The Great Depression

Period of very high poverty & high levels of unemployment

What is a Depression?

Great Depression: 1929~1941

1920s economy was not as prosperous as it seemed…

A Booming Economy?

Decreasing farm pricesCauses of the Depression

Prices fell when demand decreased after WWI

Farmers couldn’t pay debts & lost their farms

Decreasing farm pricesCauses of the Depression

1930s ~ drought in the Great Plains caused a “Dust Bowl”Migration of

farmers to the West (“Okies”)

Uneven distribution of wealth

Causes of the Depression

Very few rich people and very many poor people

Companies overproduced (people couldn’t afford to buy goods)

Decreased consumer spending in the late 1920s

Causes of the Depression

People could buy on credit…

Credit debt led to less spending and business bankruptcies

1929 ~ Stock Market CrashCauses of the Depression

10/29/1929: Black Tuesday

Stock prices dropped quickly

Marks start of Depression

1929 ~ Stock Market CrashCauses of the Depression

Investors had bought on margin (took out a loan to buy stock)

ResultsLed to bank failures

Many lost life savings

BANKYou start a

savings account

Your money Your

money

Bank invests money

Bank makes loans

Your

m

oney

Profit on

investmentInterest paid to your account

Peo

ple

repa

y lo

ans

You may close your account

BANKYou start a

savings account

Your money Your

money

Bank invests money

Bank makes loans

Your

m

oney

Profit on

investment

Peo

ple

repa

y lo

ans

After the Crash, banks lose $ on

investments

After the Crash, people can’t repay loans

UnemploymentEffects of the Depression

1933 ~ rose to 25%

Effects of the DepressionLoss of homes

Hoovervilles ~ shantytowns

HopelessnessEffects of the Depression