1 / 52

Causes of the Great Depression: Understanding Economic Turmoil in the 1920s

Explore the factors behind the Great Depression in the 1920s, from overproduction to stock market crashes and uneven wealth distribution, through group activities and insightful documents.

cesarn
Download Presentation

Causes of the Great Depression: Understanding Economic Turmoil in the 1920s

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  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. Group Activity: What caused the Great Depression? • In teams, determine what factors contributed to the Great Depression: • Examine the documents provided & complete the chart in your notes • After examining all documents, try to group the documents into categories • When finished, create a one sentence thesis that explains why the depression began…be prepared to discuss

  4. Causes of the Great Depression: A 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

  5. Causes of the Great Depression: B

  6. Causes of the Great Depression: C Benefits & Risks of Buying Stock “on Margin”

  7. Causes of the Great Depression: D

  8. Causes of the Great Depression: D

  9. Causes of the Great Depression: E Corporate Profits for Coal and Railroad Industries, 1920-1930 Profits for Railroad Companies Profits for Coal Mining

  10. Causes of the Great Depression: F

  11. Causes of the Great Depression: F

  12. Causes of the Great Depression

  13. 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

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

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

  16. 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

  17. 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

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

  19. 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

  20. 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

  21. 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

  22. Buying Stocks on Margin

  23. 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”

  24. 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

  25. 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

  26. Bank & Business Failures, 1928-1933

  27. 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%

  28. A Global Depression

  29. 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

  30. Unemployment & Consumer Spending, 1928-1933

  31. 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

  32. Soup Kitchens & Breadlines

  33. Mortgage Foreclosures

  34. Poverty in America

  35. 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

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

  37. 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

  38. 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

  39. 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

  40. Employment Agencies & Relief-Check Lines

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

More Related