The Great Depression (The Dirty Thirties )

1. The Great Depression (The Dirty Thirties) How did we go from the “Roaring Twenties” to the “Dirty Thirties”?

2. We already know that the 1920s were characterized by: • Booming economy • Low unemployment • Increasing stock values • So what went wrong?

3. Overproduction on farms: • By the mid-1920s more wheat than was needed was being produced. • Result: By 1927, the price of wheat was falling. • Result: Many farmers lost their farms and their houses.

5. Overproduction in factories: • Factories were also producing more goods than they could sell. • Result: They began to cut production. • Result: Workers lost their jobs. • Result: Families had less money to spend. • Result: Even fewer factory goods were sold. • Result: Production was cut even more…

6. Change in economic indicators 1929-32

7. Tariffs: • The USA imposed high tariffs on foreign goods to make them expensive. • Why? • To make Americans buy American goods, so that American jobs would not be lost. • But… • This protectionism hurt more than it helped. • Other countries, including Canada, did the same thing. • Result: • Every country found it difficult to export goods. • Fewer goods were produced in all countries. • Workers lost their jobs. • People had less money to spend. • Even fewer goods were sold…

9. German Reparations • Germany was not able to pay the money it was supposed to give the Britain and France. • England and France needed that money to pay back their debt to the USA. • Result: The USA was not getting its money back as quickly as it needed it.

11. All of these signs of trouble led to the “Stock Market Crash” of 1929. • In late October of 1929, cautious investors began to sell their stocks. • When this happened, other people began to follow their example. • Result: The value of the stocks “crashed”. • This affected everyone, but especially the middle class and working class people who had bought stocks on margin. • Buying on Margin: Buying stock with a 10% down payment. (You borrow 90% of the money from a bank). • This also had a huge impact on banks: • Banks invest most of their money in stocks. This money disappeared. • Banks also lost most of the money they had lent to people who bought stocks on margin. • Result: When people tried to get their money out of the banks, the banks had no money to give them! • Within a few days, millions of people had lost everything! • This was the start of the Great Depression.

13. Causes of the Great Depression:Summary • Overproduction on farms • Overproduction in factories • Tariffs • German reparations • Stock market crash of 1929