Causes effects of the great depression
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CAUSES & EFFECTS OF THE GREAT DEPRESSION. What we don’t usually learn about the 1920s…. An average of 600 banks failed each year Agricultural, railroad, and coal mining sectors were continually depressed Value of farmlands fell 30-40% between 1920-1929

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CAUSES & EFFECTS OF THE GREAT DEPRESSION

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Causes effects of the great depression

CAUSES & EFFECTS OF THE GREAT DEPRESSION


What we don t usually learn about the 1920s

What we don’t usually learn about the 1920s…

An average of 600 banks failed each year

Agricultural, railroad, and coal mining sectors were continually depressed

Value of farmlands fell 30-40% between 1920-1929

Organized labor declined throughout the decade


Causes effects of the great depression

  • ‘Technological unemployment’ enters the nation’s vocabulary

    • 200,000 workers replaced by machinery each year

  • By 1929, only 200 corporations controlled over half of all American industry

  • By 1929, the richest 1% owned 40% of the nation’s wealth

  • The middle class comprised only 15-20% of all Americans

    • BIG gap between rich and poor


Was the united states economy destined to fall into depression

Was the United States’ Economy Destined to Fall into Depression?


1 poor distribution of income

1. Poor distribution of income

  • Chart ~ page 369

  • Wages did NOT increase at the same rate as companies’ profits

  • Purchasing power in the top 10% of the nation’s population

    • Couldn’t buy enough to keep the country booming


2 purchasing power fell behind rate of production

2. Purchasing power fell behind rate of production

Low incomes

Expanding production


3 farm depression

3. Farm depression

Debt from WWI

Overproduction + lower demand = low prices

Low purchasing power


4 too much easy credit

4. Too much (easy) credit

  • Change in American mentality

    • “Go into debt to achieve the American dream”

  • Stock market speculation (i.e. gambling)

  • Too much debt

    • Eventually led to decreased spending


5 decline in foreign trade

5. Decline in foreign trade

  • Foreign nations could not afford American goods

    • War debts

    • Reparations payments


6 lack of government regulation of stock market

6. Lack of government regulation of stock market

  • Over-speculation

  • Stock Market Crash – October 1929

    • Represents the Business Cycle (pg 368)

    • “What goes up, must come down”

  • Began spiral effect that led the United States into severe depression


Immediate effects of the stock market crash

Immediate Effects of the Stock Market Crash


Causes effects of the great depression

  • Federal Reserve (“The Fed”) limited the amount of money in circulation

  • Banks collapsed (pg 374)

  • Businesses closed (pg 374)

  • Unemployment skyrocketed (pg 375)

  • Hawley-Smoot Tariff Act

  • Depression went global

    • Led to cycle of poverty and political instability


Mid range effects of the depression

Mid-range Effects of the Depression


Causes effects of the great depression

Distrust of government (Hoover)

Rise of radicalism (socialism, communism, fascism)

Violence

Escapism in pop culture

Shift from pro-business to anti-business

Dislocation of families

Uncertainty, despair

Weakened U.S. foreign policy – no economic power


Long term effects of the depression

Long Term Effects of the Depression


Causes effects of the great depression

Rise of centralized, powerful government

Regulation of stock market, banks, and economy (managed economy)

Democratic party as majority party (1932-1968)

Shift of power from Congress to the Presidency

Rise of labor unions

Legacy of fear of banks and business


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