The Great Depression

The US Economy in the 20’s After WWI the U.S. was the leading economy in the world This growth continued throughout the early 1920’s thanks to the growth in the automobile and consumer goods industry The stock market rose 400% In order to buy stocks many people began to borrow money to buy stocks, known as buying on margin.

The US Economy in the 20’s While the stock market was booming there were several hidden problems Wealth was mostly at the top Credit – purchasing something with an agreement to pay it back later Credit led to people purchasing things that they could not pay back.

The Stock Market Crashes One factor in the Great Depression was the crashing of the Stock Market on October 29, 1929, a day later named Black Tuesday. On that one day investors dumped more than 16 million shares of stock The crash led to panic among people in business and industry and triggered a banking crisis Many companies began to layoff workers because consumers were spending less in fear of economic troubles

The Depression Spreads Following the Stock Market Crash the American economy took a severe downward dive. The Depression was the result of several factors.

The Depression Spreads 1) Industry Slows – the Stock Market crash caused factories to layoff workers, causing a rise in unemployment and poverty. 2) Banks – banks began to go out of business and people lost their savings. 3) Government – President Herbert Hoover did little to try to stop the depression.

The New Deal In 1932 Americans elected Franklin Roosevelt as President Roosevelt’s plan to fix the economy was called the New Deal and included several parts 1) Increase government spending 2) Get people back to work through public works programs 3) Provide aid for those in need 4) Reform regulations in the stock market and banking system

The Global Depression British economist John Maynard Keynes supported FDR’s ideas. Keynes argued that increasing government spending, even if it meant going into debt, would increase economic output.

The Global Depression Because the U.S. was the largest economy in the world its depression spread throughout the world Europe was already struggling through the 1920’s due to recovery from WWI In Germany the forced reparations led to inflation that made their currency worthless.

The Global Depression Smoot-Hawley Tariff Act – passed in 1930 this act placed tariffs (taxes) on imported goods to encourage Americans to buy products made in the U.S. The act was supposed to help the American economy but it backfired when other countries did the same and world trade came to a halt. This loss of foreign trade crippled many economies around the world.

Political Impact As the Depression wore on unrest grew. In response to the economic troubles the National Socialist (Nazi) Party was created in Germany The Nazi Party (incorrectly) blamed the Jews for their economic troubles and promised to rebuild a powerful German empire Other nations saw similar political movements that would lead to further world conflict.