1920s BOOM 1930s BUST Main Idea: The prosperity of the 1920s seemed limitless…but 1929 would change everything for everyone Created By Mrs. Bedard PVMHS
What were the causes of the Great Depression? 1920s BOOM! To BUST This Week’s Topic: What were the causes of the Great Depression? #1: Overproduction #2: High Tariffs on Foreign Goods #3: Mistakes were made by the Federal Reserve Bank #4: 1929 Stock Market Crash #5: Banks will close Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS Where we are at: Awesomeness! 1920s New Industries CRASH! Speed Bump 1919 Depression Created By Mrs. Bedard PVMHS
What were the causes of the Great Depression? Election of 1928 Herbert Hoover How do we know him? - Lead the food administration (ration) in WWI “We are nearer to the final triumph over poverty than ever before!...I have no fears for the future of our country. It is bright with hope” Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS
Cause #1: Overproduction Created By Mrs. Bedard PVMHS
How did LACK PANTS cause Overproduction?? Created By Mrs. Bedard PVMHS
Cause #1: Overproduction Why did this happened? What was the result? Created By Mrs. Bedard PVMHS
Americans are unemployed they can’t afford to buy anything In the 1920s Companies Overproduced = too many goods CAUSE: Companies aren’t selling = not making money Layoffs = people Lose their jobs Americans are unemployed they can’t afford to buy anything businesses start to close. RESULT: Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS 25% were unemployed! Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS
Who did overproduction effect the most? Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS THE DUST BOWL “Quiet Depression” Farmers were poor even before 1929 stock market crash. Why? 1.) During WWI, farmers went into debt trying to keep up with demand. Gov. encourages farmers to plant more so soldiers would have food. = by 1920 overproduction! 2.) Also, over planting destroyed the soil. Crops stopped growing…farmers could not afford to plant new crops. Fields of dirt laid unplanted. 3.) AND in 1932 = drought…Dakotas to Texas =Great Plains become known as the Dust Bowl. Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS The Dust Bowl Location: U.S.A, The Great Plains (Nebraska, Oklahoma, etc.) Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS
What were the causes of the Great Depression? 1920s BOOM! To BUST This Week’s Topic: What were the causes of the Great Depression? #1: Overproduction #2: High Tariffs on Foreign Goods #3: Mistakes were made by the Federal Reserve Bank #4: 1929 Stock Market Crash #5: Banks will close Created By Mrs. Bedard PVMHS
#2: High Tariffs Tax on foreign products. Purpose = make US goods Cheaper so people buy American Created By Mrs. Bedard PVMHS
Now USA can’t sell goods at home CAUSE: American goods needed To sell! Hawley-Smooth Tariff = increased the cost of foreign goods so that people would buy American made. Foreign nations raised the tariff on American goods in their countries. Now USA can’t sell goods at home or overseas!. RESULT: Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS #2: High Tariffs Remember it’s the Hawley-Smoot Tariff!! Created By Mrs. Bedard PVMHS
#3: Mistakes made by Federal Reserve Bank What is the Federal Reserve Bank? Boston’s Branch Created By Mrs. Bedard PVMHS
#3: Mistakes made by Federal Mistake #1: In the 1920s = Federal Reserve Bank kept interest rates on loans really low. Problem?? Too many people borrowed money, it was cheap. Went into debt. Created By Mrs. Bedard PVMHS
#3: Mistakes made by Federal Mistake #2: Once the Depression hit in the1930s = Fed Bank raised all the interest rates on loans Problem??? - When people lost their jobs, could not pay back loans. - Now they needed to borrow $$ but couldn’t afford to. Created By Mrs. Bedard PVMHS
In the 1930s people will need To borrow money! (Lost their jobs) Money was cheap to borrow throughout the 1920s… People borrowed too much CAUSE: Federal Reserve Bank then raised the cost to borrow money… In the 1930s people will need To borrow money! (Lost their jobs) BUT now it is too expensive to borrow. RESULT: Created By Mrs. Bedard PVMHS
Things you should know about using Credit! Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS Debit v Credit?? Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS #4: 1929 Stock Market Crash Created By Mrs. Bedard PVMHS
How does the stock market work? Company opens #4- 1929 Stock Market Crash How does the stock market work? Company opens They allow you to buy “stock” (a piece of the company) = they use your money to help company grow (buy things/make things) Company does well = they pay you! Company does bad = Created By Mrs. Bedard PVMHS
#4: 1929 Stock Market Crash Why did the Stock Market Crash in 1929? 1.) 1920s Stock Market Confidence leads to a BULL MARKET: Created By Mrs. Bedard PVMHS
RESULT= PANIC! Sell, sell, sell #4: 1929 Stock Market Crash Why did the Stock Market Crash in 1929? 2.) In the 1920s people started borrowing money to buy stocks = buying on margin Problem?? 3.) Margin Call: once market started to stall = people who borrowed money had to sell quick in order to pay back the loan. RESULT= PANIC! Sell, sell, sell Created By Mrs. Bedard PVMHS
October 29 1929 – Black Tuesday Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS #5: Banks Closed Clip from It’s a Wonderful Life Created By Mrs. Bedard PVMHS
#5: Banks Closed / All Savings Were Lost! 1.) Banks invest your money: - Loans to other people/businesses - Stock market 2.) When people stopped paying back loans they stopped paying your back your savings! 3.) Caused Bank Runs = people ran to their bank to withdraw money before it was gone. 4.) Banks closed their doors…had no money! Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS It’s a Cycle! Overproduction Loss of Buyer (unemployed) Loss of Buyer (savings gone) Raise Tariffs Banks Close Loss of Buyer (no trade) Loss of Buyer (in debt!) Mistakes Federal Bank Stocks Crash Loss of Buyer (no credit) Created By Mrs. Bedard PVMHS
Created By Mrs. Bedard PVMHS 1.) Why is laissez-fair good for economic growth? How is laissez-fair bad for economic growth? 2.) How did the car industry help create an awesome economy in the 1920s? 3.) How did purchasing items on credit effect the consumer society in the 1920s? 4) Why did people start to lose their jobs in the 1920s 5.) Why was the Hawley-Smoot Tariff a cause of the Great Depression? Created By Mrs. Bedard PVMHS