1. The Great Depression
Causes, Effects, Legacy

2. The Great Depression
Economic crisis during the 1930s lasting about 10 years
Began in U.S. with subsequent impacts throughout the world
Sharp increases in unemployment, poverty, homelessness, farming failures
Precipitated innovative recovery measures and legislative protection

3. The Great Depression Causes Stock Market Crash of 1929
Rising stock prices during the 1920s
Unregulated market
Perceived easy way to make money
Borrowing or mortgaging to buy shares
Margin: purchase price financed with loans to be repaid with profits generated by increasing share price
Decline of stock prices in October 1929
Shareholder panic – rush to liquidate holdings
Exacerbated decline in prices and resulted in further panic

4. The Great Depression Results Stock Market Crash of 1929
Psychological shock and loss of confidence in the economy
Consumer spending declined
Business investment reduced
Reduced industrial production
Job losses
Farmers hit particularly hard
Declining prices for farm goods
Great Plains ‘Dust Bowl’

5. The Great Depression Remediation Change of Presidents
Herbert Hoover was President of the United States in 1929
Many blamed Hoover for the Great Depression
Shantytowns where homeless lived were called ‘Hoovervilles’
Perceived as ineffective in dealing with the crisis

6. The Great Depression Remediation Change of Presidents
Franklin D. Roosevelt elected President of the United States in 1932
Promised the people of America a ‘New Deal’
New Deal: series of laws, programs, and government agencies enacted to help the country deal with the great Depression
Placed regulations on the stock market, banks and businesses
Many of the measures and laws are still in place today (i.e. Social Security, SEC regulations)
The New Deal did not end the Great Depression but alleviated its impacts

7. The Great Depression Legacy
The Great Depression ended with the start of World War II and the resulting wartime economy
New Deal-related legislation increased the role of government in everyday life
Efforts of agencies such as Public Works Administration significantly improved the infrastructure of the country with the construction of roads, schools, bridges, parks and airports.

8. The Great Depression Interesting Facts about the Great Depression
Stock market lost 90% of its value between 1929 and 1933
11,000 banks failed during the Great Depression
Unemployment in 1929 was 3%; in 1933 it was 25%
The average family income dropped by 40% during the Great Depression
More than $1B in bank deposits were lost due to bank failures/closures
The New Deal created about 100 new government offices and 40 new agencies
At least 300,000 companies went out of business
Hundreds of thousands of home foreclosures occurred
Millions migrated from the Dust Bowl Midwest; 200,000 of those moved to California
President Roosevelt pushed 15 major laws through in his ‘First Hundred Days’ in office

9. The Great Depression
Measuring the Great Depression – Economic Definitions
Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
Deflation is a general downward movement of prices for goods and services in an economy.
Depression is a very severe recession; a period of severely declining economic activity spread across the economy (not limited to particular sectors or regions) normally visible in a decline in real GDP, real income, employment, industrial production, wholesale-retail credit and the loss of the overall confidence in the economy.

10. The Great Depression
Measuring the Great Depression – Economic Definitions
Inflation is a general upward movement of prices for goods and services in an economy..
Nominal Gross Domestic Product (GDP) is the market value of all final goods and services produced within a country in a year.
Real Gross Domestic Product (GDP) is the production of all final goods and services within a country valued at constant prices (i.e., adjusted for inflation or deflation).
Unemployment rate is the percentage of the labor force who are unemployed.