Analyze the causes of the Great Depression and its effects on American society, including the stock market crash, bank failures, unemployment, the Dust Bowl, and the response of President Hoover (Louisiana Student Standards for Social Studies, US History Standard 4: Becoming a World Power through World War II).

What this topic is asking

The Roaring Twenties ended in the worst economic collapse in American history. Standard 4 (Becoming a World Power through World War II) wants you to analyze the causes of the Great Depression, the stock market crash, overproduction, credit, and bank failures, and its effects on ordinary people, including mass unemployment and the Dust Bowl, plus the failure of President Hoover's response. LEAP often uses an unemployment graph, a breadline photograph, or a Dust Bowl image as the source.

The stock market crash

The most visible trigger was the collapse of the stock market.

The deeper causes

The exam expects you to look past the crash to the underlying causes that had built up during the decade:

• Overproduction and underconsumption. Factories and farms produced more goods than Americans could afford to buy, partly because wages had not kept pace with output. When goods went unsold, production and jobs were cut.
• Excessive credit and speculation. Consumers piled up debt on installment buying, and investors gambled on the stock market with borrowed money. When the bubble burst, debts could not be repaid.
• Unequal distribution of wealth. Too much income went to the wealthy few and too little to ordinary workers and farmers, so demand was weak and fragile.
• A weak banking system. Many banks were small and undercapitalized, vulnerable to panics and runs.

Bank failures and unemployment

When the crisis hit, the banking system collapsed. As banks failed, depositors lost their savings, which destroyed spending power and confidence; frightened people pulled money out of surviving banks, causing more to fail; and banks that survived stopped lending, starving businesses of credit. The result was a downward spiral: businesses closed, and unemployment climbed to roughly 25 percent by 1933. Breadlines, soup kitchens, and shantytowns called "Hoovervilles" spread across the country.

The Dust Bowl

Nature compounded the disaster. A severe drought in the early 1930s, worsened by years of poor farming practices that had stripped the soil, turned the southern Great Plains into the Dust Bowl. Enormous dust storms buried farms, ruined crops, and forced hundreds of thousands of families (often called "Okies") to abandon their land and migrate west, especially to California, in search of work. The Dust Bowl is a vivid LEAP example of how the Depression combined economic and environmental catastrophe.

Hoover's response

President Herbert Hoover faced the collapse with a philosophy that the federal government should not intervene heavily in the economy. He believed recovery should come through business confidence and voluntary local and charitable action, and he feared that direct relief would weaken self-reliance. He did eventually take some steps, but they were too limited and too late, and his name became attached to the misery ("Hoovervilles"). His perceived failure to act boldly led voters to elect Franklin D. Roosevelt in 1932 (see the New Deal).