Causes of the Great
Depression
SSUSH17
Underconsumption, Overproduction,
Credit, Stock Market Crash, Bank
Failure, and the Dust Bowl
Causes of the Great Depression
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Underconsumption
Overproduction
Credit
Stock Market Crash
Bank Failure
Dust Bowl
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Ugly
Orange
Cats
Sleep
Behind
Dumpsters
1. Underconsumption
• People did not purchase as many goods
as companies produced.
• Laborers had little purchasing power;
therefore, they were unable to buy
consumer goods.
2. Overproduction
• Companies produced more goods than the
consumers were buying.
• It led to pay freezes and firing employees.
• Business lost money, and many had to
close their doors for good.
3. Credit
• People were buying goods on credit
– Installment plans
• Due to pay freezes and firings, many
people could not pay off their debt they
owed companies.
• Companies lost profits.
4. Stock Market Crash
• Stock Speculation – gambling on the stock
market
• Buying on the Margin – using other peoples
money to buy stocks.
• Due to companies loss of profits, people began
to lose faith in the stock market, so investors
pulled money out of the stock market.
4. Stock Market Crash (cont’d)
• The value of stocks dropped, and many
stocks became worthless as companies
began to fold.
• Black Tuesday – October 29, 1929 – $10$15 billion dollar decline in the market.
Many people lost their life savings.
5. Bank Failure
• Banks loaned money to stock market investors
and other individuals.
• As the stock market crashed and other
individuals could not repay their debts, the bank
ran out of funds and closed their doors.
• People who invested their money in the banks
lost everything.
6. The Dust Bowl
• Origins of the Dust Bowl
– Location: Great Plains
– Cause: 1. Over usage of the land & 2. drought
– Effect: The soil dried to dust
Dust Bowl
• Winds blew the dust around blackening the sky.
• Buried crops and livestock
• Pile up against farmhouses
• From Dakotas to Texas fields became a Dust
Bowl.
Effect of the Dust Bowl on Farmers
• Many farmers had to give the land to
banks because they could not pay the
mortgage of the loans.
• Farmers headed west.
• Okies is the term given to people who
moved due to the Dust Bowl.
Wide Spread Unemployment and
the Development of Hoovervilles
Describe the consequences of the
Great Depression.
(SSUSH 17 C)
Unemployment
• During the Great Depression profits fell.
– People lost their jobs
– Unemployment rate reached 25% in 1932
– No job = can’t pay bills
– People lost their homes
Hoovervilles
• Named after Herbert Hoover because he
was blamed for the Great Depression.
– People thought Hoover should have done more to
help the unemployed, but he did not support a mass
increase in public spending.
• Hoovervilles
– Makeshift homes created by the homeless.
– Residents would sleep on packing crates or the
ground.
Hoovervilles
Hoovervilles (cont’d)
• Named after President Herbert Hoover.
• People blamed President Hoover for not
helping the people enough.
Hoover would not support a mass increase
of government spending to create public
work jobs.
Hoover Dam
Election of 1932
• Hoover is going to lose the 1932 election
to FDR.
• The American public wanted to put in
place the “New Deal”