The Crash Causes of the Great Depression. The Crash The times were good in the 20s. Why? The automobile was selling in record number. As a result a boom.

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Presentation transcript:

The Crash Causes of the Great Depression

The Crash The times were good in the 20s. Why? The automobile was selling in record number. As a result a boom started in other related areas: steel, nickel, rubber, paint, glass, oil, rubber, construction and tourism Mass access to cars also meant that people didn’t have to live so close to work. So, they build new homes in the suburbs. They also wanted perfumes, radios, refrigerators, electricity…and more.

A strong economy, good incomes, a new “reality” led to spending. Mass production (assembly line) Advertising (mass media) Credit spending (installment plans)

The problems of prosperity 1)Credit buying 2)Result-easy money encourages sales which increase demand 3)Growth was based on speculation in the hopes of profits, with the promise to pay later

October 29, 1929 “Black Tuesday” The reality set in that the market was not built on “real capital”. Investors who understood this began to sell off their stock. The Market began to sag causing a panic. More people began selling than who wanted to buy. Banks at that time were also investors in the stock market. When the markets began to fail, banks also lost money—sometimes all of it. It becomes so bad, some investors, especially those who did it for a living became window jumpers.

October 29, 1929 The Crash resulted in $30 billion of lost stock value.

The Crash was the beginning of the Great Depression, but not the only cause. The Great depression occurred because of: – Stock speculation – Margin stock and poor banking decisions – Poor monetary policy as a whole – Farms and many industries who were still broke as a result of the 1890s panics – Wealth distribution (1% of the people controlled 60% of the wealth) – Declines in foreign trade as a result of growing isolationists policies

The Dust Bowl

The Results In 1929, the average family income was $2300, by 1935, it would be $1600. Unemployment will go from 5% to 25%. The Dust Bowl will lead to failed farms, foreclosures, and the movement West of many (Okies). Increased anti-immigrant activities Hoovervilles Mass depression (psychological-Hobos) Cars and movies will become even more popular The collapse of the Hoover presidency and the rise of FDR (left—than right)

2010 Causes Market speculation Globalization policies Real estate speculation Credit and home loans required by law for those unable to pay Behaviors/attitude-What happened to delayed gratification? Technology Green Terrorism Immigration patterns Government spending Results 10% unemployment as reported plus 7% who say they are working part-time and/or have given up looking for a grand total of 17%+ unemployment. The biggest government deficit in history. Market and real estate correction Government talk of taken over a large percentage of the economy. The people: Left—than right

The National Debt debt_clock/ debt_clock/ k.org/index.html k.org/index.html