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The Great Depression. The Stock Market Crash of 1929. Stock Market: an organized system where stocks (parts of a business) are bought and sold.
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The Stock Market Crash of 1929 Stock Market: an organized system where stocks (parts of a business) are bought and sold. • Throughout the 1920s, most people who invested (bought stocks) made lots of money. Every year during the 1920s, the value of stocks rose higher and higher. The more people invested the more money they made. 2. Some people ran out of money to buy stocks, so they borrowed money from banks and others to buy even more stocks.
3. In September 1929, some investors began to sell their stocks because they feared the 1920s “stock boom” would eventually end. This caused a drop in stock prices, which in turn caused other investors to sell their stocks before they lost all their money too. 4. Soon a panic started, the value of stocks dropped dramatically and people lost all the money that they had invested. Within a few days, most stocks in the U.S. had become worthless!
People over speculated on the Stock Market: • During the 1920s people borrowed money to buy stocks and when the stock market crashed people could not repay the borrowed money and went into debt. Causes of the Great Depression
The Federal Reserve failed to prevent the collapse of the banking system: • Federal Reserve - monitors and controls the amount of money in circulation (used by the banks). • After the stock market crash, people started to withdraw their money from their banks. Soon the banks started to run out of money and close. • The Federal Reserve did nothing to keep banks from closing. • Those people who did not withdraw their money quickly enough lost their life’s savings when the banks closed.
3. High tariffs strangled international trade Tariff – a tax on imported goods (products brought to the U.S. from other countries. • In order to make money, the U.S. charged other countries high tariffs to bring their products to the U.S. • In return, other countries charged high tariffs on American products. • This caused U.S. businesses to sell fewer products in these countries, which meant they produced fewer products. • Since U.S. businesses were producing less, this meant fewer workers were needed and thus people lost their jobs.
Impact of the Great Depression on Americans • Large Numbers of banks and businesses failed. • Banks across America ran out of money and closed. • Businesses across America lost profits and closed.
2. ¼ of all American workers lost their jobs. a) When businesses lost profits, workers lost their jobs.
Men waiting in lines in the hope of getting a job for at least one day.
3. Large numbers of people went hungry and became homeless. • Soup Kitchens: places where people could get food during the Great Depression (bread & soup) • Hoovervilles: shelters built from old boxes and other scrap material where some people lived during the Great Depression.
4. Farmer’s incomes fell to all time low levels. • Many farmers over produced, which caused the price of farm products to drop dramatically. This meant less income for farmers. • Dust Bowl: (Kansas, Oklahoma, Texas) • A severe drought during the 1930s caused crops to die and the soil to dry out. Then the strong prairie winds simply blew the soil away in huge dust storms that could last for days.
The drought and blowing dust made it almost impossible to farm.
400,000 farmers gave up their farms and left the Dust Bowl region and most moved to California.
The New Deal New Deal – Programs started by President Franklin D. Roosevelt to assist business recovery, increase employment and provide financial relief to individual Americans.
New Deal Programs 1. Social Security – a tax that businesses and workers had to pay which provided monthly pensions (payment) to retired people (people too old to work).
2. Federal work programs: Public Works Administration (PWA) – The goal of the PWA was to employ large numbers of workers by building huge public works projects. The PWA built roads, ships, bridges and hospitals.
3. Environmental work programs: Civilian Conservation Corp (CCC) – This program employed 2.5 million young men to work on environmental conservation projects like planting trees to re-forest areas, building dams for flood control, and improving national parks. CCC men working in Yellowstone National Park Stone steps built by the CCC in Grand Canyon National Park
4. Farm assistance programs: Agricultural Adjustment Administration (AAA) – This agency worked to raise the price of farm products. The AAA actually paid farmers to grow less crops. Dairy farmers destroying milk in order to keep the supply down and prices high.
5. Increased rights for labor (workers): Fair Labor Standards Act – this law banned child labor and created a minimum wage for all workers ($0.40/ hour)
