Chapter 14 Section 1 Notes The Great Depression

1
Chapter 14 Section 1 NotesThe Great Depression
2
What Are The Causes?
3

• Agricultural Problems in 1920s (biggest cause)
• During WWI
• farmers had high demand
• U.S. and W. Europe Govs.
• Made good , didnt save it
• Farmers actually borrowed
• Bought more land equipment
• Thought it would last forever
• After WWI
• Demand slowed a lot
• W. Europe planted crops again.
• U.S. Gov. stops buying food
• Excess Supply of crops
• Prices were cut in half
• farm income cut in half
• cant pay off loans to banks
• lose land and equipment.
• Banks in rural areas begin to fail.

All the workers during WWI
Auctioning off barn and equipment after WWI
4

• Congress tries to help farmers
• McNary - Haugen Bill (proposed help but never
  happens)
• price supports
• Gov. would guarantee farmers that they would buy
  any extra crops at a set price and try to sell
  them or use them.
• President Coolidge vetoed this twice doesnt
  happen.
• Hoovers belief in rugged individualism is
  pretty much the same thing.
• Bottom Line
• Farmers never experience Roaring 20s

Farmers never have made money. I don't
believe we can do much about it. But of course
we should be doing something do the best we can
and without much hope. The life of the farmer
has its compensations but it has always been one
of hardship President Calvin Coolidge
5

• Industry Problems in 1920s
• Older businesses didnt profit as much
• Includes Railroads, Textiles, Coal Mining, Lumber
• higher costs
• Labor and energy
• less demand
• new competition
• increased durability of
• existing consumer products.
• New businesses slow
• after initial demand dried up
• Automobiles
• One car is enough
• New House construction decreased
• Bottom Line Jobs start going away

6

• Consumer Problems in 1920s
• Less to spend on goods and services
• Due to Industry and Farm Problems
• Unemployment began to increase
• People living good lives, but mainly because of
  credit
• The bills started adding up

7

• Uneven Distribution of Income in the 1920s
• rich got richer
• wealthiest 1 of the country
• increased income by 75
• poor got poorer
• Other 99 of the country
• increased income by 9.
• After adjusted for inflation
• avg. income decreased!
• 70 (most) of the public
• lived below poverty level.
• Especially minorities
• couldnt afford simple things
• Electricity, Furnace, Clothes
• Only 1 in 10 people had a
• fridge

8

• 1928 Election
• Herbert Hoover (Republican)
• In Coolidges Cabinet
• Never ran a campaign before
• Has endorsement of Coolidge
• Alfred E. Smith (Democrat)
• Popular Governor of NY
• Good personality
• Hoover won easily
• People wanted Roaring 20s to continue

9

• Stock Market in the 1920s
• Becomes popular way to invest
• Dow Jones Industrial Avg.
• measures how well the economy
• is doing by tracking the progress
• of 30 major company stocks from
• different areas
• it quadrupled in 5 years!
• 80 interest earned per year
• people began buying on margin
• using credit to purchase stock
• hoping the value increases.
• Speculation
• Belief you can get rich quick
• Works well when prices go up
• What happens when they go down?

10
The Great Depression Begins

• Step 1 Stock Market begins to decline (Sept.
  1929)
• Black Tuesday (October 29th)
• record amount of stock traded.
• Everyone wanted to sell, prices fell drastically
• Investors that had bought on margin owed
• By mid November, 30 billion had disappeared

11

• Step 2 Banks fail
• People that had in banks wanted to take it out.
• People that owed to banks couldnt afford to
  pay.
• Many banks had invested in the stock market.
• that was no longer worth as much.
• All of the above caused around half the banks in
  U.S. to
• close within 5 years.
• People lost millions of dollars.
• was not insured by the Govt. back then

12
(No Transcript)
13

• Step 3 Businesses Fail
• People could not afford to buy products.
• Businesses laid off employees due to low demand
• Unemployment rose from 3 (early 1929) to 25
  (end of 1933)
• Ordinary workers that kept jobs often had to take
  pay cuts
• Overall production in factories decreased by
  about 50

14
Global Depression

• Depression occurred in Europe too. Earlier than
  in U.S.
• Time and spent rebuilding after WWI
• Germany couldnt afford to pay war debts
• U.S wasnt buying European goods. WHY?
• Hawley - Smoot Tariff
• established highest tariff in history on imports
  to U.S
• tried to help out U.S. business by preventing
  competition
• it actually hurt U.S. businesses. WHY?
• foreign countries stopped
• buying U.S. products
• Global trade down 40

15
(No Transcript)