Causes of the DepressionCauses of the Depression

• BLACK TUESDAYBLACK TUESDAY – – start of start of GREAT DepressionGREAT Depression• Happened because of little Govt. regulation –Laissez Faire Happened because of little Govt. regulation –Laissez Faire

EconomicsEconomics

• HIGH TARIFFS – Foreign made products entering the USA cost HIGH TARIFFS – Foreign made products entering the USA cost more, so that AMERICANS would buy USA products only. more, so that AMERICANS would buy USA products only.

• Backfired – Foreigners in retaliation did not buy our products & Backfired – Foreigners in retaliation did not buy our products & put TARIFFS on USA GOODS.put TARIFFS on USA GOODS.

Many cause contributed to making the Great Depression as severe as it was

Farm Depression of the 1920s

•Prices of farm products felled about 40% in 1920-1921 and they remained low through the 1920s

•As results some farmers lost so much money they couldn’t pay the mortgage on their farm

Uneven Distribution of Income

•Industrial productions increased about 50% but the wages of the industrial workers rose far more slowly

•As results these workers couldn’t buy goods so fast as industry produced them

The Stock Market Crash

•Stock values dropped rapidly on Oct. 24,1929; now known as Black Thursday

•On Tuesday stock holders panicked and sold a record 16.410,030 shares of stocks

•Thousands people lost huge sums of money as stock values fell far blow the prices paid for

Banks Banks lost money on their lost money on their investmentsinvestments, and , and investors investors defaulted on loansdefaulted on loans. .

Because the government did not insure bank Because the government did not insure bank deposits deposits customers lost their money if/when a customers lost their money if/when a bank closedbank closed..

BankBank RUNS RUNS resulted as many resulted as many bank customers withdrew bank customers withdrew their money at the same timetheir money at the same time, , causing the bank to collapsecausing the bank to collapse and and close for business.close for business.

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• List and explain your 7 List and explain your 7 principles of gov’t. principles of gov’t.

Causes of the Depression

The Depression StartsThe Depression Starts

President Hoover believed that business if left alone to operate without government supervision would correct the economic conditions!

Congress approved Hoover’s most successful anti-depression measure ReconstructionReconstruction FinanceFinance Corporation Corporation

This government agency provided some relief by lending lending money to banks, railroads, and other large money to banks, railroads, and other large organization whose failure would have organization whose failure would have made depression even worsemade depression even worse

Unemployment 1925-1933

02468

101214

1925 1926 1927 1928 1929 1930 1931 1932

Year

Une

mpl

oyed

(in

mill

ions

)

QuestionQuestion: How many people were unemployed in 1925? In 1929? In 1932?

• Hoover did increaseHoover did increase PUBLIC WORKS PUBLIC WORKS – – government-financed building government-financed building projects to replace construction jobsprojects to replace construction jobs that had been stopped. that had been stopped.

• At the same time, At the same time, Hoover refused to Hoover refused to increase government spending or increase government spending or taxes.taxes.

• He He feared deficit spending would feared deficit spending would actually delay an economic actually delay an economic recoveryrecovery..

Unemployed workers often stood in Unemployed workers often stood in BREAD LINESBREAD LINES to to receive free foodreceive free food or at or at SOUP KITCHENS SOUP KITCHENS where private where private charities gave a free meal to the poor.charities gave a free meal to the poor.

Many of the homeless Many of the homeless built shacksbuilt shacks in in SHANTYTOWNSSHANTYTOWNS, which they called , which they called “HOOVERVILLES”“HOOVERVILLES”, because they , because they blamed the President for their blamed the President for their troubles.troubles.

HOBOSHOBOS, , or homeless Americans who or homeless Americans who wandered around hitching rides on wandered around hitching rides on railroad carsrailroad cars, searched for a better life , searched for a better life and WORK.and WORK.

• Homeless Americans blamed Homeless Americans blamed President Hoover for their President Hoover for their predicament.predicament.

• ManyMany homeless people wrapped homeless people wrapped themselves in used newspapersthemselves in used newspapers they they calledcalled “HOOVER BLANKETS” “HOOVER BLANKETS” toto keep themselves warm. Some wore keep themselves warm. Some wore theirtheir empty pockets inside out empty pockets inside out and and called them called them “HOOVER FLAGS”.“HOOVER FLAGS”.

2008 GREAT DEPRESSION

2000s1930s

FARMERSFARMERS

• As As crop prices dropped in the 1920’scrop prices dropped in the 1920’s, , many American farmers left their fields many American farmers left their fields uncultivated. uncultivated.

• A A terrible droughtterrible drought in the in the GREAT GREAT PLAINSPLAINS, beginning in 1932, caused the , beginning in 1932, caused the region to become known as a region to become known as a “DUST “DUST BOWL”.BOWL”.

• That resulted in many Midwestern That resulted in many Midwestern farmers and Great Plains farmers lost farmers and Great Plains farmers lost their farms. Many families their farms. Many families moved west to moved west to CALIFORNIACALIFORNIA hoping to find a better lifehoping to find a better life

The Dust Bowl