1. The Great Depression

2. The Great Depression

3. Before it happened Businesses internationally dependent Foreign loans
Foreign goods

4. Mutual confidence & mutual exchange
If you lend $, expect to get it back

5. Causes

6. A) False Sense of Prosperity
U.S. people thought they were more prosperous than they really were.
Enjoyed isolation from WWI

7. Over-production of products
If ppl did buy products, they often used credit

8. B) Stock Market Pre-Crash
Rise of stock market was driven by false hope & optimism
Stock prices kept rising
Buying on Margin – Buying stocks by borrowing

9. Oct 1929 – Stock Market Crashed
Initially started by ppl realizing the prosperity was just an illusion
Ppl panicked & tried to sell their stocks -> dropped prices

10. C) Farmer/Agric Depression
US farmers could sell their goods for high prices during WWI
Wanted more land to produce more goods -> borrowed $ from banks

11. WWI ended, demand & prices severely dropped
Couldn’t pay back loans
Banks struggled

12. Farmers forfeit on loans
D) Banks Struggle
Farmers forfeit on loans
Panic -> People wanting to withdraw their $
11k of 25k banks go bankrupt

13. Oct. 1929 NYSE crashed Speculation driven stocks high
Even average citizens invest
Bought w/ borrowed funds
Money not really theirs
Borrowed from BANKS!!!

14. Panic – everyone tries to sell to get back their $
Everyone selling drops the price of stock

17. Effects

18. US $ no longer being sent abroad Germany sent into tailspin
On Rest of World
US $ no longer being sent abroad
Germany sent into tailspin
Germany stopped paying reparations
Rest of Europe suffers

19. Americans stopped buying foreign goods
Prices tumbled!
European banks close

20. Worker loses job
Business stops making money
Worker stops buying things

21. Unemployment 1932 30 million world wide
Young people couldn’t find jobs
Skills grew rusty
Discouraged
Embittered
Frustrated
Resentful
Turned to new ideas & leaders that promised a better future

22. Econ Depression hits GB & many European countries hard
Great Britain
Econ Depression hits GB & many European countries hard
GB relied on foreign trade, suffered greatly
10-12% unemployment
Increased gov’t welfare programs

23. General Strike 1926 miners feared a dramatic drop in their low wages
Public supported them by striking

24. Failed but symbolic of the struggle of the common man &
the unity that was prevalent

25. Growth of social welfare
Unemployment benefits
Subsidized Housing
Medical Aid
Increased old-age pensions

26. Labour party rose as a champion of the working classes & of greater social equality
replaced the Liberal Party as main opposition to conservatives