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The Great Depression
Unit 7: National Crisis
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Standard • SSUSH17- The student will analyze the causes
and consequences of the Great Depression.
• a. Describe the causes, including overproduction,
underconsumption, and stock market speculation that led
to the stock market crash of 1929 and the Great
Depression.
• b. Explain factors (include over-farming and climate) that
led to the Dust Bowl and the resulting movement and
migration west.
• c. Explain the social and political impact of widespread
unemployment that resulted in developments such as
Hoovervilles.
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Causes of the Great
Depression
• Factors leading to
Great Depression:
– tariffs, war debts,
farm problems,
easy credit,
income disparity
– Federal
government keeps
interest rates low
and encourages
borrowing
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Industries in Trouble
• Key industries like
railroads, textiles, steel
barely make profit
• Mining, lumbering
expanded during war;
no longer in high
demand
• Coal especially hard-hit
due to availability of
new energy sources
• Housing starts decline
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Farmers Need a Lift
• International demand for U.S. grain declines after war
• prices drop by 40% or more
• Farmers boost production to sell more, but prices drop further
• Farm income declines, farmers default on loans, which cause rural banks to fail
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Credit and Income
• People buy less due to rising prices, stagnant wages, and credit debts
• Many people buy goods on credit (buy now, pay later)
• Businesses give easy credit and consumers pile up large debts
• Consumers have trouble paying off debt; begin to cut back on spending
• Uneven Distribution of Income:
• In 1920s, rich get richer, while the poor get poorer
• 70% of families earn less than minimum for decent standard of living
• Most cannot afford flood of products factories produce
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Dreams of Riches in the Stock
Market
• 1920s, stock prices rise
steadily; people rush to
buy stocks and bonds
• Many engage in
speculation, buy on
chance of a quick profit
• Buying on margin—
pay small percent of
price and borrow the
rest
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Black Tuesday
• September 1929 stock prices peak, then fall quickly
• Investors begin selling stock
• October 29 or Black Tuesday, nation’s confidence in market falls
• Shareholders sell recklessly and millions of shares have no buyers
• People who bought on credit left with huge debts
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Bank and Business Failures
• Great Depression (1929-1940)—economy plummets and unemployment skyrockets
• After crash, people panic and withdraw money from banks
• Banks that invested in stocks fail and people lose their money
• 90,000 businesses go bankrupt
• 1933, 25% of workers jobless, those with jobs get cuts in hours and pay
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Worldwide Shock Waves
• Great Depression limits U.S. ability to import European goods
• Hawley-Smoot Tariff Act sets highest protective tariff ever in U.S.
• Other countries cannot earn American currency to buy U.S. goods
• International trade drops and unemployment soars around world
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The Dust Bowl
• Farmers in Great Plains exhaust land through overproduction
• 1930s, drought, windstorms hit; soil scattered for hundreds of miles
• Dust Bowl— area from North Dakota to Texas that is hardest hit
• Many farm families migrate to Pacific Coast states
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Great Depression
Photo Analysis
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Photo Analysis (Depression refugee family
from Tulsa, Oklahoma)
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Photo Analysis (Soup Line)
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Photo Analysis
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Photo Analysis
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Photo Analysis
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Mistakes by Hoover
• President Herbert
Hoover tells
Americans
economy will get
better quickly
• Many experts
believe depressions
a normal part of
business cycle
• People should take
care of own families
and not depend on
government
• No federal system
of direct relief—
cash or food from
government
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The Depression in the Cities
• People lose jobs and are evicted from homes
• Shantytowns-settlements consisting of shacks could be seen in many cities
• People dig through garbage and beg
• Soup kitchens offer free or low-cost food
• Bread lines—people line up for food from charities and public agencies
• Widespread criticism of Hoover: shantytowns
called “Hoovervilles”
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Hoovervilles
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Hoovervilles