The Great
Depression
LILIAN PEREZ
MELISSA TAYLOR
MICHELLE ESPINVERA
Introduction
Throughout the generally prosperous 1920’s,
some warned of the problems with the American
economy. Some people pointed to the “sick”
industries as problems in need of attention. Yet
despite the warnings, most believed that the
economy would continue to run along. The came the
crash of 1929….
Background of the Depression
Only a select few other than farmers and the poor worried on a daily basis of
the nation’s economic health in the later 1920’s.
Americans confidence was reflected in the stock market. Stock sales had risen
steadily for a few years. As the demand for stock rose so did the prices.
Business leaders told Americans to invest claiming that anyone who put 15
dollars a month in stocks for 20 years would end up with $80,000 (a fortune at
the time)
By the end of the 1920’s playing with the market by selling and buying to make
a quick profit was widespread. Quick buying and selling inflated the prices of
stocks to the point that many were selling for more that they were really worth.
This of coarse was fine as long as the demand was high but if the investors
confidence wet down the prices would tumble downward.
The situation was made even more unstable by margin buying which is
purchasing stocks with borrowed money. This margin buying still worked as
long as the bull market continued which is the upward trend in stock prices.
Background (cont)
In the market the consumer confidence in the market still remained high
throughout the beginning of 1929.
The inevitable crash happened on October 24, 1929 (black Thursday) .
This crash made large investors very nervous which made them nervous which
made them to suddenly begin selling their shares.
The dumping of so much stock jolted investors confidence and made prices to
plunge. Panic consumed Wall Street.
Black Thursday was only the opening stage of a downward roll. Prices kept
dropping in the following weeks. On October 29 prices got to a lower low and
investors dumped over 1 million shares of stock.
As the months passed people started to think that the depression will be
temporarily and minor.
So blame the depression the state of the world economy after WWI and some
blame it on the economic practices of the 1920’s.
Depression Facts (cont)
During World War I, federal spending grows three times larger than tax collections. When
the government cuts back spending to balance the budget in 1920, a severe recession
results.
An average of 600 banks fail each year.
At the height of the Depression in 1933, nearly 25% of the Nation's total work force,
12,830,000 people, were unemployed.
Waged fell about 43% during the years 1929 to 1933
Unable to help themselves the American public looked to the Federal Government.
Dissatisfied with President Herbert Hoover's economic programs, the people elected
Franklin D. Roosevelt as their president in 1932.
Shanty towns constructed of packing crates, abandoned cars and other cast off scraps
sprung up across the Nation.
Gangs of youths, whose families could no longer support them, rode the rails in box cars
like so many hoboes, hoping to find a job. "Okies", victims of the drought and dust storms
in the Great Plains, left their farms and headed for California, the new land of "milk and
honey"
Life in the city
The Great Depression hit people across
America in cities and on farms and
disrupt families.
During the early stages of the
Depression the federal government did
little to help to aid local areas.
Small city governments and charitable
organizations such as the Red Cross
took on the responsibility of providing
relief to the needy.
Haggard men and woman would stand
on lines for hours on breadlines for
bowls of watery soup and crusts of old
dry bread just to eat.
In the 1930’s couples participated in
dance marathons to win money. Some
marathons would last for days just for
couples to drop out of exhaustion.
In addition to the
hunger and
poverty,
homelessness was a
serious urban
problem.
Shantytowns where
collections of
makeshift shelters
built out of packing
boxes, scrap
lumber, corrugated
iron, and other
thrown away items. Life in the city (cont)
Presidents of The Great Depression
31st President of the United States
(1929–1933).
In the presidential election of 1928,
Hoover easily won the Republican
nomination, despite having no
previous elected office experience.
Hoover tried to combat the ensuing
Great Depression with volunteer
efforts, none of which produced
economic recovery during his term.
The consensus among historians is that
Hoover's defeat in the 1932 election
was caused primarily by failure to end
the downward economic spiral.
Hoover’s view was if we left the
economy alone it would fix itself with
time.
Hoover's Philosophy
Before the market crash people thought that the government should not
interfere in the free enterprise system.
After the crash, the New York Times said that in time the depression will end
and just to wait it out.
A few months later, the crisis became worse and the federal government had to
step in and provide relief, such as food, clothing, shelter, and money.
Herbert Hoover rejected this idea of any government aid.
He stated,” I do not believe that the power and duty of the Government ought
to be extended to the relief of individual suffering….The lesson should be
constantly enforced that though the people support the Government the
Government should not support the people.”
Hoover debated that direct federal relief would inflate the federal government
and undermine the self respect of the people receiving the aid.
Hoover stated that Americans should lift themselves up through hard work and
character.
Hoover’s Philosophy (cont)
Hoover’s beliefs came from rugged individualism which is the idea that success
comes through individual effort and private enterprise.
He wasn’t alone in his beliefs because many Americans agreed with voluntary
efforts were preferable to government intervention. It soon became a fact that
the voluntary efforts would not be enough to the scale that the depression was
at.
The communities and private charities couldn’t meet up with the resources
needed to deal with the rising levels of human misery.
In 1930 Hoover appointed the Committee for Unemployment Relief to assist
with state and local efforts.
The committee only urged Americans to contribute more to charity than
actually assist with relief efforts.
Within the weeks after the stock market crash Hoover called a white house
conference of the top business , labor and political leaders. He urged them to
maintain employment and wages.
A bank run or also
known as a run on the
bank happens when a
large number of bank
customers withdraw
their deposits because
they believe the bank is
or might become
bankrupt.
Thousands of investors
lost large sums of
money and man were
wiped clean and lost
everything.
1. The Great
Depression had
devastating effects in
virtually every
country, rich and
poor.
2. Personal income, tax
revenue, profits and
prices dropped, and
international trade
plunged by a half to
two-thirds.
3. Unemployment in
the United States
rose to 25%, and in
some countries rose
as high as 33%.
The End
