Causes of the Great Depression 1929 - 1941

1
Causes of the Great Depression 1929 - 1941

• What is a depression?
• Stock Market Crash not a cause!
• Stock Market Crash October 29, 1929
• marks the beginning of the Depression.

2
Conditions of the Great Depression

• Longest, most severe economic crisis in the
  nations history.
• The entire population is affected.
• Ends with World War II production.

3
Conditions of the Great Depression

• 1930-1933 9,000 banks close.
• Depositors lose over 2.5 billion.
• GNP declines by 25 .
• Investment 3 of what it was in 1929.
• Farm income cut by 2/3.
• 25 unemployment

4
High Amount of Internal Debt

• Easy Credit created more debt than many
  individuals could handle.
• Lack of savings.
• Complicated by unemployment.

5
High Unemployment

• Nearly 1/3 of the population out of work.
• 1932 80 of Toledo, Ohio
• No spending going on to stimulate the economy.
• Adds to the effects of other causes.

6
High Amounts of External Debt

• Tariff
• High tariffs hurt trade.
• Made the banking crisis much worse.

7
Banking Crisis

• Bank Failures
• Year failures / total number of banks
• 1920 168 / 30,909
• 1929 659 / 25,568
• 1931 2,294 / 22,242
• 1933 4,004 / 14,771
• Bank failures hurt everyone.

8
Unbalanced Economy

• Some industries were strong some were very weak.
• Farm income 223
• Other incomes 870
• False sense of security created by Stock Market.
• Some industries carried the whole economy
  throughout 1920s. (car, construction)

9
Unregulated Market

• Buying on the Margin.
• Banks were not regulated.
• Deposits were not insured.

10
Farm Crisis

• World War I production levels created a surplus
  of agricultural products.
• Mechanization added to the surplus.
• Greatly weakened over all economy.
• 26 of population in agriculture.
• Adds to unemployment / banking crisis.

11
Dust Bowl

• Natural disaster that added to the farm crisis.
• Central plains hit by severe drought.
• 100,000 lost their farms.
• Many fled from the plains to California.

12
THE NEW DEAL

• Domestic Policies of Franklin Delano Roosevelt.
• Liberal Policy
• Economic and Social Reform
• Based on Economic Theories of John Maynard Keynes
• Pump Priming

13
Franklin Delano Roosevelt

• Elected to Four Terms
• Liberal- Democrat from New York
• Wealthy
• Handicapped
• The only thing to fear is fear itself.

14
THE NEW DEAL

• TVA
• FDIC
• CCC
• AAA
• Social Security Act of 1935
• Fair Labor Standards Act of 1938