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Understanding the Great Depression: Causes & Consequences

Explore the post-WWI economic downturn, crisis in the farm sector, easy credit availability, wealth distribution disparity, Hoover's leadership, stock market crash, and the lasting impact on society. Learn the reasons behind the nation's sick economy and how it led to the Great Depression of 1929-1940.

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Understanding the Great Depression: Causes & Consequences

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  1. #1Chapter 14 The Great Depression Begins SECTION 1: THE NATION’S SICK ECONOMY. OBJECTIVE: UNDERSTAND THE CAUSES OF THE GREAT DEPRESSION

  2. I. Causes of the Great Depression A. Post-WWI Depression • Less worldwide trade • Less demand for goods • Less Jobs

  3. B. Crisis in the Farm Sector • Demand for crops declined after WWI. • Farmers fall into debt. • Congress attempts to help with price supports: governments buy surplus crops, guarantee prices. -Vetoed by President Coolidge. Why?

  4. C. Availability of Easy Credit • Consumers purchase goods on credit: buy now and pay later. • Consumers pile up large consumer debt. • Too much debt = less consumer spending.

  5. D. Unequal Distribution of Wealth • Rich got richer, and the poor got poorer. • Poor cannot afford to buy consumer goods. • Led to surplus of goods. • Led to less jobs. • More poor people.

  6. II. Hoover Takes the Nation • Republican Herbert Hoover wins election in 1928. • Hoover was the Secretary of Commerce. Inexperienced as a politician. • Most Americans belief in Hoover’s leadership.

  7. III. Stock Market Crashes • Americans dream of striking it rich in the Stock Market. • Americans engage in speculation: buying stocks and bonds on the chance of quick profit. • Buying on margin: pay small percent of price, borrow the rest. • Government did little to regulate the stock market.

  8. Black Tuesday October 29, 1929 • Stock prices falling; shareholders attempt to sell before prices lowered even more. • People who had purchased stock on credit were stuck with huge debt. • Hoover asks businesses not to lay off employees.

  9. IV. The Great Depression • 1929-1940 • Effects: children had poor diets, families became homeless, men became unemployed, and some committed suicide. • Unemployment rates leaped from 3% to 25%. • People developed habits of saving and thriftiness. • Led to rise of charity (soup kitchens and bread lines) • Hoover’s approach to the Depression was voluntary cooperation.

  10. Short Answer Question In your opinion, what was the primary cause of the Great Depression? Support your answer in 3-4 sentences.

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