The Great Depression

By Leah Friesen

Causes of the Great Depression

     Herbert Hoover won the election of 1982 by more than 6 million votes and 444 to 87 in the Electoral College. Hoover won over the Democratic nominee Alfred E. Smith. The stock market was soaring in the 1920s and many people were convinced to buy stocks. By 1929 almost ten percent of all American households owned stocks. The stock market crashed on October 21, 1929, so people’s stock was now selling for less than what they bought it for. On October 24, the stock market fell again. This day became known as Black Thursday. October 29 became known as Black Tuesday because the stock market fell again. On Black Tuesday, about 16 million shares of stock were sold and the market lost between $10 billion and $15 billion in value. In the middle of November, stock prices dropped by more than ⅓. About $30 billion was lost.

     By 1929, banks had loaned close to $6 billion to people who had bought stock. When the stock market collapsed, banks lost money on their investments and had to cut back on the loans they gave out. Because of this, consumers and businesses were not able to borrow as much money. Some banks had to close. If banks closed, people lost their savings because the government did not insure bank deposits. By 1933, over 11,000 out of 25,000 banks in the nation had closed. Bank runs occurred when many depositors withdrew their money at one time, usually because people think the banks are going to collapse. Banks made money by loaning money and collecting interest. If too many people withdrew their money at one time, the bank would collapse because a bank only keeps enough money in reserve to cover daily withdrawals.
    Overproduction was another cause of the Great Depression. More efficient machinery caused an increase in production, but most Americans were not making enough money to buy the products. Buyers had debt to pay off on costly items so they stopped buying new products. This caused manufacturers to cut production and lay off employees, then the snowball effect. Radios were not being sold so they had to decrease their production. This meant there were less orders for the products that are a part of radios such as wire, wood cabinets, and glass radio tubes. There were less orders for those products so they didn’t need as many employees, causing more people to be laid off.

    The Hawley-Smoot Tariff caused other nations to not buy American products. President Hoover proposed the tariff in 1929, hoping it would help farmers. The tariff ended up raising the average tariff rate to the highest rate in American history. It didn’t help American business because foreign countries also raised their tariffs so less American products were sold overseas. In 1932, exports had fallen one fifth of what they were in 1929. The Federal Reserve Bank kept its rates low throughout the 1920s which encouraged banks to make risky loans so business leaders thought the economy was still expanding. Business leaders borrowed money to expand production, but that led to overproduction. Companies then had to lay off workers.

Life During the Great Depression

    Life during the Great Depression was hard. Many people went hungry. Soup kitchens became the popular place to receive food. New York City’s YMCA fed up to 12,000 people every day. Most soup kitchens were located in the city, so it was difficult for farmers to make the trip to the city to receive food. Americans didn’t have much money so they were not able to pay their rent. If people weren’t able to pay their rent, they would lose their home. Some people refused to move out, so landlords asked courts for an eviction notice. Then court officers, or bailiffs, would eject the people who refused to move out, piling their belongings on the street.

    Homeless people built shacks for themselves in Hoovervilles. They called them Hoovervilles because they blamed President Hoover for their hard life. These homeless people wanted to find jobs so they could earn money and buy food. They began to wander around the country, trying to find work, and were called hobos. By the end of 1932, 13 million people were unemployed, compared to 5 million in 1930. Children were hired for less-than standard wages. In 1930, about 2.25 million boys and girls between the ages of 10 and 18 worked in various factories, canneries, mines, and on farms. Children had to leave school to work and help provide for their family.

    The Dust Bowl began when a drought hit the land from the Dakotas to Texas. Crop prices fell, so many farmers stopped cultivating their land. The wheat fields became known as a great “Dust Bowl.” Wind whipped the dust into the air, and it would blacken the skies. The dust settled over the crops and livestock. Dust would fill the lungs of livestock and humans, causing them to suffocate and die. The number of dust storms per year grew from 22 in 1934 to 72 in 1937. Many farmers had to mortgage their land. Farmers then went to California to find a better life. Most migrants were from Oklahoma and became known as “Okies.”

    Between 1930 and 1934, almost 1 million farms were foreclosed. Farmers decided to destroy their crops, hoping for an increase in demand and price. Some farmers burned their corn to heat homes. Dairy farmers would stop milk trucks on the roads and dump the milk in the ditches.

    In the 1930s, movies became very popular. More than 60 million Americans went to movies, usually comedies, every week. They became popular because it allowed people to forget about their problems and focus on the movie for a few hours. Snow White and the Seven Dwarfs was Walt Disney’s first feature-length animated film. Another way people got away from the troubles of everyday life was by listening to the radio. Jack Benny, George Burns, and Gracie Allen were popular radio comedians, while Green Hornet and The Lone Ranger were popular superhero adventures on the radio. Day to day stories of radio dramas were also popular. The sponsors of these shows were usually laundry soap producers so the shows were nicknamed soap operas.
    Writers and artists used the homeless and unemployed as their subjects. John Steinbeck published The Grapes of Wrath, a story about the Dust Bowl.

Government Response to the Great Depression

    On October 25, 1929 President Hoover declared that the worst of the depression was going to be over soon. He wanted people to stop panicking and avoid bank runs and layoffs. Hoover wanted to avoid government interference to help individuals. He wrote the book American Individualism to present arguments about why the American system of individualism is the best. Conferences were organized by Hoover to improve the economy. He met with heads of banks, railroads, other big businesses, labor leaders, and government officials. They said they would keep factories open and stop lowering wages. The plan already failed by 1931. Hoover increased the funding for government financed building projects so more construction jobs would be available. This created some jobs but only for a small amount of people that were unemployed.

    In October 1931, Hoover set up the National Credit Corporation. This was setup to create a pool of money that would allow banks that were in trouble to continue lending money. This failed to meet the nation’s needs. The Reconstruction Finance Corporation was set up by Congress to make loans to businesses. By 1932 it lent about $238 million to 160 banks, 60 railroads, and 18 building-and-loan organizations. It was too cautious and also failed.

    Hoover did not want the government participate in relief (money given directly to impoverished families). He said state and local government should help, and other needs should be met by private charity. By spring of 1932 state and local governments were running out of money, and private charities didn’t have the resources to handle the Depression. Congress passed the Emergency Relief and Construction Act that called for $1.5 billion for public works and $300 million for emergency loans to the states for relief. Hoover spent money to stabilize business and thought that his efforts would eventually “trickle down” to the poor.

    When World War I was over, Congress passed a bill that gave a $1,000 bonus for every veteran, to be distributed in 1945. In 1931 Wright Patman introduced a bill that would allow the veterans to receive their money early. Veterans heard this and began to march to Washington. The trip started in Oregon and totaled about 1,000 veterans by the end of the march. The press called them the “Bonus Army.” The marchers camped in Hoovervilles until their numbers grew to 15,000. The Senate voted down the bill, causing veterans to become upset. Some veterans left to go back to their house while others stayed in vacant buildings downtown. Hoover wanted them out so he sent in the police. An officer panicked, fired into a crowd, and killed two veterans. The city government decided to call in the army. General Douglas MacArthur ignored Hoover’s orders to clear the buildings while leaving the camps alone and sent in the cavalry, infantry, and tanks to clear the camps. The unarmed veterans ran away, but 700 soldiers pursued them. People from all over the world heard about this and it harmed Hoover’s reputation.


Section 1

Appleby, Joyce Oldham., Alan Brinkley, Albert S. Broussard, James M. McPherson, and Donald A. Ritchie. The American Vision: Modern times. New York, NY: Glencoe/McGraw-Hill, 2006. Print.

"Causes Of The Great Depression | The Great Depression | Causes, Effects, Timelines." Causes Of The Great Depression | The Great Depression | Causes, Effects, Timelines. N.p., n.d. Web. 04 Mar. 2013.

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Section 2

Appleby, Joyce Oldham., Alan Brinkley, Albert S. Broussard, James M. McPherson, and Donald A. Ritchie. The American Vision: Modern times. New York, NY: Glencoe/McGraw-Hill, 2006. Print.

"Life During the Great Depression." N.p., n.d. Web. 04 Mar. 2013.

"The Great Depression - Life During the Depression." The Great Depression - Life During the Depression. N.p., n.d. Web. 04 Mar. 2013.

Section 3

Appleby, Joyce Oldham., Alan Brinkley, Albert S. Broussard, James M. McPherson, and Donald A. Ritchie. The American Vision: Modern times. New York, NY: Glencoe/McGraw-Hill, 2006. Print.

"The Great Depression (1929-1939)." N.p., n.d. Web. 4 Mar. 2013. "The Great Depression and New Deal, 1929-1939." The Great Depression and New Deal, 1929-1939. N.p., n.d. Web. 04 Mar. 2013.

"The Great Depression and New Deal, 1929-1939." The Great Depression and New Deal, 1929-1939. N.p., n.d. Web. 04 Mar. 2013.

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