depression causes dr tech class
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Causes of the Great Depression with opening viedoTRANSCRIPT
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The Roaring 20’s• Fun times reigned
– Dancing– Flappers– Drinking
• The new concept of “credit”
• People were buying:– Automobiles– Appliances– Clothes
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The 1920’s “Roared”! But… The 1920’s “Roared”! But… the economy grew “sick”the economy grew “sick”
• Many industries start to Many industries start to suffer suffer
• Farmers get hit the worst Farmers get hit the worst with the economic slow with the economic slow down down
• People buy more on People buy more on credit and build up debtcredit and build up debt
• Income becomes very Income becomes very unbalanced unbalanced
• The stock market soars The stock market soars as people speculate and as people speculate and buy on margin buy on margin
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Farms and factories overproduced beyond the demand.
Overproduction / Reduction in PurchasingOverproduction / Reduction in Purchasing
People had little or no
money to spend.
Demand forgoods fell.
Businesses cut production
Workers sufferedfrom wage cuts
and lay offs.
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A farm is being sold at a foreclosure sale in Iowa. Military police were on hand to keep farmers from disrupting the auction. ca. 1935.
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What’s wrong with buying What’s wrong with buying on credit???on credit???
• Credit systemCredit system– People didn’t really People didn’t really
have the money they have the money they were spendingwere spending
• WWIWWI– The U.S. was a major The U.S. was a major
credit loaner to other credit loaner to other nations in neednations in need
– Many of these nations Many of these nations could not pay us backcould not pay us back
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The Stock MarketThe Stock Market• People bought People bought
stocks on stocks on marginsmargins– If a stock is $100 If a stock is $100
you can pay $10 you can pay $10 now and the rest now and the rest later when the later when the stock rosestock rose
• Stocks fallStocks fall– Now the person Now the person
has less than $100 has less than $100 and no money to and no money to pay backpay back
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Stock Market CrashStock Market Crash
• On Tuesday, October 29, 1929, stock prices plummeted.
• This became known as Black Tuesday.
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• People that bought stocks on margin (credit) could not repay their debts.
The Philanthropist by, Herb Block (Dec. 5, 1930)
During the Great Depression approximately 25% of the workforce was unemployed. People who lost their jobs began selling five-cent apples on the streets of American cities, providing a symbol of the economic hardships of the era.
• People that had invested their savings in stocks had little or nothing left.
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Bank FailuresBank Failures
• When the stock market When the stock market crashed, people could not crashed, people could not repay their loans to the bank.repay their loans to the bank.
• Banks were involved in stock Banks were involved in stock speculation and lost billions.speculation and lost billions.
• Therefore, banks couldn’t Therefore, banks couldn’t give depositors their money give depositors their money and banks closed.and banks closed.
• Many people lost their life Many people lost their life savings.savings.