Depression Causes­ Dr Tech Class


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Causes of the Great Depression with opening viedo

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Depression Causes­ Dr Tech Class

  1. 2. The Roaring 20’s <ul><li>Fun times reigned </li></ul><ul><ul><li>Dancing </li></ul></ul><ul><ul><li>Flappers </li></ul></ul><ul><ul><li>Drinking </li></ul></ul><ul><li>The new concept of “credit” </li></ul><ul><li>People were buying: </li></ul><ul><ul><li>Automobiles </li></ul></ul><ul><ul><li>Appliances </li></ul></ul><ul><ul><li>Clothes </li></ul></ul>
  2. 3. The 1920’s “Roared”! But… the economy grew “sick” <ul><li>Many industries start to suffer </li></ul><ul><li>Farmers get hit the worst with the economic slow down </li></ul><ul><li>People buy more on credit and build up debt </li></ul><ul><li>Income becomes very unbalanced </li></ul><ul><li>The stock market soars as people speculate and buy on margin </li></ul>
  3. 4. Farms and factories overproduced beyond the demand. Overproduction / Reduction in Purchasing People had little or no money to spend. Demand for goods fell. Businesses cut production Workers suffered from wage cuts and lay offs.
  4. 5. A farm is being sold at a foreclosure sale in Iowa. Military police were on hand to keep farmers from disrupting the auction. ca. 1935.
  5. 6. What’s wrong with buying on credit??? <ul><li>Credit system </li></ul><ul><ul><li>People didn’t really have the money they were spending </li></ul></ul><ul><li>WWI </li></ul><ul><ul><li>The U.S. was a major credit loaner to other nations in need </li></ul></ul><ul><ul><li>Many of these nations could not pay us back </li></ul></ul>
  6. 7. The Stock Market <ul><li>People bought stocks on margins </li></ul><ul><ul><li>If a stock is $100 you can pay $10 now and the rest later when the stock rose </li></ul></ul><ul><li>Stocks fall </li></ul><ul><ul><li>Now the person has less than $100 and no money to pay back </li></ul></ul>
  7. 8. Stock Market Crash <ul><li>On Tuesday, October 29, 1929, stock prices plummeted. </li></ul><ul><li>This became known as Black Tuesday. </li></ul>
  8. 11. <ul><li>People that bought stocks on margin (credit) could not repay their debts. </li></ul>The Philanthropist by, Herb Block (Dec. 5, 1930) During the Great Depression approximately 25% of the workforce was unemployed. People who lost their jobs began selling five-cent apples on the streets of American cities, providing a symbol of the economic hardships of the era. <ul><li>People that had invested their savings in stocks had little or nothing left. </li></ul>
  9. 13. Bank Failures <ul><li>When the stock market crashed, people could not repay their loans to the bank. </li></ul><ul><li>Banks were involved in stock speculation and lost billions. </li></ul><ul><li>Therefore, banks couldn’t give depositors their money and banks closed. </li></ul><ul><li>Many people lost their life savings. </li></ul>