The Great Depression “We felt lucky if we got an orange for Christmas” -Grandma

What lead to the Depression? WWI- came in late –Democrat –Woodrow Wilson –Economy started to take off

Economic Growth Industrialization Arms and Artillery Planes Agriculture Europe decimated Record amount of crops Increased production –Buying new equipment –Expansion

Society Living the good life

Post WWI Disillusioned with Europe Go back to isolationism No end to prosperity Return to normalcy Republicans in control Harding Coolidge Hoover

Cause of Great Depression The Stock Market Crash Two million lost life savings. Result is less buying power Results in an economic Catch-22

Why Does the Market Crash People Borrow Money (Buy on Margin) to Buy Stocks. When Stock Market Falls people sell so they don’t lose money This causes chain reaction; more people sell. As people lose money they can’t pay back banks. Banks lose money they are keeping for individuals, etc…

Stock Market Crash Stocks Fall 40% 9000 Banks go under 9 Million Savings Wiped out. 86,000 Businesses Fail Wages Fall 60% Unemployment to 25% 15 Million Jobless people

Cause of Great Depression Ability to Purchase can’t keep up with Production Income is enough to only survive; not purchase extra goods Low demand- coal,auto,construction

Cause of Great Depression Unbalanced Distribution of Income 5/95 Rule

Cause of the Great Depression Farm Depression 1920’s Farmers had little to spend –Drought/Dust Bowl –New competition –Change in American Diets –Overproduction ¼ of population with less money to spend $262 YR.

Farmers Solution to overproduction is burn and throw out excess=less supply People are starving Could have given aid- Coolidge says farmers have never made money and he didn’t think he could do much about it. Vetoed aid 2x

Cause of Great Depression Technological Unemployment New Machines boost productivity 1920’s 2 million workers displaced/yr. 1930’s This trend continues –Causes the downward spiral of unemployment.

Cause of Great Depression Too Much Credit Hawley –Smoot tariff Banks made “easy” money available Credit allowed people to buy on installments So much new debt resulted in less spending at a later point.

Cause of Great Depression Weakness in Banks Banks lose money in Stock Market Crash Customers can’t pay bank loans People panicked when Banks begin to close.

Cause of Great Depression Decline of Foreign Trade Europe can’t buy American Goods; causes layoffs in export industry Farm products are not bought overseas; supplies pile up and prices continue to drop.

Unemployment Rate % % % % % % % %

What ends the Great Depression? Two Possibilities –President FDR (Franklin Delano Roosevelt) and his New Deal Program. -Or- --World War II

Depression – 1930’s Vocabulary

Depression – a period of drastic decline in business activity accompanied by high unemployment. *Veto – Presidential power of rejecting a law passed by Congress.

Hoovervilles – nickname given to shantytowns in the United States during the depression.

Hoover Blankets – slang term given to newspapers used by homeless people for warmth during the depression. Dust Bowl – name given to parts of the Central Plains in the 1930’s after a severe drought dried out the region.

Buying on Margin – purchasing stocks on credit.

*Public Works – Projects such as highways, parks, and libraries built with public funds for public use. Foreclosure – to take possession of property by a mortgagor because of defaults on payments.