5-4.2 What were the causes of the Great Depression and the effects of the Dust
Bowl
5-4.2 Summarize the causes of the Great Depression, including overproduction and declining purchasing power, the bursting of the stock market bubble in 1929, and the resulting unemployment, failed economic institutions; and the effects of the Dust Bowl.
The stock market crash of 1929 marked the end of the economic boom of the 1920s and the startof the Great Depression of the 1930s. It is important for students to understand that the stock market crash was not the only factor that contributed to the Depression. The stock market crash of 1929 exposed the economic weaknesses of the United States. Not everyone could buy the products that came from American factories because wages were low and farm prices were depressed. Although some American consumers had been able to continue to buy using credit, such borrowing could not be sustained. Similar to what happened to farmers following World War I a decade earlier, factories suffered from overproduction and many industries began to lay
off workers as the decade came to an end. When investors recognized this slowing of the
economy, they suddenly began selling their stocks. This sale was made worse because some
investors had borrowed in order to buy stocks and could not pay off loans due to the devaluation
of stocks. The stock market crash resulted
off workers as the decade came to an end. When investors recognized this slowing of the
economy, they suddenly began selling their stocks. This sale was made worse because some
investors had borrowed in order to buy stocks and could not pay off loans due to the devaluation
of stocks. The stock market crash resulted
After the crash, unemployment continued to rise. Students should recognize the domino effect of laid off workers, decreasing wages, decreasing buying power, and decreasing prices. As consumers were unable or unwilling to buy, businesses failed. Failed businesses laid off more workers continuing the downward spiral. Unemployed borrowers were unable to pay off their bank loans. Loss of confidence in the banking system led many people to try to withdraw
whatever savings they had. With limited income from loan payments, banks could not pay their
depositors. Such runs on the banks caused bank failures. People lost what little they had been
able to save.
whatever savings they had. With limited income from loan payments, banks could not pay their
depositors. Such runs on the banks caused bank failures. People lost what little they had been
able to save.
Many African Americans began to migrate northward in the early 1900s to combat the depressed
farm economy and prejudice in the South. Additional Americans began to migrate from their
farms to find jobs during the Depression. Unfortunately, most did not find the employment
opportunities they sought. Homeless people began to build make-shift homes out of scrap lumber
and empty boxes in parks and other public spaces. These shantytowns were called
“Hoovervilles”, named after President Herbert Hoover.
farm economy and prejudice in the South. Additional Americans began to migrate from their
farms to find jobs during the Depression. Unfortunately, most did not find the employment
opportunities they sought. Homeless people began to build make-shift homes out of scrap lumber
and empty boxes in parks and other public spaces. These shantytowns were called
“Hoovervilles”, named after President Herbert Hoover.
The Dust Bowl conditions of the Midwest led others, such as the Okies, to migrate to California
where they sought jobs as migrant workers. Many unemployed young men and some young
women took to the highways or rode the rails from town to town seeking work or a handout and
became known as hoboes.
where they sought jobs as migrant workers. Many unemployed young men and some young
women took to the highways or rode the rails from town to town seeking work or a handout and
became known as hoboes.