Great Depression Cause/Effect

Root Causes of the Great Depression

- Factories and farms produce more goods than people can buy. - Banks make loans that borrowers cannot pay back. - After the stock market crash, many businesses cannot find people who will invest in their growth.

Effects of the Great Depression

- Many banks fail. - Many businesses and factories fail. - Millions of Americans are out of work. - Many are homeless and hungry. - Families break up and people suffer

Hawley-Smoot Tariff

1930 legislation under Pres. Hoover that raised import duties by as much as 50%, worsening the worldwide depression.

Installment Buying

A system by which a buyer pays for a thing in regular installments while enjoying the use of it.

National Industrial Recovery Act

Develops rules for doing business

Social Security

Government support the elderly

Federal Deposit Insurance Corporation

Insures savings accounts in banks approved by the government.

Herbert Hoover

The 31st president of the United States (1929-1933), whose term was notably marked by the stock market crash of 1929 and the beginnings of the Great Depression

Summary of the Dust Bowl

The Dust Bowl drought of the 1930s was one of the worst environmental disasters of the Twentieth Century anywhere in the world. Many factors led to the Dust Bowl. The increased demand for wheat during World War I, the development of new mechanized farm machinery along with falling wheat prices in the 1920s, led to millions of acres of native grassland being replaced by heavily disked fields of straight row crops. Four years of drought shriveled the crops and left the loose top soil to the mercy of the ever-present winds. It occurred in the driest region of the Plains - southeastern Colorado, southwest Kansas and the panhandles of Oklahoma and Texas - became known as the Dust Bowl. Three million people left their farms on the Great Plains during the drought and half a million migrated to other states, almost all to the West. The drought that helped cause the dust bowl lasted seven years, from 1933 to 1940. Dust storms were not new to the region in the 1930s, but a number of demographic and cultural factors were new. First there were a lot more people living in the region in the 1930s than there had been in the 1880s. During the Depression, schools across the Plains sent students home because of the dust storms. Some school administrators were worried about what might happen to the students' health. There had been cases of "dust pneumonia" where dust clogged up the lungs just like the disease. Other administrators and teachers, especially in the southern Plains, knew that people had gotten lost in dust storms when visibility went to zero. 89 million acres of land were severely damaged or destroyed.

Black Thursday

The first day of the depression. The initial day the markets took a downturn.

Great Depression

The stock market crash of October 1929 brought the economic prosperity of the 1920s to a symbolic end. The Great Depression was a worldwide economic crisis that in the United States was marked by widespread unemployment, near halts in industrial production and construction, and an 89 percent decline in stock prices. The Great Depression may be said to have begun with a catastrophic collapse of stock-market prices on the New York Stock Exchange in October 1929. Reduction in Purchasing Across the Board -With the stock market crash and the fears of further economic woes, individuals from all classes stopped purchasing items. This then led to a reduction in the number of items produced and thus a reduction in the workforce. As people lost their jobs, they were unable to keep up with paying for items they had bought through installment plans and their items were repossessed. More and more inventory began to accumulate. The unemployment rate rose above 25% which meant, of course, even less spending to help alleviate the economic situation. In 1928, the top 1% earned 29.94% of the nation's income (about 24.5 mil.) By 1932, U.S. manufacturing output had fallen to 54 percent of its 1929 level, and unemployment had risen to between 12 and 15 million workers, or 25-30 percent of the work force. In previous depressions, farmers were usually safe from the severe effects of a depression because they could at least feed themselves. Unfortunately, during the Great Depression, the Great Plains were hit hard with both a drought and horrendous dust storms. It was a period of protests and hunger marches — and unionism spread like wildfire — but many people suffered quietly, ashamed of their poverty. Many countries wanted to protect themselves from the chaos in the economy, so they decided to make more laws restricting trade and reinforce the ones that were already in place. During the next three years stock prices in the United States continued to fall, until by late 1932 they had dropped to only about 20 percent of their value in 1929. by 1933, 11,000 of the United States' 25,000 banks had failed. Signaled the beginning of government involvement in the economy and in society as a whole.

bank holiday

closing of banks four days during the Great Depression

Black Tuesday

day the stock market crashed, signaling the start of the Great Depression

Hardships faced by women

faced difficulty finding jobs; men usually hired before women.

Hardships faced by Asian Americans

faced discrimination; competition over jobs leads to calls that they leave the country.

Hardships faced by Mexican Americans

faced discrimination; some forced to return to Mexico.

Hardships faced by Native Americans

faced terrible poverty; however, Congress passes new laws giving them more control over their own affairs.

relief program

government program to help the needy

Hooverville

group of shacks in which homeless lived during the Great Depression

Okies

migrated person from oklahoma

Hardships faced by African Americans

often first to lose jobs; faced continued discrimination; a few leaders became advisers to President Roosevelt.

migrant worker

person who moves from one region to another in search of work

soup kitchen

place where food is provided to the needy at little or no charge

buying on margin

practice that allows people to buy stock with a down payment of a portion of the value

Dust Bowl

region in the central Great Plains that was hit by a severe drought

bankrupt

unable to pay debts