causes of the great depression

Yee Haw!!

President Herbert HooverFrom a speech given October 22, 1928:

….When the war closed, the most vital of issues both in our own country and around the world was whether government should continue their wartime ownership and operation of many [instruments] of production and distribution. We were challenged with a... choice between the American system of rugged individualism and a European philosophy of diametrically opposed doctrines doctrines of paternalism and state socialism.

…. our American experiment in human welfare has yielded a degree of well-being unparalleled in the world. It has come nearer to the abolition of poverty, to the abolition of fear of want, than humanity has ever reached before. Progress of the past seven years is proof of it....

Causes of the Great Depression

Speculation and Crash• Bull Market• Buying on the Margin• Speculation• Black Thursday• Black Tuesday• Bear Market

Speculative bubbles from the present?

• Bank Runs

Yee Haw Stock Market Crash 1929Students selected the “Go for the Gold” option

Some students bought bonanza chips

Point values decreased dramatically, all but those who held tight lost everything they had and sometimes more

Even those who played it safe lost their credit

Overproduction, Underconsumption, and Concentrated Wealth

• Mass production• Overproduction• Underconsumption• Wealth Gap• Downward spiral

Speculative bubbles from the present?

Businesses went bankrupt

UnemploymentCannot afford to buy goods

Profits shrank

Government Assistance?• Tariffs worsen things• Hawley – Smoot Tariff Act 1929

The Stock Market Crash of 1929

The Banks The Borrowers The Businesses

The bank gives a $100 loans for $20 up front. The bank has

$20.         

The bank gives a $150 loan for $30 up front. The bank has

$50

The recipient takes a $100 loan from the bank. The recipient has $100.

The recipient buys two shares of stock for $50 each. The recipient has $0. Buying with loaned money is referred to as buying on the margin.

Speculation causes stock prices to rise to $75.

 The recipient takes another $150 loan. And

buys two more shares of stock. The recipient has $0.

European investors get nervous and start selling their stock investments. As prices fall,

they gain momentum. The recipient attempts to sell all four of his stocks for $25 each, for a total

of $100.

The business sells two shares of stock for

$100 and invests it in land. The businessman

has $0

The land that the business bought was

overpriced because of speculation and

becomes worthless. The business no longer has enough money to

operate.

http://www.youtube.com/watch?v=Wil1ePlT1xs&feature=relmfu&safe=active

1. How did the Great Depression effect the characters in The Grapes of Wrath?2. How did the characters deal with these circumstances? What did they do?