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The Causes of the Great Depression. Collapse. Bellwork. Ronald Reagan once said, “A recession is when your neighbor loses his job. A depression is when you lose yours.” Having lived through a major recession, what do you feel is the difference between a recession and a depression?.

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  1. The Causes of the Great Depression Collapse

  2. Bellwork Ronald Reagan once said, “A recession is when your neighbor loses his job. A depression is when you lose yours.” Having lived through a major recession, what do you feel is the difference between a recession and a depression?

  3. The Problem • Overvalued stock market • Over production in factories and farms • Tariffs hurting exports • Depression in farming industry • High consumerism purchases on credit

  4. Causes of the Depression • Overproduction of raw goods (commodities) caused their price to drop.

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  6. Causes of the Depression • Overproduction of raw goods (commodities) caused their price to drop. • Result: • Decrease wages for farmers and miners (25% population) and other suppliers of raw materials.

  7. Causes of the Depression • Overproduction of raw goods (commodities) caused their price to drop. • Result: • Decrease wages for farmers and miners (25% population) • The Hawley-Smoot Tariff blocked overtaxed foreign goods

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  9. Causes of the Depression • Overproduction of raw goods (commodities) caused their price to drop. • Result: • Decrease wages for farmers and miners (25% population) • The Hawley-Smoot Tariff blocked overtaxed foreign goods • Result: Countries put high tariffs on U.S. goods.Exports collapsed

  10. Causes of the Depression • Overproduction of raw goods (commodities) caused their price to drop. • Result: • Decrease wages for farmers and miners (25% population) • The Hawley-Smoot Tariff blocked overtaxed foreign goods • Result: Countries put high tariffs on U.S. goods.Exports collapsed • Because demand lowered but supply stayed the same, companies overproduced consumer and durable goods

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  12. Causes of the Depression • Overproduction of raw goods (commodities) caused their price to drop. • Result: • Decrease wages for farmers and miners (25% population) • The Hawley-Smoot Tariff blocked overtaxed foreign goods • Result: Countries put high tariffs on U.S. goods.Exports collapsed • Companies overproduced consumer and durable goods • Result: Business began to go in debt.

  13. Causes of the Depression • Overproduction of raw goods (commodities) caused their price to drop. • Result: • Decrease wages for farmers and miners (25% population) • The Hawley-Smoot Tariff blocked overtaxed foreign goods • Result: Countries put high tariffs on U.S. goods.Exports collapsed • Companies overproduced consumer and durable goods • Result: Business began to go in debt • Corporate Profits plummeted

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  15. Causes of the Depression • Overproduction of raw goods (commodities) caused their price to drop. • Result: • Decrease wages for farmers and miners (25% population) • The Hawley-Smoot Tariff blocked overtaxed foreign goods • Result: Countries put high tariffs on U.S. goods.Exports collapsed • Companies overproduced consumer and durable goods • Result: Business began to go in debt • Corporate Profits plummeted • Result: Stock Market Collapsed

  16. October 1929 • During the late 1920s stock prices soared because of margin buying. • Margin Buying: This is when an investor borrows money and then invests that money in the market.

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  18. October 1929 • As the earnings of companies began to fall brokers began to demand investors pay them back. • Investors pulled their money from the market in mass in autumn of 1929. • The market fell nearly 25% in two days destroying the fortunes of many.

  19. Check Up! • List three causes of the Great Depression.

  20. When did the GDP of the United States begin to fall rapidly?

  21. Within 4 years unemployment had risen from 4% in 1929 to 25% in 1933. • By 1932 the stock market had fallen more than 80% from its high in 1929. • Hundreds of banks closed • Billions of dollars in investments and savings disappeared • This period of time became known as the Great Depression.

  22. Think, Pair, Share • What was the recession of 1929 considered a depression while the financial crisis of 2008-2009 considered a recession. • Step 1: Think, write down your thoughts • Step 2: Pair, talk you your neighbors • Step 3: Share, discuss with the whole class

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