1. Causes of the Great Depression
11/28 – 11/29

2. Warmup What was the nickname for the decade of the 1920s?
The Roaring Twenties

3. Post-War Economic Boom
During WWI, the US had an economic boom
Following WWI, the economy dipped slightly, but then went back up
US emerged from the war as a world power
Factories (assembly lines) producing 72% more goods per worker than pre-war levels
More for sale meant lower prices
Workers earned a lot more too (average 43% increase in wages)

4. What Do We Do With All That Money?
Advertising triggered a “need” for new industries:
Radios, refrigerators, cars, hygiene products, clothes, etc.
¾ of all cars in the world were owned by Americans
Credit emerged as acceptable purchasing tool
Americans began to invest in the stock market

5. Europe is Broke US forced European nations to repay war loans
US could have forgiven loans
Europe devastated by war, and could not rebuild economy to repay
US lent Europe money to rebuild
Europe just went further into debt
With Europe essentially broke, it couldn’t repay the US and it couldn’t buy American goods (uh-oh!)

7. Republican Economic Policies
President Calvin Coolidge: “The business of America is business”
Coolidge put into place pro-business policies
Lowered taxes on the wealthy
Lax enforcement of anti-trust laws and regulations
High protective tariffs

8. Real Estate and Stock Speculation
Speculation: where a person makes a risky investment in the hope of making a quick profit
California and Florida became hotspots for real estate speculators
People used the stock market to make some quick money
People believed the value in the stock market would never go down

9. Over Production
Farmers and factories increased production during the ‘20s
People believed the boom times of the 1920s would never come to an end
But, Miss Caspers, you told us that the more you have of something, the less it’s worth
Yes, which means that prices on goods went down
Even though businesses were making more goods, they were making less money

11. Toll on Farming Industry
Farmers had borrowed from banks to buy new equipment
When farmers failed to sell surplus crops, they were unable to repay their loans
Banks took over farms
At the same time, a drought hit the central US
Winds picked up dirt and the central US became known as the Dust Bowl
Farmers left Oklahoma for California

14. Unequal Distribution of Wealth
Statistically, the ‘20s was a time of wealth for all
Wealthiest Americans saw their wages rise 75%
Poorest Americans saw their wages only rise 9%
Many Americans took to buying on credit which took them deeper into debt
After the Crash, people could not even afford the basic staples of life

15. The Market Crashes
In 1929, investors started selling stock while the value was still high
This triggered a massive sell-off, which caused prices to drop
“Black Tuesday” ( ): the market crashed, losing 16 billion dollars

17. Banks Collapse
In the ‘20s, banks had no regulation (deposits were uninsured)
Banks used money to speculate on the stock market
When the market crashed, banks lost billions
When people went to bank to withdraw money, there wasn’t any
Since banks had no assets, no cash reserves, and no new money coming in, they closed down
Almost 6,000 banks closed by 1932

18. The Great Depression Begins
The country had been in economic recessions before
This recession is known as the Great Depression because:
The amount of time it lasted (almost 11 years)
The number of businesses and people it affected