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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

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


  • ‘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



1 poor distribution of income
1. Poor distribution of income Depression?

  • 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 Depression?

Low incomes

Expanding production


3 farm depression
3. Farm depression Depression?

Debt from WWI

Overproduction + lower demand = low prices

Low purchasing power


4 too much easy credit
4. Too much (easy) credit Depression?

  • 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 Depression?

  • 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 Depression?

  • 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 Depression?Stock Market Crash




Distrust of government (Hoover) in circulation

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



Rise of centralized, powerful government in circulation

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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