Presentation on theme: "Economic Causes & Effects of the Great Depression"— Presentation transcript:
1Economic Causes & Effects of the Great Depression
2Causes of the GD & Stock Market Crash 1. Overproduction: too many goods (Factories & Farms)FarmersFarmers increased production during WWIDemand decreased after the warSurplusSuffered throughout 1920s-low prices (can’t pay loans/make a living)Factory workersGet laid-offWorkers cannot buy goodsPrices drop
32. Unevenly Distributed Wealth Causes of the GD & Stock Market Crash2. Unevenly Distributed WealthRich became richer, while industrial workers simply stayed poorCreated economic problems – wealthy did not buy enough to keep economy booming
4Causes of the GD & Stock Market Crash 3. Easy Access to CreditInstallment plans Take home today, make paymentsBuying on Margin Buy stock by just paying a small portion of what it is worthex shares at $10 = $1000only pay $300owe $700
5Check for Understanding Rally RobinWhat were the causes of the Great Depression & Stock Market Crash?
6Causes of the GD & Stock Market Crash Stock Market Crash, Black Thursday, Oct. 29, 1929How???Buying on Margin (Borrowing $$)Remember our example…100 shares at $10= $1000 only pay $300still owe $700Problem - stock crashes, you lose your money, and can’t pay back stockbrokerStockbroker can’t pay back bank
8Effects of the GD & Stock Market Crash Banks CollapsedWhat happens to your money when you put it into a savings account? *Simulation*Bank FailuresBanks closed and lost $$$People defaulted on loans (can’t pay back)Banks could not cover their deposits, because it was lent out to bad creditors5,000 banks closed betweenPeople lost entire LIFE SAVINGS
9= + Banks Close Banks have no money to give people People Default on LoansPeople Loose savings
101920’s Problems BANKS Have NO $$ PEOPLE LOST SAVINGS & JOBS Factories making too much; farms growing too much.BANKS Have NO $$PEOPLE LOST SAVINGS & JOBSNO ONE TO HELP!Factories Fire Workers (Don’t need them)Farm Prices fall (Farmers can’t make $$)Banks Close because they have no money: Loans have not been paid back, can’t give people their savingsFarmers & Factory Workers can’t pay back loans to Banks: DEFAULT!!
11Effects of the GD & Stock Market Crash Banks CollapsedBusinesses ClosedUnemployment RoseHawley-Smoot Tariff, June 1930“Protective tariff” – to protect American products from foreign competitionRaised prices on foreign importsDestroyed international trade
12Check for Understanding Partner Activity – Create a radio show. One partner will be the D.J. and the other will be a citizen calling in to the radio show. The D.J. will ask the caller questions about how the stock market crash is affecting the caller. The caller will respond by discussing his/her concerns.
14The Government’s Response Hoover’s ResponseVolunteerismCalls on business leaders to maintain employment, wages, pricesLocalismProblems could best be solved at local & state levelsReconstruction Finance Corporation (RFC), 1932More than $1 billion to RR’s & large businessesTrickle-down economicsUnfortunately, $$ did not trickle down to the people who needed it most
15The Government’s Response Socialism or Communism???Some thought that these ideologies were the answerBonus ArmyWWI veterans seeking bonus promised to receive (but not until 1945)1931 they called for early paymentMarched on WashingtonHoover would not meet them – instead he sent Gen. Douglas MacArthur & federal troopsRefer to “The Bonus Army” on pg 723