• To provide resources for a growing population

• To facilitate the transportation of goods in the region

• To increase tourism in the region

• To prevent the Colorado River from drying up

Multiple Choice

The situation shown in this photograph occurred in which region?

• Ohio River valley
• Rocky Mountains
• Great Plains
• Northeast

Multiple Choice

These shantytowns popped up in cities during the early part of the Depression

• Hoovervilles

• Rooseveltiums

• Wilsontowns

• Rye

Multiple Choice

What effect did the Dust Bowl storms have on the Great Depression?

• Many farmers were forced to leave the Great Plains.

• Unemployment decreased gradually.

• Many homes along the Mississippi River were flooded.

• Hoover was re-elected as president.

Multiple Choice

Which of these statements is true of the 1932 presidential election?

• Franklin Roosevelt won in a landslide.
• Hoover lost by a narrow margin.
• Huey Long ran a strong third-party campaign.
• Roosevelt won a third term.

Multiple Choice

During the early 1930s, the main goal of the Bonus Army was to pressure the Hoover administration to

• strengthen the nation’s defenses
• end the military draft
• bring American troops home from overseas
• support the early payment of money promised to veterans

Multiple Choice

Who was the President of the United States when the Stock Market crashed?

• Franklin D. Roosevelt

• Herbert Hoover

• Woodrow Wilson

• Theodore Roosevelt

Multiple Choice

Who was the President of the United States when the Stock Market crashed?

• Franklin D. Roosevelt

• Herbert Hoover

• Woodrow Wilson

• Theodore Roosevelt