Essential Question : What were the causes of the Great Depression? Warm-Up Question :

1. Essential Question: • What were the causes of the Great Depression? • Warm-Up Question: • Think about the changes that took place in America in the 1920s. In what ways were these changes good? Bad?

2. Causes of the Great Depression • The 1920s were a decade of consumerspending&theeconomy looked healthy on the surface: • Incomedidincreaseinthe1920s, but there were some severe problems with the U.S. economy • In October 1929, the “Roaring Twenties” came to an end & the Great Depression began…why?

3. Causes of the Depression • Weak Industries: • Mass-production of consumer goods led to overproduction • People did not need as many appliances & cars bytheendofthedecade (under-consumption) • Railroads, textiles, steel, coalmining,construction were barely profitable “Traditional industries” faced new competition in the 1920: Cars, synthetic clothes, natural gas

4. Overproduction of Consumer Goods Too much inventory…Not enough buyers

5. “Traditional” industries suffered in the 1920s Corporate Profits for Coal and Railroad Industries, 1920-1930 Profits for Railroad Companies Profits for Coal Mining

6. Causes of the Depression • Depressed Farming: • The end of WWI led to a decline in demand for agricultural products • Too much food led to a 40% drop in crop prices • Farmers could not pay back loans & many had their farms foreclosed • Some rural banks failed

8. Causes of the Depression • Credit: • Many Americans used easy credit to live beyond their means • By“buyingnow&paying later,” Americans generated large debts • As a result, Americans cut back on spending by the end of the decade

9. Americans bought goods on credit & did not have much in savings accounts

10. Causes of the Depression • UnevenDivisionofWealth • Despite rising wages, the gap between the rich & poor grew wider in the 1920s • 70% of Americans were considered “poor” • Most of the spending in the 1920s was done by 30% of the population

11. Distribution of Wealth in the 1920s * An income of $2,500 per year was considered the minimum amount needed for a decent standard of living

12. Causes of the Depression • The Stock Market: • In the 1920s, the stock market soared & people speculated with stocks • Many people borrowed money to pay for stocks, called buying on margin • There was no regulation of the market & some companies altered stock values to raise profits

13. Buying Stocks on Margin

14. Causes of the Depression • The Stock Market: • On October 29, 1929 (Black Tuesday) the stock market crashed • People rushed to sell, prices plummeted, & investors lost $30 billion • Speculators who bought on the margin, could not pay off their debts • Many lost their savings The stock market crash in October 1929 marked the beginning of the “Great Depression”

15. The U.S. stock market had only about 3 million active buyers & sellers but the spillover into the greater economy led to the Great Depression

16. Causes of the Depression • Bank Failures: • After the crash,peopletried to withdraw their money from banks • In1929,600banksfailed duetolackoffunds&the inability to recoup loans • The failure of the banks left many Americans without their life savings

17. Bank & Business Failures, 1928-1933

18. uses of the Great Depression: B

19. Causes of the Depression • Foreign Trade: • Post-wardebtsinEurope & high protective tariffs in America limited international trade • The Great Depression led to a global depression in Europe, Asia, & Latin America • World trade fell by 40%

20. A Global Depression

21. Causes of the Depression • Consumer Confidence: • Millions of Americans lost their jobs or took pay cuts to keep jobs • The lack of confidence in the future kept people from spending money • The lack of spending made the depressiondrag onuntil the 1940s

22. Unemployment & Consumer Spending, 1928-1933

23. Effects of the Great Depression • The Great Depression led to a collapseoftheU.S.financialsystem • 25,000 banks & 90,000 businesses failed by 1933 • Unemployment peaked at 25% • Many Americans lost their homes • America had record poverty & suicide rates; Fathers abandoned families; Healthcare declined • Private charities created soup kitchens & breadlines to help

24. Soup Kitchens & Breadlines

25. Mortgage Foreclosures

27. Poverty in America

28. The Dust Bowl • The effects of the depression were made worse by the Dust Bowl: • Heavy droughts & over-farming in the West destroyed the Plains • In the early 1930s, windstorms swept away loose soil • Farmers in the Plains left their farms & searched for work or better land in West coast states

29. The Dust Bowl (1931-1939) worsened the effects of the Depression Areas Affected by the Dust Bowl drought “Okies” & “Arkies”

30. Group Activity: • In teams, play the role of an economist & try to bring the Great Depression to an end • Examine each of the “Economic Briefing” sheets provided & choose a solution based upon the choices provided • After examining each briefing sheet, choose a presenter & discuss as a class • When finished, examine “Conservative, Liberal, & Radical Solutions” sheet & examine the reading on how President Hoover responded to the Depression

31. President Hoover’s Response • President Herbert Hoover initially rejected bold gov’t action in response the depression: • He tried to reassure Americans that prosperity would return • He called for volunteerism & “rugged individualism”—Americans need to work together to end the depression

32. President Hoover’s Response • As the depression worsened, Hoover called for more gov’t action • The gov’t issued relief checks to help the unemployed • The Reconstruction Finance Corps (RFC) loaned money to failing businesses • BuildingprojectslikeHooverDam • These efforts did not end the depression & many citizens lost faith in President Hoover

34. Employment Agencies & Relief-Check Lines

35. Americans who lost their homes, lived in shantytowns nicknamed “Hoovervilles”

37. Conclusions • The Depression of the 1930s came as a shock to Americans: • When the stock market crashed in 1929, businesses closed & millions were unemployed • Americans lost faith in Hoover & began looking for new leadership & an more active gov’t to solve their problems