Causes of the Great Depression

Causes of the Great Depression Chapter 17, Section 1

Prosperity Hides Troubles • Throughout the 1920s, the U.S. had experienced economic prosperity with two Republican presidents. • When likeable Herbert Hoover was chosen as the Republican candidate in 1928, he promised “…a chicken in every pot, a car in every garage.” • Hoover had held numerous gov. positions previously and excelled in them.

Prosperity Hides Troubles • Underneath the prosperity, though lurked several problems that compounded throughout the decade. • Farmers had increased production, bought more land, and purchased machinery on credit during WWI. However, production did not immediately decrease after the war. Farmers were unable to sell their abundant crops, pushing them further into debt.

Prosperity Hides Troubles • When industrial wages rose steadily, their output increased at a much greater rate; management made more. The rich Americans did not make up for the lack of purchasing power of the lower-wage Americans. • Buying on credit compounded with each year. More and more Americans bought what they could not afford.

Prosperity Hides Troubles • These problems boiled over on October 29th, 1929 when the stock market crashed. It became known as Black Tuesday. • However, this was part of the business cycle– a series of expansions and recessions in the economy.

The Great Depression Begins • The reaction to the stock market crash signaled the start to the Great Depression. • Stock market speculation too many people had put money into the stock based on what could happen, and not real information (known as speculation); • Banks collapse when people lost money on the stock market, they feared they would lose their money in the banks, so they withdrew it;

The Great Depression Begins • The government attempted to protect American products, the gov. passed the Hawley-Smoot Tariff. It raised taxes on imported goods, crippling international trade. • European difficulties with reparations and war debt payments worsened when the U.S. could not lend money to European countries.

Americans Face Hard Times Chapter 17, Section 2

Misery and Despair Grip American Cities • Massive unemployment as a result of the economic collapse led to widespread homelessness and poverty. • This led to the ‘construction’ of American shantytowns, made from cardboard boxes. • They were known as Hoovervilles because many saw the blame for the collapse as belonging to the president.

Poverty Devastates Rural America • Part of the problem facing farmers was the over-use of the land in the Midwest. Loose soil, compounded by drought and high winds led to the Dust Bowl– an area where dust storms were common. • States affected included Texas, Oklahoma, Kansas New Mexico and Colorado.

Poverty Devastates Rural America

Poverty Devastates Rural America • Many farmers were forced to abandon their farms. Some chose to become tenant farmers, and work for a larger farmland. Others chose to leave the Midwest altogether, mainly for California. • These individuals were known as Okies– although not all were from Oklahoma.

Few Americans Escape Hard Times • The Great Depression was not only difficult on the American people economically, but emotionally as well. • Women had increased anxiety and stress, and often had to go back to work to support their families; • Children sometimes ran away from home and many quit school; • Minorities were again blamed for the struggles and had to endure racism.

Causes of the Great Depression