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The Great Depression Unit 7

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Title: The Great Depression Unit 7


1
The Great Depression Unit 7
  • Causes of the Great Depression

2
  • 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?

3
Causes of the Great Depression
  • The 1920s were a decade of consumer spending
    the economy looked healthy on the surface
  • Income did increase in the 1920s, but there were
    some severe problems with the U.S. economy
  • In October 1929, the Roaring Twenties came to
    an end the Great Depression beganwhy?

4
Group Activity What caused the Great Depression?
  • In teams, determine what factors contributed to
    the Great Depression
  • Examine the documents provided complete the
    chart in your notes
  • After examining all documents, try to group the
    documents into categories
  • When finished, create a one sentence thesis that
    explains why the depression beganbe prepared to
    discuss

5
Causes of the Great Depression A
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
6
Causes of the Great Depression B
7
Causes of the Great Depression C
Benefits Risks of Buying Stock on Margin
8
Causes of the Great Depression D
9
Causes of the Great Depression E
Corporate Profits for Coal and Railroad
Industries, 1920-1930
Profits for Coal Mining
Profits for Railroad Companies
10
Causes of the Great Depression F
11
Causes of the Great Depression
12
Causes of the Depression
  • Weak Industries
  • Mass-production of consumer goods led to
    overproduction
  • People did not need as many appliances cars by
    the end of the decade (under-consumption)
  • Railroads, textiles, steel, coal mining,
    construction were barely profitable

Traditional industries faced new competition in
the 1920 Cars, synthetic clothes, natural gas
13
Overproduction of Consumer Goods
Too much inventoryNot enough buyers
14
Traditional industries suffered in the 1920s
Corporate Profits for Coal and Railroad
Industries, 1920-1930
Profits for Coal Mining
Profits for Railroad Companies
15
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

16
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17
Causes of the Depression
  • Credit
  • Many Americans used easy credit to live beyond
    their means
  • By buying now paying later, Americans
    generated large debts
  • As a result, Americans cut back on spending by
    the end of the decade

18
Americans bought goods on credit did not have
much in savings accounts
19
Causes of the Depression
  • Uneven Division of Wealth
  • 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

20
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
21
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

22
Buying Stocks on Margin
23
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
24
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
25
Causes of the Depression
  • Bank Failures
  • After the crash, people tried to withdraw their
    money from banks
  • In 1929, 600 banks failed due to lack of funds
    the inability to recoup loans
  • The failure of the banks left many Americans
    without their life savings

26
Bank Business Failures, 1928-1933
27
Causes of the Depression
  • Foreign Trade
  • Post-war debts in Europe 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

28
A Global Depression
29
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 depression drag on
    until the 1940s

30
Unemployment Consumer Spending, 1928-1933
31
Effects of the Great Depression
  • The Great Depression led to a collapse of the
    U.S. financial system
  • 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

32
Soup Kitchens Breadlines
33
Mortgage Foreclosures
34
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35
Poverty in America
36
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

37
The Dust Bowl (1931-1939) worsened the effects
of the Depression
Areas Affected by the Dust Bowl drought
Okies Arkies
38
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

39
President Hoovers Response
  • President Herbert Hoover initially rejected bold
    govt action in response the depression
  • He tried to reassure Americans that prosperity
    would return
  • He called for volunteerism rugged
    individualismAmericans need to work together to
    end the depression

40
President Hoovers Response
  • As the depression worsened, Hoover called for
    more govt action
  • The govt issued relief checks to help the
    unemployed
  • The Reconstruction Finance Corps (RFC) loaned
    money to failing businesses
  • Building projects like Hoover Dam
  • These efforts did not end the depression many
    citizens lost faith in President Hoover

41
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42
Employment Agencies Relief-Check Lines
43
Americans who lost their homes, lived in
shantytowns nicknamed Hoovervilles
44
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45
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 govt to
    solve their problems
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