Presentation on theme: "Causes of the Great Depression"— Presentation transcript:
1 Causes of the Great Depression Chapter 8 Section 1
2 Lecture Focus Question #1: How did the prosperity of the 1920s lead to the Great Depression?3-4 sentence response!
3 Optimism Sweeps America 1920s: times were good in AmericaPresidents took credit for prosperityHoover elected 1928: prosperity expected to continue“a chicken in every pot, a car in every garage”
4 Problems Plague Farmers Farmers suffered economically during 20sContracted huge debt during WWILarge decline in demand for cropsFarms still yielded bumper crops but failed to sellResult: farmers in debt, no cash, lived on credit
6 Wealth & Credit Corporate profit skyrocketed → rich got richer Workers simply became less poorYearly income of worker: $2,000 / yearYearly income of wealthy: $100,000 / yearResult: nation’s wealth unevenly distributed95% of Americans controlled 5% of $5% of Americans controlled 95% of $Expansion of credit hid this problem
7 Black Tuesday → Great Crash Stock Market CrashesBoom and bust economyOver-speculation in the 20s + Overproduction of goods in the 20s =1) Confidence in stock market drops2) Stock prices drop slightly3) Stock brokers and banks start calling in loansBlack Tuesday → Great CrashGreat Crash = Stock Market Crash of 1929
9 The Great Depression Begins Panic spread, people rushed to withdraw $Banks forced to close → unable to give depositors their $Businesses closed, unemployment Hawley-Smoot Tariff: Hoover’s failed attempt to protect U.S. goods from foreign competition