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Understanding the 1920s Economy and the Great Depression

Learn about Harding, Coolidge, the economy, and society in the 1920s. Explore causes of the Great Depression and its impact with a graphic organizer. Evaluate stock market crash, overproduction, underconsumption, speculation, and bank failures.

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Understanding the 1920s Economy and the Great Depression

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  1. Do Now Where is the best place to keep your money? Is under your mattress a good idea? Explain

  2. Review… • Who were Presidents: • Harding? • Coolidge? • How was the Economy? • Describe the 1920’s society.

  3. Lesson Essential Question • How did the prosperity of the 1920’s set the stage for the economic collapse of 1929?

  4. Causes of the Great Depression • Make a Cause and Effect Graphic Organizer • 1. Under consumption: • Consumers stopped buying products???

  5. Causes of the Great Depression cont. • Overproduction • Mass production in all industries led to an increased supply of goods • Cutbacks and layoffs led to a reduction in income • Reduction in spending • Causing society to under consume….

  6. Causes of the Great Depression cont. • Speculation • Buying stocks on margin • Small down payment, financing the rest • Stock exchange triples in overall price (1925-1929) • What is a Stock?

  7. Causes of the Great Depression cont. • Stock Market Crash • Stocks for many companies were overpriced in comparison to the profits of the company • Federal Reserve sent warnings to banks: Do not lend anymore! (many banks ignored this warning) • October 29th: Black Tuesday • Prices fell as 16 million shares were sold

  8. Causes of the Great Depression cont. • Bank Failure • Too much of the money in banks were tied up in uninsured loans • Banks begin to close, people lose their savings • Bank Runs: people line up to withdraw their money from banks • Many more banks close

  9. Exit Ticket • LEQ response

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