Great Depression What is it? Causes and Contributing Factors
Dec 26, 2015
Great DepressionWhat is it?
Causes and Contributing Factors
• What is a Depression?– Depression – a sharp & sustained decline in economic
activity• Great Depression – longest/worst in economic
history
• Depression did not occur in 1 day - progressive• Oct. 29, 1929 – stock market crashed– Had been steadily growing weaker– Oct. 24 began “panic selling” of stocks– Stock prices dropped 2/3
• Economy reached bottom in 1932
5 causes of the Great Depression
1. Weak economy
2. American business system was unbalanced
3. Poor distribution of purchasing power
4. Debt threatened economy
5. International debts owed, but not being paid
IN your spiral – illustrate these 5 causes!
3 Contributing Factors that prolonged the Depression
1. Banking CrisisBetween 1930-33 over 9,000 banks closedBank deposits not insured & depositors lost $Decline in bank system: reduced amount of $ available
for loans/investmentsFederal Reserve System (controls flow of $ to American
banks) responded slowly1931 raised interest rates (shrinking $ supply further)
Economy bottomed out in 1932GNP declined 25% over last 3 yearsInvestments only 3% of what it was before crashFarm income cut by 2/3’s
2. Unemployment
Reached 25% (1 of every 4 Americans out of work)
Most immediately visible in Midwestex. 50% unemployed in Cleveland, Ohioex. 80% unemployed in Toledo, Ohio
3. The Dust Bowl
Natural disaster that struck middle Americamid 1930’s lower than avg. rainfall from Dakotas to TX
worst areas: panhandle of TX & OK, and parts of Kansas, Colorado & New Mexico
lakes dried, plants withered, animals diedtopsoil so dry that it was blown east in heavy windspeople lost land or ceased to be able to make a living
off of it many moved West b/c they heard of jobs and good crops “Oakies” most worked as low-paid migrant farmers
farmers, despite dust, still produced more than people could buy, prices continued to fall.
Great Depression Images
Dust storms were frequent during the depression; this one occurred in Texas in 1935.
Dorothea Lange's Migrant Mother
depicts destitute pea pickers during the
depression in California, centering on Florence Owens
Thompson, a mother of seven children, age
32, March 1936.
In the early 1930s shantytowns sprang up in cities across the United States, built by people made homeless by the Great Depression. These areas were nicknamed Hoovervilles because their inhabitants blamed United States president Herbert Hoover. This one is in Seattle.
Dwellers in a local Hooverville, Circleville, Ohio
Two small children during the Great Depression- part of a squatter community (known bitterly as "Hoovervilles“)
•What did the man do wrong if he really did save money to help him through the bad times?
•What’s different today from what happened during the Great Depression?
•Do you think it can happen again?