1920s BOOM 1930s BUST

Main Idea:The prosperity of the 1920s seemedlimitless…but 1929 would change

everything for everyone

Created By Mrs. Bedard PVMHS

1920s BOOM! To BUSTThis Week’s Topic:

What were the causes of the Great Depression?

#1: Overproduction

#2: High Tariffs on Foreign Goods

#3: Mistakes were made by the Federal Reserve Bank

#4: 1929 Stock Market Crash

#5: Banks will closeCreated By Mrs. Bedard PVMHS

Where we are at:

Speed Bump1919

CRASH!

Depression

1920sNew Industries

Awesomeness!

Created By Mrs. Bedard PVMHS

What were the causes of the Great Depression?

Election of 1928 Herbert Hoover

How do we know him?

- Lead the food administration (ration) in WWI

“We are nearer to the final triumph over poverty than

ever before!...I have no fears for the future of our

country. It is bright with hope”

Created By Mrs. Bedard PVMHS

Created By Mrs. Bedard PVMHS

Cause #1: Overproduction

Created By Mrs. Bedard PVMHS

How did LACK PANTS cause Overproduction??

Created By Mrs. Bedard PVMHS

Cause #1: Overproduction

Why did this happened?

What was the result?

Created By Mrs. Bedard PVMHS

In the 1920s Companies Overproduced

= too many goods

Companies aren’t selling =not making money

Layoffs = peopleLose their jobs

CAUSE:

Americans are unemployedthey can’t afford to buy anything

businesses start to close.

RESULT:

Created By Mrs. Bedard PVMHS

By 1933=25% were

unemployed!

Created By Mrs. Bedard PVMHS

Created By Mrs. Bedard PVMHS

Who did overproduction effect the most?

Created By Mrs. Bedard PVMHS

THE DUST BOWL

“Quiet Depression” Farmers were poor even before 1929 stock market crash.

Why?1.) During WWI, farmers went into debt trying to keep up with demand. Gov. encourages farmers to plant more so soldiers would have food. = by 1920 overproduction!

2.) Also, over planting destroyed the soil. Crops stopped growing…farmers could not afford to plant new crops. Fields of dirt laid unplanted.

3.) AND in 1932 = drought…Dakotas to Texas =Great Plains become known as the Dust Bowl.Created By Mrs. Bedard PVMHS

The Dust Bowl

Location: U.S.A, The Great Plains (Nebraska, Oklahoma, etc.)

Created By Mrs. Bedard PVMHS

Created By Mrs. Bedard PVMHS

Created By Mrs. Bedard PVMHS

Created By Mrs. Bedard PVMHS

1920s BOOM! To BUSTThis Week’s Topic:

What were the causes of the Great Depression?

#1: Overproduction

#2: High Tariffs on Foreign Goods

#3: Mistakes were made by the Federal Reserve Bank

#4: 1929 Stock Market Crash

#5: Banks will closeCreated By Mrs. Bedard PVMHS

#2: High Tariffs

Tax on foreign products.

Purpose = make US goodsCheaper so people buy American

Created By Mrs. Bedard PVMHS

American goods neededTo sell!

Hawley-Smooth Tariff = increasedthe cost of foreign goods so that

people would buy American made.

CAUSE:

Foreign nations raised the tariff on American goods in their countries.

Now USA can’t sell goods at homeor overseas!.

RESULT:

Created By Mrs. Bedard PVMHS

#2: High Tariffs

Remember it’s the Hawley-Smoot Tariff!!

Created By Mrs. Bedard PVMHS

#3: Mistakes made by Federal

Reserve Bank

What is the Federal

Reserve Bank?

Boston’s BranchCreated By Mrs. Bedard PVMHS

#3: Mistakes made by Federal

• Mistake #1: In the 1920s = Federal Reserve Bank

kept interest rates on loans really low.

Problem??

- Too many people borrowed money, it was cheap.

- Went into debt.

Created By Mrs. Bedard PVMHS

#3: Mistakes made by Federal

Mistake #2: Once the Depression hit in the1930s =

Fed Bank raised all the interest rates on loans

Problem???

- When people lost their jobs, could not pay back loans.

- Now they needed to borrow $$ but couldn’t afford to.

Created By Mrs. Bedard PVMHS

Money was cheap to borrowthroughout the 1920s…

People borrowed too much

Federal Reserve Bank then raised the cost to borrow money…

CAUSE:

In the 1930s people will needTo borrow money! (Lost their jobs)

BUT now it is too expensive to borrow.

RESULT:

Created By Mrs. Bedard PVMHS

Things you should knowabout using Credit!

Created By Mrs. Bedard PVMHS

Debit v Credit??

Created By Mrs. Bedard PVMHS

#4: 1929 Stock Market Crash

Created By Mrs. Bedard PVMHS

#4- 1929 Stock Market Crash

How does the stock market work?

A)Company opens

B)They allow you to buy “stock” (a piece of the company) = they use your money to help company grow (buy things/make things)

C)Company does well = they pay you!

Company does bad =

Created By Mrs. Bedard PVMHS

Why did the Stock Market Crash in 1929?

1.) 1920s Stock Market Confidence leads to a

BULL MARKET:

#4: 1929 Stock Market Crash

Created By Mrs. Bedard PVMHS

Why did the Stock Market Crash in 1929?

2.) In the 1920s people started borrowing money to buy stocks = buying on margin

• Problem??

• 3.) Margin Call: once market started to stall = people who borrowed money had to sell quick in order to pay back the loan.

RESULT=PANIC!

Sell, sell, sell

#4: 1929 Stock Market Crash

Created By Mrs. Bedard PVMHS

October 29 1929 – Black Tuesday

Created By Mrs. Bedard PVMHS

Created By Mrs. Bedard PVMHS

Created By Mrs. Bedard PVMHS

#5: Banks Closed

Clip from It’s a Wonderful Life

Created By Mrs. Bedard PVMHS

#5: Banks Closed / All Savings Were Lost!

1.) Banks invest your money:- Loans to other people/businesses- Stock market

2.) When people stopped paying back loans they stopped paying your back your savings!

3.) Caused Bank Runs = people ran to their bank to withdraw money before it was gone.

4.) Banks closed their doors…had no money!Created By Mrs. Bedard PVMHS

It’s a Cycle!

Loss ofBuyer

(unemployed)

Overproduction

Raise Tariffs

Loss ofBuyer

(no trade)

Mistakes Federal Bank

Loss ofBuyer

(savings gone)

Stocks CrashLoss ofBuyer

(no credit)

Banks Close

Loss ofBuyer

(in debt!)

Created By Mrs. Bedard PVMHS

1.) Why is laissez-fair good for economic growth? How is laissez-fair bad for economic growth?

2.) How did the car industry help create an awesome economy in the 1920s?

3.) How did purchasing items on credit effect the consumer society in the 1920s?

4) Why did people start to lose their jobs in the 1920s

5.) Why was the Hawley-Smoot Tariff a cause of the Great Depression? Created By Mrs. Bedard PVMHS