1. The Great Depression

3. Causes of the great depression
Overproduction
Laissez Faire policies that left the economy unregulated
Fraud
Over speculation on the stock market
Decline in foreign trade

4. Laissez faire
a doctrine opposing governmental interference in economic affairs beyond the minimum necessary for the maintenance of peace and property rights
Businesses report record profits
Uneven distribution of wealth
5% earned 33% of income
Less real spending, but production levels continued to rise

5. Background
1920’s a time of great prosperity, but problems exist under the surface
Conservative policies of Harding, Coolidge & Hoover administrations don’t, can’t help
Depression doesn’t begin with the Stock Market Crash in 1929
Starts 10 years earlier in Europe – WW1, war damage, reparations

6. Early Signs Agricultural overproduction Prices drop, supply & demand
Tractors, Combines, etc.
Prices drop, supply & demand
Farmers default on loans, banks foreclose

7. Dustbowl Three waves: 1934, 1936, 1939-40
In some areas lasted as long as 8 years
New technologies encouraged farmers to cultivate arid grassland (<10 inches rain/year)
Unanchored soil turned to dust
Centered on panhandle of Texas & Oklahoma, affected parts of New Mexico, Colorado, Kansas
Tens of thousands forced off farms, “Okies”

8. “okies”
Midwestern farmers, many from Oklahoma, migrate to California looking for work
Begin to compete with Mexican farm workers for scarce jobs
Hobos
Hoovervilles
“Grapes of Wrath”

9. Overproduction Companies producing more than could be consumed
Lost profits and debt
Companies go out of business
Poor management
Fraud
Inflated profit reports to drive up stock prices

10. Foreign Debt WW1 – America becomes World’s leading creditor nation
Foreign powers owe US government and American $1Billion annually
Debt goes unpaid
Declining US trade
Demand for reparations
Continuing European depression

11. Crash
Investor confidence, government policies lead to increasing stock investment
Unprecedented rise starts in 1928, record high of 381 by Sept 1929, decline begins
Panic selling starts on Oct 24, 1929, million shares traded
Oct 29, 1929 “Black Tuesday,” market plummets

12. Depression 9000 banks close between 1930 and 1932
Bank customers panic, try to pull funds
As money disappears, deflation sets in
Businesses close or lay off workers
Unemployment rises to 25-35%
Toledo, Ohio unemployment rises to 80%

13. Coming attractions Individual and group activities
Creating a scrapbook
Photos, songs, diary entries