1. Causes of the Great Depression
Lecture 1
Standard

2. Standard
Describe the monetary issues of the late 19th and early 20th century that gave rise to the establishment of the Federal Reserve and the weaknesses in key sectors of the economy in the late 1920s.
Essential Question: What factors led to the Great Depression? Was it inevitable or could it have been prevented? Explain.

3. “I do not believe that the power and duty of the General Government ought to be extended to the relief of individual suffering…The lesson should be constantly enforced that though the people support the Government the Government should not support the people.”
—Herbert Hoover, 1930

4. 1928 R Herbert C. Hoover 21,391,993 444 D Alfred E. Smith 15,016,169
531 R
Herbert C. Hoover
21,391,993
444 D
Alfred E. Smith
15,016,169 87

5. Causes of the Depression
Agricultural Depression
demand for farm produce fell after WWI
farmer’s couldn’t pay their loans
thousands of farms were seized by banks
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6. Distribution of $$$ Uneven Distribution of Wealth
poor families couldn’t afford to buy goods
rich families didn’t buy enough to help the economy
1% made over $10,000
5% made $5,000 – 9,000
29% made $2,000 – 5,000
65% made under $2,000
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7. Credit Easy Credit buying on margin real estate speculation
average people had no safety net when the depression began
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8. The Crash Black Tuesday – October 29, 1929
JP Morgan himself tried to buy enough stock to stop the crash
16 million shares were sold in one day
Thousands lost their jobs
within two months stocks dropped $40 billion about the cost of WWI
GE dropped from $400 to $283 a share
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9. The Great Depression worst economic crisis in American history
in the past, government did little or nothing
economy got better
the nation had to rethink the relationship between
government
welfare of regular people

13. Tariffs Hawley-Smoot Tariff, 1930
to protect US business, the government raised the tax on imports
other countries responded with their own taxes
international trade plummeted
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