The Great Depression Begins I. Reasons for Depression A.Farmers producing too much B.Overproduction from WWI C.Went into debt and farms failed D. Industry decline in demand Still producing with no buyers E. Rich got richer, poor got poorer F. Debt increases buying on credit II. The Market A.1920s prices rose B.Problems arose in late 20s: 1.Speculation Risky business transactions hoping to get rich quick Increases debt ratio Video Clip 2. Buying on Margin Paying a percentage of stock up front and borrowing rest This worked as long as prices rose III. The crash A.Panicked investors unloaded their shares B.Black TuesdayOct. 29, Bottom fell out of market Due to people and corporations frantically selling their stocks before prices dropped even lower Video Clip IV. Financial Collapse A.Americans panicked - withdrew money from banks 1.banks close 2.Banks not insured by Fed. Govt. -lost their life savings Listen to FDRs explanation of bank closures, given in his first radio address (March 12 th 1933) V. Workers A.1 out of 4 workers didnt have a job B.Those who kept jobs had to accept pay cuts & reduced hours VI. Effect on America A. Extensive Poverty B. Joblessness / Homelessness C. Bank Closures D. Business Closures E. Distrust in Economy F. Disrupts Agriculture