Essential Question:

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• Essential Question
• What were the causes of the Great Depression?
• Warm-Up Question
• Think about the changes that took place in
  America in the 1920s. In what ways were these
  changes good? Bad?

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Causes of the Great Depression

• The 1920s were a decade of consumer spending
  the economy looked healthy on the surface
• Income did increase in the 1920s, but there were
  some severe problems with the U.S. economy
• In October 1929, the Roaring Twenties came to
  an end the Great Depression beganwhy?

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Group Activity What caused the Great Depression?

• In teams, determine what factors contributed to
  the Great Depression
• Examine the documents provided complete the
  chart in your notes
• After examining all documents, try to group the
  documents into categories
• When finished, create one paragraph that explains
  why the depression beganbe prepared to discuss

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Causes of the Great Depression A
Distribution of Wealth in the 1920s An income
of 2,500 per year was considered the
minimum amount needed for a decent standard of
living
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Causes of the Great Depression B
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Causes of the Great Depression C
Benefits Risks of Buying Stock on Margin
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Causes of the Great Depression D
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Causes of the Great Depression E
Corporate Profits for Coal and Railroad
Industries, 1920-1930
Profits for Coal Mining
Profits for Railroad Companies
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Causes of the Great Depression F
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Causes of the Great Depression
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Causes of the Depression

• Weak Industries
• Mass-production of consumer goods led to
  overproduction
• People did not need as many appliances cars by
  the end of the decade (under-consumption)
• Railroads, textiles, steel, coal mining,
  construction were barely profitable

Traditional industries faced new competition in
the 1920 Cars, synthetic clothes, natural gas
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Overproduction of Consumer Goods
Too much inventoryNot enough buyers
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Traditional industries suffered in the 1920s
Corporate Profits for Coal and Railroad
Industries, 1920-1930
Profits for Coal Mining
Profits for Railroad Companies
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Causes of the Depression

• Depressed Farming
• The end of WWI led to a decline in demand for
  agricultural products
• Too much food led to a 40 drop in crop prices
• Farmers could not pay back loans many had their
  farms foreclosed
• Some rural banks failed

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Causes of the Depression

• Credit
• Many Americans used easy credit to live beyond
  their means
• By buying now paying later, Americans
  generated large debts
• As a result, Americans cut back on spending by
  the end of the decade

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Americans bought goods on credit did not have
much in savings accounts
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Causes of the Depression

• Uneven Division of Wealth
• Despite rising wages, the gap between the rich
  poor grew wider in the 1920s
• 70 of Americans were considered poor
• Most of the spending in the 1920s was done by 30
  of the population

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Distribution of Wealth in the 1920s
An income of 2,500 per year was considered the
minimum amount needed for a decent standard of
living
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Causes of the Depression

• The Stock Market
• In the 1920s, the stock market soared people
  speculated with stocks
• Many people borrowed money to pay for stocks,
  called buying on margin
• There was no regulation of the market some
  companies altered stock values to raise profits

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Buying Stocks on Margin
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Causes of the Depression

• The Stock Market
• On October 29, 1929 (Black Tuesday) the stock
  market crashed
• People rushed to sell, prices plummeted,
  investors lost 30 billion
• Speculators who bought on the margin, could not
  pay off their debts
• Many lost their savings

The stock market crash in October 1929 marked the
beginning of the Great Depression
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The U.S. stock market had only about 3 million
active buyers sellers but the spillover into
the greater economy led to the Great Depression
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Causes of the Depression

• Bank Failures
• After the crash, people tried to withdraw their
  money from banks
• In 1929, 600 banks failed due to lack of funds
  the inability to recoup loans
• The failure of the banks left many Americans
  without their life savings

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Bank Business Failures, 1928-1933
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Causes of the Depression

• Foreign Trade
• Post-war debts in Europe high protective
  tariffs in America limited international trade
• The Great Depression led to a global depression
  in Europe, Asia, Latin America
• World trade fell by 40

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A Global Depression
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Causes of the Depression

• Consumer Confidence
• Millions of Americans lost their jobs or took pay
  cuts to keep jobs
• The lack of confidence in the future kept people
  from spending money
• The lack of spending made the depression drag on
  until the 1940s

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Unemployment Consumer Spending, 1928-1933
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Effects of the Great Depression

• The Great Depression led to a collapse of the
  U.S. financial system
• 25,000 banks 90,000 businesses failed by 1933
• Unemployment peaked at 25
• Many Americans lost their homes
• America had record poverty suicide rates
  Fathers abandoned families Healthcare declined
• Private charities created soup kitchens
  breadlines to help

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Soup Kitchens Breadlines
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Mortgage Foreclosures
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Poverty in America
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The Dust Bowl

• The effects of the depression were made worse by
  the Dust Bowl
• Heavy droughts over-farming in the West
  destroyed the Plains
• In the early 1930s, windstorms swept away loose
  soil
• Farmers in the Plains left their farms searched
  for work or better land in West coast states

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The Dust Bowl (1931-1939) worsened the effects
of the Depression
Areas Affected by the Dust Bowl drought
Okies Arkies
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Group Activity

• In teams, play the role of an economist try to
  bring the Great Depression to an end
• Examine each of the Economic Briefing sheets
  provided choose a solution based upon the
  choices provided
• After examining each briefing sheet, choose a
  presenter discuss as a class
• When finished, examine Conservative, Liberal,
  Radical Solutions sheet examine the reading on
  how President Hoover responded to the Depression

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President Hoovers Response

• President Herbert Hoover initially rejected bold
  govt action in response the depression
• He tried to reassure Americans that prosperity
  would return
• He called for volunteerism rugged
  individualismAmericans need to work together to
  end the depression

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President Hoovers Response

• As the depression worsened, Hoover called for
  more govt action
• The govt issued relief checks to help the
  unemployed
• The Reconstruction Finance Corps (RFC) loaned
  money to failing businesses
• Building projects like Hoover Dam
• These efforts did not end the depression many
  citizens lost faith in President Hoover

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Employment Agencies Relief-Check Lines
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Americans who lost their homes, lived in
shantytowns nicknamed Hoovervilles
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Conclusions

• The Depression of the 1930s came as a shock to
  Americans
• When the stock market crashed in 1929, businesses
  closed millions were unemployed
• Americans lost faith in Hoover began looking
  for new leadership an more active govt to
  solve their problems