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The Great Depression: The Depression Begins

The Great Depression: The Depression Begins. 1929-1939. Depression Begins. Businesses & officials = minor setback & temp. OBVI.= severe economic depression

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The Great Depression: The Depression Begins

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  1. The Great Depression:The Depression Begins 1929-1939

  2. Depression Begins • Businesses & officials = minor setback & temp. • OBVI.= severe economic depression • “While the crash only took place 6 months ago, I am convinced we have now passed the worst & w/ continued unity of effort we shall rapidly recover. There is one certainty of the future of a ppl of the resources, intelligence & character of the ppl of the United States—that is, prosperity.” —Herbert Hoover, October 2, 1930

  3. Banking Crisis • Crash banking crisis= losses & defaulting on loans • Forced to close • Fear ppl w/drew their savings more failures • 1930-1932= 5,000 banks failed • 1 in NYC bank wiped out 400,000 ppl

  4. Business Failures • Banking crisis business failures • Cut production & jobs= accelerated the slump • 26,000 bankrupt in 1930 • 28,285 next year • Unemployment all time lows= 1932- 23.6% • The crash, crisis, failures, & unemployment= signals (symptoms) of the depression

  5. What Caused the Great Depression? • Global depression • Income gap & Consumer Debt • Business cycle

  6. Global Depression • Setbacks b/c of war debts • World trade rapidly • U.S. industries that relied on sales abroad had large surpluses

  7. Global Depression • Situation worse w/ high tariffs on imports • Smoot-Hawley Tariff- highest EVER • Protected industries from inexpensive imports • Eliminated market for foreign goods

  8. Income Gap & Consumer Debt • Central cause • Disposable income of the wealthiest 1% by 63% • Poorest 93% by 4% • Used credit= PRETEND • Relying on credit=economic chaos, couldn’t pay debt

  9. Business Cycle • Depressions- an inevitable part of the cycle– reg. ups & downs of business • Length & severity of the Great Depression went beyond the norm

  10. Quick Review • How is the beginning of the Great Depression like a domino affect? • What were signs of the Great Depression? • What were causes of the Great Depression?

  11. Activity: Banking Simulation • You are going to take on the role of individuals living at the beginning of the Great Depression. • You live in a community with 3 banks • 3 bankers, rest are customers • Bankers to the front w/ a table, make a sign for your bank and tape it to your desk

  12. Activity: Banking Simulation • Bankers will be opening for business • Everyone, take the action instructed on your cards

  13. Activity: Banking Simulation • How many made deposits in your bank? • How many made loan payments to your bank? • How many were unable to make loan payments? • How many wanted to withdraw money from your bank? • Did anyone have any problems? Why? Which bank did you have your account at? • How did it make you feel?

  14. Activity: Radio Broadcast • Imagine it is 1930, you are economists who have been asked to appear on a radio program & explain the causes of the Great Depression to listeners • Each of you, write a script for a broadcast discussing those causes & contrasting the depression w/ a normal cycle

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