The GreatDepression
Section 11.1: The Causesof the Great Depression(Appleby 400-405)
Agenda for Today
•Great DepressionSlide Show
•PresentationsMonday (Bonus Army& Lindberg)
•Homework
–Finish Letter toparents
•Write a captionfor this picture.
–Who is she?
–What is goingon in thepicture?
–What is shethinkingabout?
The Causes of the Great Depression
1918191919201929
Treaty ofVersailles
FrederickTaylor’sScientificManagementof Business
Hardingpromised“Normalcy
Buying onCredit
HenryFord’sAssemblyLine
HooverElectedPresident
Laissez-Faire
Coolidge: Thebusiness ofAmerica isbusiness
StockMarketCrashes
Industrial Productivity Soars
ObjectivesAt the end of this lesson you should be able to:
•Define theGreat Crashof 1929 andlist at least 3causes
•Define theGreatDepressionand list 4causes
The Roaring Twenties
•The RoaringTwenties wascharacterized by abooming economy, alaissez-fairegovernment, the riseof jazz, flapper girls,speakeasies,organized crime anda general disregardfor tradition. But thencame …
Fast forward to 1933
What happened to America?
The Crash of 1929
Describe the Bull Market of the late 1920s.
•Stock Market
–place where shares (stocks) of corporations orbonds (IOUs) are sold to investors
•Bull Market of the 20s
–stock prices continuously rose during 20s
–Attracted many inexperienced investors to risktheir savings in stock market
•10% of Americans owned stock by 1929
•Buying on Margin
–Practice of the 20s where investors borrowedmoney from stockbroker to buy more stock
•Speculation
–Some investors “gambled” their money in thestock market
–Ignored the true value of the stock and boughtit hoping the bull market would continue
What was the Great Crash?
•A massive drop in the value ofstocks of corporations sold on theNew York Stock exchange
•Known as Black Tuesday-October29, 1929
•Dow Jones Industrial Stocks lost$15 billion of their value
–Dow
•average value of 30publically owned “blue chip”stocks
•Considered a “thermometer”measuring the health of theeconomy
•Crash considered beginning of theGreat Depression
ClickforClip
Let’s Review
•Why were the 20’s called the Roaring 20s?
–The economy grew at rapid pace
•Why did it roar?
–Laissez-faire government
–New production techniques
–Credit
•Describe the risky behavior of investing in the StockMarket during the 20s’s.
–Buying on Margin
–Speculation
•What happened in Oct. 1929?
–Stock Market crashed
–Value of shares of corporations sharply dropped
Answer
Answer
Answer
Answer
How did the Crash affect Banks?
•Banks engaged in risky business behavior
–loaned 6 billion to stock speculators
–Invested savings deposits in Stock Market
•Crash
–Caused speculators to default
–Lost savings of depositors
•Banks
–began to cut back of giving loans to legitimatebusiness
•Greatly reduced business activity
–Many banks began to close
•Depositors lost all of their savings
•Bank Run
–Panicked depositors rushed to the banks towithdraw their money before the bank closed
–10% of banks in US collapsed by 1932
What was the GreatDepression?
•Great Depression
–period of severelyreduced economicactivity from October of1929 to 1939
–Characterized by highunemployment,agricultural disaster, anda general loss of hope ofachieving the AmericanDream
–Began with the StockMarket Crash of 1929
–Ended in 1939 with startof WWII
The Crash of ‘29
What were the causes of the Great Depression?
•Uneven Distribution of Income
–Businesses overproduced during the 20s
•Industrial productivity soared
–Rose 32% during 20s
–Workers wages remained low
•Only rose 8%
–2, 500 = avg. annual income
•could not afford to buy enough products
–Reduced consumer spending led businesses to lay off workers
–Led to Vicious cycle
•Decline in foreign trade
•Raised taxes in imports to record levels
•Wanted to protect American business
•But lead to a sharp decline in foreign trade
•Mistakes of the Federal Reserve
–Failed to curb risky inventing during 20s by keeping interest rates low
–When Depression came it raised interest rates
•Made it harder for businesses to do business
0:54-6:18
Sales Decline
Businesseslayoff workers
Consumersspend less
Ticket Out10 points
•Pretend that you’re a immigrant who came tothis country during the Industrial Revolution.You just received a letter from your worriedparents back home.
•Write a letter to them in which you explain thecauses of “The Crash” and your reaction to it.
–Remember
•it’s circa 1929-1930
•Include at least 3 specific content-oriented details
•Due Monday