The Great Depression

• Causes of the Great Depression

  • Inequality
  • Republican Party tax policies favoured the wealthy
  • Workers in old industries did not share in the prosperity
  • Working-class women, African Americans, Native Americans, the elderly and the rural poor continued to have a low standard of living
  • Many Americans, such as farmers and agricultural workers, did not prosper during the boom
  • Problems in agriculture
  • Tariff wars
  • Overproduction
  • Problems abroad
  • Laissez-faire policy of the Republican presidents
  • The Wall Street Crash
• Inequality


  Unequal distribution of wealth, with around 60 per cent of families earning below the minimum liveable income of $2,000 a year
• Republican Party tax policies


  Favoured the wealthy
• Workers in old industries (such as coal) did not share in the prosperity of the 1920s because there was competition from other industries
• Working-class women, African Americans, Native Americans, the elderly and the rural poor continued to have a low standard of living despite the boom
• Many Americans, such as farmers and agricultural workers, did not prosper during the boom
• Problems in agriculture


  • As farming techniques improved, farmers started producing more food
  • Demand fell and so did prices
• Tariff wars


  Made it difficult to sell any surplus abroad
• Thousands of farmers had large debts and lost their farms. This in turn meant sharecroppers were evicted
• Overproduction


  • American industries and businesses were producing more than the population could consume
  • There was a decline in demand for consumer goods once those who could afford them had already bought them
  • Many Americans could not afford to buy these new products
  • Those who had bought them often did so on credit, so the amount of debt in America was increasing
• By 1927, 63 per cent of American homes had electricity. However, this meant that nearly 40 per cent of homes, mainly in rural areas, did not have access to electricity, so electrical products were of no use to those people
• Problems abroad


  • US businesses struggled to sell surplus goods because foreign governments put tariffs on US goods in response to tariffs imposed by the US government
  • This particularly affected agriculture
• Laissez-faire


  The policy of the Republican presidents meant there was no regulation and not enough safeguards in the economy to deal with any future problems
• The Wall Street Crash


  • Business profits were decreasing
  • Shareholders' and speculators' confidence quickly began to erode
  • In September and October 1929, the stock market crashed
  • On 24th October, nearly 13 million shares were sold on the Wall Street stock exchange
  • On Tuesday 29th October, 16 million shares were sold as prices continued to fall
  • Shareholders lost billions of dollars
  • The rise of speculation during the 1920s meant that many had brought their share on the margin
  • Many speculators were unable to pay their loans from banks back so many banks went bankrupt
  • People with savings in these banks lost all their savings
• The American economy had suffered economic downturns and slumps before, but the Great Depression was the worst in the country's history. It affected more people and lasted much longer
• American society during the Great Depression

  • In contrast to the boom of the 1920s, the 1930s was, for many people, a decade of hardship, poverty and desperation
• Business and banks


  • Between 1929 and 1933, industrial production in the USA fell dramatically
  • Some businesses were forced to cut production, reduce working hours or even shut down completely
  • Many banks ran out of money and were forced out of business
  • Around 9,000 banks closed between 1930 and 1933
  • This meant that many Americans lost their savings
• Unemployment


  • The number of products sold halved between 1929 and 1933
  • Falling consumer demand meant that businesses could make less profit
  • Many workers lost their jobs as businesses couldn't afford to pay them
  • By July 1932 around 23 per cent of the working population were unemployed
  • With no income and difficulty finding work, many people were evicted from their homes and became homeless
  • As America had no social welfare schemes, many people became reliant on charity
  • Breadlines and soup kitchens became necessary for survival
• Farmers


  • Farmers who couldn't afford to pay their debts or mortgages continued to be evicted and lost their land
  • Farmers often couldn't afford to pay farmworkers, so they lost their jobs
  • Severe drought and soil erosion in the Dust Bowl area made effective farming impossible
• The Great Depression affected how people lived, both from a physical and mental perspective. For example, many Americans were losing faith in the idea of the American dream