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The Great Depression and its Causes

Explore the causes and key events of the Great Depression, a period of economic decline and high unemployment from 1929 to 1941. Learn about the stock market crash, bank failures, Dust Bowl, Hoovervilles, and more. Discover the impact of speculation, unequal wealth distribution, and the lack of government regulation. Understand the significance of programs like the Reconstruction Finance Corporation and the Hoover Dam.

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The Great Depression and its Causes

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  1. The Great Depression Chapter 12 Vocab – 15 words

  2. Great Depression • A period from 1929-1941 in which the economy faltered and unemployment soared.

  3. Causes of the Great Depression • Agricultural Overproduction and Debt • Unequal distribution of wealth • Easy Credit

  4. Black Tuesday/ Stock Market Crash • October 29, 1929 • The stock market lost $10-$15 billion dollars. • By November, stock prices had dropped by over 1/3.

  5. Causes of the Stock Market Crash • Speculation • Buying on the Margin • No government regulation

  6. Speculation • Practice of making high risk investments in hopes of obtaining large profits. • She speculated that the price of gold would increase, so she bought a pound of gold in hopes of becoming wealthy overnight.

  7. Buying on the Margin • Buying stocks by paying a small (10%) down payment, then borrowing the rest from a stockbroker. • If stocks rose, the buyer could easily pay the stockbroker and still make a profit. • If stocks fell, the broker would issue a margin call, and the buyer would have to pay the loan immediately.

  8. Bank Failures • As people lost confidence in the economy, they made “runs” on the banks to retrieve their money. • The Federal Reserve limited the money supply to discourage lending. • As a result, few banks had enough currency, and were forced to close.

  9. Hawley Smoot Tariff • Raised prices on foreign imports to such a level that they could not compete in the American market. • Effect: caused European countries to enact their own tariffs…disastrous to the global economy.

  10. “Hoovervilles” • Makeshift shantytowns of tents and shacks built on public land or vacant lots. • The nickname “hooverville” was a jab at President Hoover, who many blamed for the hard times.

  11. Tenant Farmers • Farmers that lived on land they did not own, working for the landowners rather than themselves.

  12. Dust Bowl • Farmers in the Great Plains had used poor farming methods which deprived the soil of moisture. • Combined with a severe drought, the soil turned to dust. • Winds blew the dust for hundreds of miles, blanketing farms and blackening the skys.

  13. Okies • Dust bowl migrants who went to the West Coast to escape the problems of the dust bowl.

  14. Reconstruction Finance Corporation (RFC) • Federal agency set up by Congress in 1932 to provide emergency government credit to banks, railroads and other large businesses. • Example of trickle down economic.

  15. Hoover Dam • Dam on the Colorado River built during the Great Depression (1932) to create jobs.

  16. Bonus Army • A group of World War I veterans who traveled to Washington DC to demand an early payment of the bonus that Congress had promised them.

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