Presentation on theme: "The Causes of the Great Depression. The Postwar Economic Boom The years following WWI were known as the “Roaring Twenties” The Boom affected America in."— Presentation transcript:
The Postwar Economic Boom The years following WWI were known as the “Roaring Twenties” The Boom affected America in several ways –Americans were earning more –Americans had more to spend –Earnings increased the amount of goods produced –Stock Market at an all time high by 1929
The Depression Foreshadowed Rising Unemployment Farmers losing their land Stock prices were dropping # of American’s living in poverty increased\
Reasons for the Stock Market Crash Republican domestic and International economic policies Unckecked stock speculation Weak and unregulated banking industry Overproduction of goods Decline in the farming industry Unequal distribution of weath
Republican Economic Policies Domestic policies –“The Business of America is Business” –Calvin Coolidge –“Trickle down Economics” Theory that economic policies that benefit big business and America’s wealthiest citizens would eventually benefit all American’s International Policies –US had lent 11 billion dollars to European nations during WWI –European nations could not repay the loans after the war. –US decided to lend them more money –European nations began defaulting on loans
Real Estate and Stock Market Speculation Real Estate Speculation –Speculations: in which a person or organization makes a risky investment in hope making a quick, large profit. –Boom to Bust cycle (crash) –Two Major states: California and Florida were the objects of real estate speculation in the 1920’s –Stock Market Speculation Stocks became inflated because of speculation
The Stock Market Crash and the Banking Industry Collapse 1. The 1929 Stock Market Crash –October 24, 1929, investors flooded the market with sell orders –J. P. Morgan & other bankers attempted to stabilize the market –October 29, “Black Tuesday” in a matter of hours people lost billions –By the end of October the Great Depression had begun.
2. The Banking Industry Collapse The stock market crash led to the collapse of the banking Industry Laissez faire economics –A policy in which government does not interfere with or imposed any regulations on businesses or commerce. Banks had extended lines of credit to speculators Banks DID NOT: –Keep cash on hand, Deposits were not insured, no government oversight
Overproduction American belief in unrestricted captialism and unrestricted growth Industrial Goods High consumer demand Advertizements New machines allowed factories to produce more Agricultural Goods Technological advances made it easier to produce more.
The Toll of the Farming Industry The Farming Industry Decline –Historical backbone of the Economy –Farmers failed to sell their surplus crops –Farmers had trouble paying loans –Led to many foreclosures and banks collasping Farmers during the Great Depression –Situation only grew worse –Severe drought
The DUST BOWL The Drought turned the soil into a powdery dust that swept across the plains Over 1 million families lost their farms between 1923 and 1933. Many fled to California in search of employment and land. Threw into dramatic relief the tremendous gap between America’s have’s and have- nots.
Unequal Distribution of Wealth The gap between rich and poor –In 1929, just 1 percent of the American population possessed over 59 percent of the countries wealth –American industrial workers grew as impoverished as the nation’s farmers Purchasing Power is Lost –Americans fell deeper and deeper into debt.