Causes of the Great Depression - Mr. Albiniak
Transcript of Causes of the Great Depression - Mr. Albiniak
Causes of the Great
Depression
1920’s Economy 1. Describe the Economy
of the 1920’s.
2. Are there any potential problems with America’s economy?
Target
Identify and describe the long term and short term causes of the Depression.
Industry
Textiles, steel, railroads barely made profit
Why?
WWI, increased demand
War over???
Lowered demand
Housing decreased (most important indicator)
Farmers
WWI increased demand
After war?
Lowered Demand
Farmers couldn’t pay off debt
Lost their farms
Farmers con’t
Government tried to help
Passed McNary-Haugen Bill
Federal Price Supports
Prices of food set by government at a fair value
Congressed passed the Bill twice Coolidge vetoed it twice
Consumers
American’s began to buy less
Why?
Rising prices
stagnant wages
Too much credit
Led to people living beyond their means
Distribution of Wealth Large gap between the rich
and poor
$1,500 a year = decent standard of living
½ the country was making less than that!
Rich did well
Income of the wealthiest 1% rose by 75%
Wealthiest 5% made up 1/3 of the nation’s wealth
Most American’s could not fully participate in the economy
New President
After Coolidge
Herbert Hoover
Republican
Ran on “America’s Prosperity”
Stock Market
Define “Investing”
1920’s stocks rose (“Bull Market”)
Speculation
Risky business transactions on the chance of a quick profit
Stock Market Crash
People began buying Stock on Margin
Paying a small amount up front and borrowing the rest
September 1929, market peaked then started to decline
People panicked and started to sell
The bottom fell out
Black Tuesday
October 29, 1929
Stock market lost 30 billion dollars
Began the Great Depression
1929-1941
Economy in severe decline
Millions out of work
Unemployment goes to 25%
Banks couldn’t cover loans
World Effects U.S. needs $
Hawley-Smoot Tariff Act
Raised tariffs to highest level ever!
No one bought foreign goods
Foreign countries retaliated with tariffs
No one bought American goods
Sank deeper into the depression
Representative W.C. Hawley, and Senator Reed Smoot shake hands in agreement on new tariff bill