The document provides information about the causes and impact of the Great Depression in the United States between 1929-1940. It discusses several key factors that led to the Depression, including depressed farms and industry, unequal wealth distribution, tight monetary policy, and declining foreign trade. The stock market crash of 1929 is described as further exacerbating economic weaknesses. The summary describes how millions of Americans lost their jobs and savings, leading to the formation of shanty towns known as "Hoovervilles." The document also notes the long-lasting emotional and psychological toll the Depression took on the American people.

1. The Great Depression
1929-1940What do we do now?
Unit 6 - Chapter 18
#3
The Great Depression Study Guide Packet – Test Day

2. Causes of the Great Depression
– on(study guide)
• Depressed Farms & Industry
• Unequal Wealth Distribution
- growing gap between rich and poor
• Monetary Policy (tight money)
- credit dried up
Would you borrow $ to someone if you
didn’t think they would pay you back?
• Decline in Foreign Trade
- high tariffs: Hawley-Smoot Tariff
- Trade Dropped by 1/3 from 1929-32

4. People lost all faith in the American
Banking System

5. If the economy represented a train, then it
came to a grinding halt on the tracks

6. Depression / Recession
• Recession:
2 consecutive
quarters of economic
decline
Recession “When
you lose your job”
Depression “When I
lose my job”
25% Unemployed

8. Economic Weaknesses
• Many Americans enjoyed good fortune in the 1920s, but
problems bubbled underneath the surface
• One problem in the American economy:
uneven distribution of wealth during the 1920s.
– The wealthiest 1% of the population’s income grew
75%, but the average worker saw under a 10% gain.
• Credit (Installment Buying) allowed Americans to buy
expensive goods, but by the end of the decade many
people reached their credit limits, and purchases slowed.
• Warehouses filled with goods no one could afford to buy
(How many Model T Fords could the ave person buy?)

10. In the 1920’s, people began to purchase items they couldn’t afford
through the use of INSTALLMENT BUYING/buying on credit
New Goods for Sale
Installment
buying
increased the
demand for
goods, while
consumer
Debt
increased

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12. Millions of Americans
invested in the BULL
MARKET, becoming
rich as stock prices rose
Stocks Surge

13. The Stock Market Crashes
September 3, 1929, the peak of the Market
• consumer purchasing was falling & rumors of a collapse began
October 24, 1929
• nervous investors began selling, creating a huge sell-off with no buyers
• Stock prices plunged, triggering a panic to sell
• leading bankers bought stocks and prevented a further collapse,
stopping the panic through Friday
Black Tuesday, October 29
- worst day, affecting stocks of even solid companies
• Damage was widespread and catastrophic. In a few days the market
had dropped in value - $16 billion, 1/2 its pre-crash value
(That’s about 1.3 Trillion Today)

15. Unquestioned
faith in the Bull
market helped
lead to the
GREAT
DEPRESSION!
Many were buying
stocks on margin,
which is similar to
installment buying

19. Suicide Rates Spiked

20. Many Men Abandoned Their Families - Hoboes

21. Hoovervilles /Shanty Towns

23. “Hoover Blankets”

24. Hoover became the most despised man in
America

25. • Became more unpopular
• Persuaded Congress to
establish:
Reconstruction Finance Corp.
- power to make
emergency loans to banks
but it was too little too late…
• Hoover didn’t want programs
of direct govt. aid to
individuals
• didn't want to erode
Americans sense of:
RUGGED
INDIVIDUALISM

26. Ironic image

27. The Depression finally ends in
America when WWII starts

28. • NO NOTES AFTER THIS POINT–
• USE THE LAST FEW SLIDES to help
REVIEW

29. How would your life/families lives
be effected by the Great Depression?
• Unemployment – 25% (Chicago 50%)
• Bank closes and entire savings
disappears (401K – gone)
- Between 1929-32: 9,000 Banks Closed
• There are no govt. programs to help
- No welfare Programs
What would your family do?
- make a list of about 10 items with
your desk partner
Share with Class

30. Credit and the Stock Market
The Federal Reserve
• The board of the Federal Reserve,
the nation’s central bank, worried
about the nation’s interest in stock
and decided to make it harder for
brokers to offer margin loans to
investors.
• Their move was successful, until
money came from a new source:
American corporations who were
willing to give brokers money for
margin loans.
• Buying continued to rise.
Investors increasingly used credit to buy stocks as the market rose.
Buying on Margin
• Investors were buying on margin,
or buying stocks with loans from
stockbrokers, intending to pay
brokers back when they sold the
stock.
• As the market rose, brokers
required less margin, or investors’
money, for stocks and gave bigger
loans to investors.
• Buying on margin was risky,
because fallen stocks left investors
in debt with no money.
• If stocks fell, brokers could ask for
their loans back, which was called a
margin call.

31. The Human Impact of the Great Depression
Hoboes
• Hoboes were mostly men,
but included teens and
women.
• Boarding trains was hard
and illegal, and railroads
hired guards to chase
hoboes away.
• Finding food was a constant
challenge, because people
had little to spare and rarely
shared with hoboes.
• Hoboes developed a system
of sign language to warn of
possible dangers or
opportunities.
The true measure of the Great Depression’s disaster lies in how it
affected the American people.
Hoovervilles
• Thousand applied for a handful
of jobs, and job loss resulted in
poverty for most Americans.
• To survive, people begged door
to door, relied on soup kitchens
and bread lines. Some went
hungry.
• Some who lost their homes lived
in shantytowns, or
Hoovervilles, named after
President Hoover who many
blamed for the Great
Depression.

32. The Emotional Impact of the Depression
• The Great Depression’s worst blow might have been
to the minds and spirits of the American people.
• Though many shared the same fate, the
unemployed often felt that they failed as people.
• Accepting handouts deeply troubled many proud
Americans. Their shame and despair was reflected
in the high suicide rates of the time.
• Anger was another common emotion, because many
felt the nation had failed the hardworking citizens
who had helped build it.

33. The Act
• One of Hoover’s major efforts to address the economic crisis was the
1930 Smoot-Hawley Tariff Act.
• Tariffs are taxes on imported goods that raise their cost, making it
more likely that American purchasers buy cheaper American goods.
• The Smoot-Hawley Tariff Act was a disaster.
• Originally designed to help farmers, it was expanded to include a
large number of manufactured goods.
• The high tariff rates were unprecedented.
• When European nations responded with tariffs on American goods,
international trade fell dramatically.
• By 1934 trade was down two thirds from its 1929 level.
The Smoot-Hawley Tariff Act
The Effects

34. Great Depression Paper
• MLA–1,000/7500® words/ (Film as guide)
• In your Essay – discuss 3 main points
1. Why did the crash of Wall St. and
the Great Depression occur?
2. Discuss parallels with the current
economic problems in America
3. What lessons should have been
learned from the G.D.-Discuss at least 2
• Work’s Cited on Bibliography page

35. Partner - Stock Worksheet
(stock quotes/old book)
• Two People in a group / One Sheet
• One Calculator
• All work is done in class-show your work
• Do not talk to other groups
• Answer all 7 questions / Follow the
directions on the worksheet
-- Staple #7 onto the worksheet & turn in