The Great Depression Begins…. I. Reasons for Depression A.Farmers producing too much B.Overproduction from WWI C.Went into debt and farms failed.

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Presentation transcript:

The Great Depression Begins…

I. Reasons for Depression A.Farmers producing too much B.Overproduction from WWI C.Went into debt and farms failed

D. Industry –decline in demand Still producing with no buyers E. Rich got richer, poor got poorer F. Debt increases – buying on credit

II. The Market A.1920’s prices rose B.Problems arose in late 20’s: 1.Speculation Risky business transactions hoping to get rich quick –Increases debt ratio Video Clip

2. Buying on Margin Paying a percentage of stock up front and borrowing rest –This worked as long as prices rose

III. The crash A.Panicked investors unloaded their shares

B.Black Tuesday—Oct. 29, Bottom fell out of market Due to people and corporations frantically selling their stocks before prices dropped even lower Video Clip

IV. Financial Collapse A.Americans panicked - withdrew money from banks 1.banks close 2.Banks not insured by Fed. Govt. -lost their life savings

Listen to FDR’s explanation of bank closures, given in his first radio address (March 12 th 1933)

V. Workers A.1 out of 4 workers didn’t have a job

B.Those who kept jobs had to accept pay cuts & reduced hours

VI. Effect on America A. Extensive Poverty B. Joblessness / Homelessness C. Bank Closures D. Business Closures E. Distrust in Economy F. Disrupts Agriculture