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The Great Depression (1929-40)

The Great Depression (1929-40). Unit Objectives Analyze and Explain: 1. What a “depression” is 2. Causes of the “Gr. Dep.” 3. Solutions? 4. How it affected people 5. Re-shaping role of gov’t. What is a depression?.

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The Great Depression (1929-40)

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  1. The Great Depression (1929-40) Unit Objectives Analyze and Explain: 1. What a “depression” is 2. Causes of the “Gr. Dep.” 3. Solutions? 4. How it affected people 5. Re-shaping role of gov’t

  2. What is a depression? • When an economy stops growing for 6 months…called a “recession” • Symptoms of a recession: - Business failures - Unemployment rises • Homes lost - Hunger, divorce, crime • Depression= a prolonged or particularly severe recession A recession on steroids???

  3. Root Causes of Great Depression • #1: Uneven distribution of wealth • While the overall economy boomed in the 1920s, the wealth created by the boom flowed to only a small %... • half of American families lived in poverty

  4. #2: Agriculture • Overproduction & low prices • Farmers produced more…drove prices even lower • Farmers couldn’t make payments on farms & equipment • Banks repossessed farms & equip

  5. #3: Personal Debt • New technologies, products, and advertising techniques created a mass consumption in the 1920s • But people bought on credit… went into debt to acquire modern conveniences (“installment plan”)

  6. #4: Shaky Banking System • Many banks also invested depositor’s $ in the stock market • Many banks were unable to cope with the number of defaulted loans…simply closed their doors and went out of business

  7. #5: Gov’t. Policy • Commonly accepted belief: “laissez faire” • not the role of gov’t to interfere with markets • Not much regulation (control)

  8. The Catalyst? Stock Mkt. Crash • Many individuals investors had bought stock “on margin” • Stock prices declining in late summer • Big sell-off on “Black Thursday” Oct. 24, 1929 • Total collapse “Black Tuesday” Oct. 29th • Many were wiped out…financially ruined

  9. Panic and A Run on Banks • Banks were mobbed by depositors wanting to get their money out… • Many banks went under • Many Americans lost entire life savings

  10. Hoover’s response… • President Hoover stated publicly that “the Government should not support the people.” • Believed in “rugged individualism” (people rescuing themselves by their own efforts)

  11. Hoover eventually acted… • spent hundreds of millions of dollars on public works projects such as: • the construction of Boulder (later renamed Hoover) Dam in Nevada. • The Federal Farm Boardloaned farmers money and bought up tons of their surplus crops • Called on churches & charities to offer more help

  12. Hoover’s response (con’t.) • However, these policies did not go far enough to help those who needed it most, and economic conditions did not improve

  13. HHH blamed & criticized… • “Hoovervilles: shanty towns of “houses” made from wood scraps, newspaper, etc.

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