NOTES on the Great Depression SSUSH17 SSUSH17 Causes of the - PowerPoint PPT Presentation

NOTES on the Great Depression SSUSH17

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Causes of the Depression 1. uneven distribution of wealth 2. Stock market mistakes a. Speculation: buying cheap stocks hoping they will improve b. Buying on Margin: borrowing money from broker to buy stocks i. charge interest! ii. Stock must BOOM to make any $ SSUSH17

3. Overproduction … supply exceeds demand  price drop a. Mass production = too efficient 4. Buying on Credit a. Farmers buy equipment on credit b. Prices drop  Cannot pay debt c. Farm foreclosures! SSUSH17

Farms Foreclosed SSUSH17

5. Panic! Stock Market Crash a. Black Tuesday i. 16.4 million shares SOLD (Oct 29 th , 1929) ii. Loss of $30 billion SSUSH17

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6. Bank Runs – everyone withdraws $ a. WORLD’s biggest lender falls b. Stop lending to Europe  Europe cannot afford to buy American products c. Europeans cannot sell goods in US … cannot pay back war debts US stops loans to European Europe factories fail Europe cannot repay loans OR buy Amer. products SSUSH17

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Great Depression – severe economic decline 1. Widespread poverty a. Factories close – 25% unemployed b. Hoovervilles = shantytowns for homeless 2. gross national product (total value of goods and services a country produces) = cut in half SSUSH17

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“Prosperity cannot be restored by raids upon the public treasury” SSUSH17

Herbert Hoover (R) 31 st President of the U.S. 1929-1933 Born: Aug 10, 1874 Died: Oct 20, 1964 “Children are our most valuable natural resource. We need to start drilling for more children.”

Herbert Hoover’s response 1. Relied on “Corporate Volunteerism” a. Opposes expanded government programs or direct government intervention 2. Bonus Army - 20,000 unemployed veterans marched on Washington a. Want war pensions b. Army burns camps - Used tanks and tear gas c. Hoover = horrified … but takes responsibility 3. Smoot Hawley Tariff – protectionist tax on foreign goods a. Intended to help American companies, farmers, etc … b. Hurts American consumers & relationships with international trade community, reduces imports SSUSH17

4. In 1933, Prohibition is repealed. Increased: *Economy *Industry *Jobs 21 st Amendment to the United States Constitution SSUSH17

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Stories of Survival • Nothing was wasted  the “depression generation” – even those who recovered enough to live a very comfortable life, would continue to pinch pennies as if financial ruin were just around the corner – People pulled together and helped “When Wall Street took the tail one another spin, you had to stand in line to – Humor to cope get a window to jump out of” SSUSH17

Dust bowl – drought and dust storms in plains states SSUSH17