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Standard 11.6.1

Causes of the Great Depression. Lecture 1. Standard 11.6.1. Standard 11.6.1. Describe the monetary issues of the late 19 th and early 20 th century that gave rise to the establishment of the Federal Reserve and the weaknesses in key sectors of the economy in the late 1920s.

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Standard 11.6.1

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  1. Causes of the Great Depression Lecture 1 Standard 11.6.1

  2. Standard 11.6.1 • Describe the monetary issues of the late 19th and early 20th century that gave rise to the establishment of the Federal Reserve and the weaknesses in key sectors of the economy in the late 1920s. • Essential Question: What factors led to the Stock Market Crash? Was it inevitable or could it have been prevented? Explain.

  3. “I do not believe that the power and duty of the General Government ought to be extended to the relief of individual suffering…The lesson should be constantly enforced that though the people support the Government the Government should not support the people.” —Herbert Hoover, 1930

  4. Partner A • Do you agree with Hoover’s philosophy that the “people support the Government, the Government should not support the people?” Explain.

  5. 1928 531

  6. The Great Depression • worst economic crisis in American history • in the past, government did little or nothing • economy got better • the nation had to rethink the relationship between • government • welfare of regular people

  7. Causes of the Depression • Agricultural Depression • demand for farm produce fell after WWI • farmer’s couldn’t pay their loans • thousands of farms were seized by banks 11.6.1

  8. Partner B • Why did farm produce fall after WWI?

  9. Distribution of $$$ • Uneven Distribution of Wealth • poor families couldn’t afford to buy goods • rich families didn’t buy enough to help the economy • 1% made over $10,000 • 5% made $5,000 – 9,000 • 29% made $2,000 – 5,000 • 65% made under $2,000 11.6.2

  10. Partner A • How is Wealth Distributed Today? Do you think it’s fair? Does it need to be fair? Explain.

  11. Credit • Easy Credit • buying on margin • real estate speculation • average people had no safety net when the depression began 11.6.2

  12. The Crash • Black Tuesday – October 29, 1929 • JP Morgan himself tried to buy enough stock to stop the crash • 16 million shares were sold in one day • Thousands lost their jobs • within two months stocks dropped $40 billion about the cost of WWI • GE dropped from $400 to $283 a share 11.6.1

  13. 2009 Tax Schedule

  14. Partner B • What were some of the contributing factors to the Crash?

  15. Tariffs • Hawley-Smoot Tariff, 1930 • to protect US business, the government raised the tax on imports • other countries responded with their own taxes • international trade plummeted 11.6.1

  16. Homework Questions • Chapter 8 Sections 1

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