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The Great Depression was a result of a perfect storm of economic factors, including government policies, declining demand, maldistribution of wealth, and overproduction. The late 1920s saw a halt in consumer purchases, leading to financial instability in key industries. The 1929 stock market crash exacerbated these issues, resulting in widespread bank failures and a significant rise in unemployment. Additionally, the Dust Bowl further devastated agricultural output. This period reshaped American society, altering social dynamics and the economy for decades.
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Causes of the Great Depression • Between government policies and corporate structures, actions taken during the 1920s created immediate wealth. • Unfortunately those same practices created deeper problems. • The various conditions that led to the Great Depression are much like a perfect storm coming together at the same time.
Causes Cont. • Decline in Demand • The most profitable industries during the 1920s were construction and automobiles. • By the late 20s fewer people were purchasing new cars and the demand came to a halt. • Many industries and factories built new structures and additions, but eventually demand slowed down. • Newer markets emerged, but not stable enough to support the massive needs of the economy.
Causes Cont. • Maldistribution of wealth • Most Americans had purchased goods on credit during the 20s, but actual wages did not reflect wealth. • Policies created a pyramid of wealth, a very small percentage of Americans controlled an overwhelming percentage of the money. • Overproduction • Many industries responded by making more goods, but as unemployment rose demand fell. • Many companies were left with warehouses full of goods they couldn’t sell.
Causes Cont. • Declining Exports • Following WWI European allies struggled to recover from their shattered economies. • They relied heavily on reparations paid by Germany and Austria from the Treaty of Versailles. • When Germany couldn’t repay, American banks gave them loans. • High American tariffs caused them to send less goods to U.S. markets. • As debts piled and American banks failed the depression spread to Europe as well.
Causes Cont. • Plight of Farmers • Farmers rarely experienced the wealth of the 20s. • Many had to take loans to continue to grow their crops and keep up with growing agricultural technology. • As the market proceeded to collapse and series of droughts and poor growing seasons caused more farmers to default on loans.
The Stock Market Crash • The value of stocks on Wall St. continuously rose over an 8 year period. • Those values more than tripled between 1925 & 1929. • Due to the wild success of the markets, speculation became a popular activity. • This is when you buy stocks low and then sell them when a profit can be turned. • Since the market was so safe many bought on margin: • Investors could borrow money from brokers with only a small down payment on the whole value. • Most stocks were purchased with money investors didn’t actually have.
Crash Cont. • By late 1929 the value of stocks had risen much higher than the actual production of companies. • Brokers knew this, and when prices started to fall they all sold and made the problem worse. • Investors lost over $30 Billion nationwide on Black Tuesday and they couldn’t repay the debt. • Since banks had lent most of the money, they couldn’t cover their losses and began to default. • The biggest tragedy of Black Tuesday is that many people who never bought stocks lost all their savings too.
Banking Collapse • Following the stock market crash over 9,000 banks either went bankrupt or closed their doors to avoid bankruptcy. • Depositors lost over $2 Billion on top of investment losses. • The nation’s money supply decreased by 1/3 which caused a decrease in purchasing power and deflation. • Federal Reserve raised interest rates to protect their own interests which worsened flow of money further. • Unemployment rose above 25% during the depression and never went below 15% for ten years.
Unemployment and Relief • Many laborers had been accustomed to layoffs, but never so quickly and drastic. • In 1932 unemployment hit 50% in Cleveland, 60% in Akron, and 80% in Toledo. • Shame and helplessness became epidemic as most Americans believed employment and poverty were personal responsibilities. • Local relief associations were ill-equipped to handle new demands. • State governments felt compelled to extend funds for relief, but did not have tax bases to give the money anymore. • Many felt public welfare programs would not only harm the government budgets, but also harm public morale.
The Dust Bowl • One of the worst droughts in the nation’s history also hit beginning in 1930. • Decrease in rainfall and steady increases in temperatures destroyed crops. • Lack of geographical protection created massive dust storms that swept away large portions of fertile topsoil. • Kansas soil registered no moisture 3 feet below the surface and temperatures averaged over 100 degrees • The dust bowl extended from north Texas all the way to the Dakotas. • Plagues of grasshoppers and locusts also ascended on the plains to destroy whatever crops they could grow.
Social Structure of the U.S. during depression • Birth rate and divorces went down during the Depression. • This is because families couldn’t afford either. • More strict child labor laws were created • The government wanted to protect jobs for older Americans who were supporting families. • High School enrollment increased since kids couldn’t get jobs as easily.
The Role of Women • More women entered the work force as the need for money increased for each family. • The women’s division of the WPA hired over 300,000 women for jobs as teachers, nurses, and librarians. • As more men were laid off and women went to work, traditional roles within the home were reversed.
Popular culture during the depression • Serious situations of the depression caused many artists to focus on realistic subjects. • John Steinbeck: Wrote Grapes of Wrath and Of Mice and Men. • Grapes of Wrath: was about Oklahoma farmers in the Dust Bowl during the depression. • Of Mice and Men: was about migrant farmhands trying to find work during the depression. • Margaret Mitchell: wrote Gone with the Wind. • About rebuilding life in the South after the Civil War. • Scarlet Ohara’s inner strength is supposed to represent Americans during the depression.
Entertainment • Newly developed talkies from the 20s became even more popular. • Along with the improving technology came the first movie stars. • Mae West, Clark Gable, Shirley Temple, Ginger Rogers, and Fred Astaire • Movies about life of happy and wealthy celebrities and fairy tales became popular because most people wanted to escape from their reality. • The first soap operas were created over the radio at this time also.
Snow White and the Seven Dwarfs • First full length animated feature film by Walt Disney.
Crime of the Depression • Bank robbers became famous during this period since many Americans resented the banks after the stock market crash. • For an 18 month period robbers like John Dillinger, “Baby Face Nelson”, Bonnie and Clyde, and Machine Gun Kelly raided banks and harassed police departments from Michigan to Texas. • Eventually the FBI would be formed as a result of the interstate crime sprees.
The Hoover Administration • More or less the wrong man at the wrong time. • Tried to put public funding back into various relief programs, but never enough because he didn’t want to upset the federal budget too much. • Tried to raise tariffs on certain industries to protect American interests, but couldn’t stem the tide. • Ultimately felt too much direct government relief to the average American citizen would teach them dependency. • Actually proposed raising taxes when some of the programs cost the government more money.
Hoover’s RFC • Reconstruction Finance Corporation: • Designed to give government funding directly into industries to provide jobs. • Give gov’t loans to banks, railroads and businesses. • had a budget of $1.5 Billion for public works alone. • Problems with the RFC • Never fully used all the money authorized to it so the idea never made much of an impact. • Only gave money to institutions they felt would return on the investment. • Never really dealt with the real problems of the economy.
Hoovervilles • Hoover himself became a target of resentment, citizens blaming him personally for their sudden troubles. • Hoovervilles: shacks, and shantytowns where many struggling Americans were forced to live when they lost their homes. • Used as a term of resentment towards Herbert Hoover.
The Bonus Army • WWI veterans were promised bonus checks at a later date for their service during the war. • Due to hardships they wanted to receive those checks early. • When Congress refused to give them those checks they protested outside the White House. • At first, Hoover tried to help them, even providing cots and some shelter. • When they refused to leave he eventually sent army officials to force them out. • Riots and violence broke out when the last 2,000 soldiers refused to go home.
