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Great Depression Chapter 22 Chapter 22 Section 1 Section 1.

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Presentation on theme: "Great Depression Chapter 22 Chapter 22 Section 1 Section 1."— Presentation transcript:

1 Great Depression Chapter 22 Chapter 22 Section 1 Section 1

2 Brainstorming: What is a depression? What is a depression? What were some of the warning signs of the Great Depression? What were some of the warning signs of the Great Depression?

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8 Industries in Trouble superficial prosperity hid economic weaknesses superficial prosperity hid economic weaknesses railroads, textiles, and steel had barely made a profit railroads, textiles, and steel had barely made a profit

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11 mining & lumbering were no longer in demand mining & lumbering were no longer in demand coal-mining hard-hit, due to new forms of energy coal-mining hard-hit, due to new forms of energy

12 Farmers Need a Lift WWI - prices rose & international demand for crops such as wheat & corn soared WWI - prices rose & international demand for crops such as wheat & corn soared farmers planted more & taken out loans for land & equipment farmers planted more & taken out loans for land & equipment demand fell after the war & crop prices declined by 40 percent or more demand fell after the war & crop prices declined by 40 percent or more

13 farmers boosted production in the hopes of selling more crops, but this only depressed prices further farmers boosted production in the hopes of selling more crops, but this only depressed prices further annual farm income declined from $10 billion to just over $4 billion annual farm income declined from $10 billion to just over $4 billion

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15 Literally using HorsePower

16 farmers couldnt pay off loans farmers couldnt pay off loans farms lost when banks seized the property as payment farms lost when banks seized the property as payment as they default on loans, many banks began to fail as they default on loans, many banks began to fail auctions were held to recoup some of the banks loans auctions were held to recoup some of the banks loans

17 Foreclosure Auction in Iowa

18 McNary-Haugen Bill called for price-supports for key products called for price-supports for key products –government would buy surplus crops at set prices and sell them on world market President Coolidge vetoed the bill twice President Coolidge vetoed the bill twice

19 Consumers Have Less Money Farmers bought fewer goods/services Farmers bought fewer goods/services Americans were buying less Americans were buying less 1.rising prices 2.stagnant wages 3.unbalanced distribution of income 4.overbuying on credit Production expanded faster than wages, resulting in a gap between rich and poor Production expanded faster than wages, resulting in a gap between rich and poor

20 Living on Credit Bought goods on credit w/interest Bought goods on credit w/interest Many had trouble paying off their growing debts Many had trouble paying off their growing debts Faced with debt, many cut back on spending Faced with debt, many cut back on spending

21 Uneven Distribution of Income Wealthiest income (only 1% of the population) rose by 75% Wealthiest income (only 1% of the population) rose by 75% 70% of nations families earned less than $2500 a year 70% of nations families earned less than $2500 a year Families earning 2X that much couldnt afford many household products Families earning 2X that much couldnt afford many household products

22 YEE HAW Game Get into pairs Take a direction sheet and await directions You must make your decision and annotate it in ink All decisions are final

23 Dreams of Riches in the Stock Market Economists warned of weaknesses in the economy, but most Americans confident in the nations economic health Economists warned of weaknesses in the economy, but most Americans confident in the nations economic health Stock market became the symbol of a prosperous American economy Stock market became the symbol of a prosperous American economy

24 Hoping to Strike it Rich speculation – buying stocks & bonds on chance of quick profit, ignoring the risks speculation – buying stocks & bonds on chance of quick profit, ignoring the risks Buying on margin – paying a small of % a stocks price as a down payment & borrowing the rest Buying on margin – paying a small of % a stocks price as a down payment & borrowing the rest

25 Effects of this Practice: 1. Caused the upward spiral 2. Rising prices didnt reflect the companies worth 3. If the value of stocks declined, people who had bought on margin had no way to pay the loans.

26 The Stock Market Crashes Early September 1929, stock prices peaked and then fell Early September 1929, stock prices peaked and then fell investors quickly sold their stocks and pulled out investors quickly sold their stocks and pulled out October 24, the market took a plunge and panicked investors unloaded their shares October 24, the market took a plunge and panicked investors unloaded their shares

27 Black Tuesday October 29, 1929 October 29, 1929 Bottom fell out of the market Bottom fell out of the market Tried to sell before prices plunged even lower Tried to sell before prices plunged even lower

28 Stock Market Bubble Burst People who bought on credit were stuck with huge debts as prices plummeted, while others lost their savings People who bought on credit were stuck with huge debts as prices plummeted, while others lost their savings by mid-November investors had lost about $30 billion (amount equal to how much America paid for WWI) by mid-November investors had lost about $30 billion (amount equal to how much America paid for WWI)

29 Financial Collapse Stock market crash symbolized beginning of the Great Depression Stock market crash symbolized beginning of the Great Depression The economy plummeted and unemployment skyrocketed The economy plummeted and unemployment skyrocketed Crash hastened the collapse of the economy and made the depression more severe Crash hastened the collapse of the economy and made the depression more severe

30 Bank and Business Failures Many withdrew their money from the banks Many withdrew their money from the banks

31 The Banks many invested in the stock market many invested in the stock market By 1933, 11,000 of the nations 25,000 had failed By 1933, 11,000 of the nations 25,000 had failed Because the government did not protect or insure bank accounts, millions of people lost their savings accounts Because the government did not protect or insure bank accounts, millions of people lost their savings accounts

32 the gross national product – nations total output of goods & services – was nearly cut in half the gross national product – nations total output of goods & services – was nearly cut in half About 90,000 businesses went bankrupt About 90,000 businesses went bankrupt

33 Millions Lost Jobs Unemployment increased to 25% in Unemployment increased to 25% in One out of every four workers was out of a job One out of every four workers was out of a job Those who kept their jobs faced pay cuts and reduced hours Those who kept their jobs faced pay cuts and reduced hours

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35 Some were Lucky Sold their stocks before the crash and made money Sold their stocks before the crash and made money Joseph P. Kennedy, the father of future president John K. Kennedy, was one who did Joseph P. Kennedy, the father of future president John K. Kennedy, was one who did Most were not so lucky Most were not so lucky

36 Causes of Great Depression 1. Old and decaying industrial base –outmoded equipment made some industries less competitive

37 2. A crisis in the farm sector –Farmers produced more than they were able to sell, especially with the end of WWI and the disappearance of markets that the war had opened to them

38 3. The Availability of easy credit –Many people went into debt buying goods on the installment plan

39 4. An unequal distribution of income –There was too little money in the hands of the working people, who were the vast majority of consumers.

40 Dow Jones Industrial Average was barometer of the stock markets health was barometer of the stock markets health A measure based on the stock prices of 30 large firms trading on the New York Stock Exchange A measure based on the stock prices of 30 large firms trading on the New York Stock Exchange 1920s - stock prices rose steadily 1920s - stock prices rose steadily

41 Worldwide Shock Waves Europe suffered recovering from war & faced debts Europe suffered recovering from war & faced debts Germany paying war reparations Germany paying war reparations Great Depression added to problems by limiting U.S. ability to import European goods Great Depression added to problems by limiting U.S. ability to import European goods Difficult to sell U.S. farm products & manufactured goods abroad Difficult to sell U.S. farm products & manufactured goods abroad

42 Hawley-Smoot Tariff (1930) 1. highest protective tariff in U.S. history 2. Designed to protect American Farmers & manufacturers from foreign competition 3. Unemployment worse in industries that could no longer export goods Europe

43 Results of the Tariff: Many countries retaliated by raising their own tariffs Many countries retaliated by raising their own tariffs Within a few years, world trade had fallen more than 40% Within a few years, world trade had fallen more than 40%


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