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Essential Question : What were the causes of the Great Depression? Warm-Up Question :

Explore the factors that led to the Great Depression in the 1920s, including overproduction, weak industries, depressed farming, credit issues, and the stock market crash. Discover the devastating effects such as bank failures, unemployment, poverty, and the Dust Bowl. Understand how these events shaped America's economy and society.

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Essential Question : What were the causes of the Great Depression? Warm-Up Question :

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  1. Essential Question: • What were the causes of the Great Depression? • Warm-Up Question: • Think about the changes that took place in America in the 1920s. In what ways were these changes good? Bad?

  2. Causes of the Great Depression • The 1920s were a decade of consumerspending&theeconomy looked healthy on the surface: • Incomedidincreaseinthe1920s, but there were some severe problems with the U.S. economy • In October 1929, the “Roaring Twenties” came to an end & the Great Depression began…why?

  3. Causes of the Depression • Weak Industries: • Mass-production of consumer goods led to overproduction • People did not need as many appliances & cars bytheendofthedecade (under-consumption) • Railroads, textiles, steel, coalmining,construction were barely profitable “Traditional industries” faced new competition in the 1920: Cars, synthetic clothes, natural gas

  4. Overproduction of Consumer Goods Too much inventory…Not enough buyers

  5. “Traditional” industries suffered in the 1920s Corporate Profits for Coal and Railroad Industries, 1920-1930 Profits for Railroad Companies Profits for Coal Mining

  6. Causes of the Depression • Depressed Farming: • The end of WWI led to a decline in demand for agricultural products • Too much food led to a 40% drop in crop prices • Farmers could not pay back loans & many had their farms foreclosed • Some rural banks failed

  7. Causes of the Depression • Credit: • Many Americans used easy credit to live beyond their means • By“buyingnow&paying later,” Americans generated large debts • As a result, Americans cut back on spending by the end of the decade

  8. Americans bought goods on credit & did not have much in savings accounts

  9. Causes of the Depression • UnevenDivisionofWealth • Despite rising wages, the gap between the rich & poor grew wider in the 1920s • 70% of Americans were considered “poor” • Most of the spending in the 1920s was done by 30% of the population

  10. Distribution of Wealth in the 1920s * An income of $2,500 per year was considered the minimum amount needed for a decent standard of living

  11. Causes of the Depression • The Stock Market: • In the 1920s, the stock market soared & people speculated with stocks • Many people borrowed money to pay for stocks, called buying on margin • There was no regulation of the market & some companies altered stock values to raise profits

  12. Buying Stocks on Margin

  13. Causes of the Depression • The Stock Market: • On October 29, 1929 (Black Tuesday) the stock market crashed • People rushed to sell, prices plummeted, & investors lost $30 billion • Speculators who bought on the margin, could not pay off their debts • Many lost their savings The stock market crash in October 1929 marked the beginning of the “Great Depression”

  14. The U.S. stock market had only about 3 million active buyers & sellers but the spillover into the greater economy led to the Great Depression

  15. Causes of the Depression • Bank Failures: • After the crash,peopletried to withdraw their money from banks • In1929,600banksfailed duetolackoffunds&the inability to recoup loans • The failure of the banks left many Americans without their life savings

  16. Bank & Business Failures, 1928-1933

  17. uses of the Great Depression: B

  18. Causes of the Depression • Foreign Trade: • Post-wardebtsinEurope & high protective tariffs in America limited international trade • The Great Depression led to a global depression in Europe, Asia, & Latin America • World trade fell by 40%

  19. A Global Depression

  20. Causes of the Depression • Consumer Confidence: • Millions of Americans lost their jobs or took pay cuts to keep jobs • The lack of confidence in the future kept people from spending money • The lack of spending made the depressiondrag onuntil the 1940s

  21. Unemployment & Consumer Spending, 1928-1933

  22. Effects of the Great Depression • The Great Depression led to a collapseoftheU.S.financialsystem • 25,000 banks & 90,000 businesses failed by 1933 • Unemployment peaked at 25% • Many Americans lost their homes • America had record poverty & suicide rates; Fathers abandoned families; Healthcare declined • Private charities created soup kitchens & breadlines to help

  23. Soup Kitchens & Breadlines

  24. Mortgage Foreclosures

  25. Poverty in America

  26. The Dust Bowl • The effects of the depression were made worse by the Dust Bowl: • Heavy droughts & over-farming in the West destroyed the Plains • In the early 1930s, windstorms swept away loose soil • Farmers in the Plains left their farms & searched for work or better land in West coast states

  27. The Dust Bowl (1931-1939) worsened the effects of the Depression Areas Affected by the Dust Bowl drought “Okies” & “Arkies”

  28. Group Activity: • In teams, play the role of an economist & try to bring the Great Depression to an end • Examine each of the “Economic Briefing” sheets provided & choose a solution based upon the choices provided • After examining each briefing sheet, choose a presenter & discuss as a class • When finished, examine “Conservative, Liberal, & Radical Solutions” sheet & examine the reading on how President Hoover responded to the Depression

  29. President Hoover’s Response • President Herbert Hoover initially rejected bold gov’t action in response the depression: • He tried to reassure Americans that prosperity would return • He called for volunteerism & “rugged individualism”—Americans need to work together to end the depression

  30. President Hoover’s Response • As the depression worsened, Hoover called for more gov’t action • The gov’t issued relief checks to help the unemployed • The Reconstruction Finance Corps (RFC) loaned money to failing businesses • BuildingprojectslikeHooverDam • These efforts did not end the depression & many citizens lost faith in President Hoover

  31. Employment Agencies & Relief-Check Lines

  32. Americans who lost their homes, lived in shantytowns nicknamed “Hoovervilles”

  33. Conclusions • The Depression of the 1930s came as a shock to Americans: • When the stock market crashed in 1929, businesses closed & millions were unemployed • Americans lost faith in Hoover & began looking for new leadership & an more active gov’t to solve their problems

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