The Great Depression

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The Great Depression 1929-1941
Above Bread line, NY City, c 1930
Migrant Mexican field workers, California, March
1939. Photograph by Dorothea Lange.
Above Farm foreclosure sale, c. 1933
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The Economic Cycle the fluctuation of economic
conditions form a state of prosperity, through a
state of decline, down to a state of recession
(or even depression), followed by a state of
recovery, and the back to prosperity
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Depression stage of economic cycle
characterized by low economic activity and rising
unemployment
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Effects of the Depression

• soaring unemployment
• people lose their life savings
• people lose their homes
• families in crisis
• fear takes hold of the nation
• people do not invest money or spend money on goods

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Causes of the Great Depression

• world wide depression
• post World War I European nations are in a deep
  depression
• Germany, Italy, England, France, and Russia
  struggle to rebuild their nations
• nations unable to pay back loans to US

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Causes of the Great Depression

• The Roaring 20s werent happy, prosperous times
  for everyone in the United States
• Farmers struggled with unstable crop prices
• Farmers also faced over production of crops which
  led to low farm prices
• Drought in the mid-west yielded poor harvests

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Causes of the Great Depression

• demand for new homes and office buildings
  declined
• the sale of heavy machinery fell
• consumers were buying less

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Causes of the Great Depression

• Even though there were significant signs of
  economic slowdown, the United States government
  did NOT inform the public of these developments.
• Most Americans did not know that the United
  States was in trouble.

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Causes of the Great Depression

• investors bought stocks on margin (borrowing
  money from stockbrokers who borrowed money from
  banks) brokers asked investors to pay the money
  they stilled owed
• stocks were overvalued
• prices of stocks plummeted
• stock market crashed on Tuesday, October 29, 1929
  AKA Black Tuesday
• Investors couldnt pay brokers who then couldnt
  pay banks
• the crash didnt cause the depression but it
  shook consumer confidence

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Causes of the Great Depression
Cycle of disaster one disaster in the economy
triggered another -stock market crash -ruined
investors -investors cant pay off loans to
stockbrokers -stockbrokers cant pay
banks -banks begin to fail (over 5,000
closed btwn 1929 1932) -no investors
cant buy goods -businesses loose
money -people get laid off -people cant
afford to buy goods, thus overproduction -
people lose their life savings, homes, valuables,
etc.
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