The Great Depression

The Great Depression

Mr. Rosamilia’s“A Series of Unfortunate Events” The swiss-cheese theory of disaster

I. The nation’s sick economy A. Industrial weakness—old industries like textiles, steel, railroads, mining and lumbering declined along with newer industries like automobiles, construction, and consumer goods B. Farmers suffer—farmers boosted production during the 1920s to make up for falling prices which caused prices to fall even more 1. many farmers lost their farms when they couldn’t pay off their debts

2. Congress passed the McNary- Haugen bill which would help prevent farmers from going broke 3. President Coolidge vetoed the bill twice saying, “Farmers have never made money. I don’t believe we can do much about it.”

C. Consumers had less money to spend because of rising prices, stagnant wages, unbalanced distribution of income, and too much buying on credit D. Hoover becomes president in 1928

II. The stock market crash A. The “gold rush” of the 1920s—many Americans engaged in speculation and buying on margin which drove prices to artificially high levels by 1929 B. On October 29th—or Black Tuesday the market crashed and investors lost millions overnight

C. Causes of the Great Depression 1. declining industry 2. declining agriculture 3. too much credit 4. unequal distribution of income

III. Financial Collapse A. Banks failed as Americans panicked and rushed to withdraw their money B. About 85,000 businesses failed C. Unemployment reached 25% (today it has reached 7.9%) D. Worldwide shockwaves 1. Europe was already in an economic crisis before the crash 2. Hawley-Smoot Tariff—highest protective tariff in US history a. many countries passed protective tariffs of their own b. world trade declined 40%

IV. The Depression Devastates People’s Lives A. The Depression in the cities—many unemployed ended up homeless 1. shantytowns sprang up on the outskirts of many cities 2. soup kitchens and bread lines opened up in many cities to feed the homeless B. Unemployment rates were higher for African Americans and Latinos

C. The Depression in rural areas—about 400,000 farms were lost through foreclosure from 1929 to 1932 D. The Dust Bowl—drought and overuse of the soil turned the Great Plains into what became known as the Dust Bowl

V. Effects on the American Family A. Many families broke up under the economic strain of the Depression B. Millions of unemployed men wandered the country looking for work C. There was no federal relief for the poor in the early years of the Depression D. Women and children struggled to survive

E. Social and Psychological Effects 1. Suicide rates rose by 30% 2. People who survived were changed forever a. financial security became the primary goal in life b. habits of saving and thriftiness remained for the rest of their lives

VI. Hoover Struggles with the Depression A. Hoover’s philosophy: “rugged individualism” 1. government should manage but not control 2. government should guide but not provide direct relief B. His cautious approach doesn’t help and many people began to blame him

C. Hoover eventually takes action and starts to direct federal money to stimulate the economy 1. Hoover Dam 2. Reconstruction Finance Corporation D. In the end this turned out to be too little too late…

E. 1932—the Bonus Army represented Hoover’s failure

The Great Depression