the great depression causes.pptthe great depression was on its way… summary: causes of the great...
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The Optimism of the 1920s Concealed Problems in the
American Economic System
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Question: How Strong was the American Economy in the
1920s?
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The United States Economy Grew During WWI
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United States’Industries
Telephone Sewing Machine
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United States’ Industries
Radio Ice Box
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Everyone Wanted the New Inventions, so Radios and Washing
Machines Were Bought with “Pay As Machines Were Bought with “Pay As You Go”.
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CarsIn 1916 the United States produced one million cars.
In 1920 the United States produced fourmillion cars.million cars.
In 1929 the United States produced 26 million cars.
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What is Another Word for “Pay As You Go”?
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Advertising
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Many people chose to invest in the stock market.
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Buying on Margin
• Many people who wanted to buy stocks soon began to buy on margin.
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• In 1927 the average price of a stock was selling at $85 a share.
• By 1929 the average price of a stock had grown to $216 a share.
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Summarize
• In your own words, summarize how buying stocks on margin was a problem. buying stocks on margin was a problem.
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Question: Why did the Stock Market crash?
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• In 1929 only about one out of every ten Americans even owned stocks.
• Most Americans making about $1,000 a year. They simply could not afford to buy stocks.
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Banks invested the money people had saved in them in the stock market. They didn’t
need to ask the investors’ permission.
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• In the 1920s this was perfectly legal.
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The Crash
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The Crash
• With the value of stocks now at pennies on the dollar, the money supporting businesses across America disappeared.businesses across America disappeared.
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The Crash
• When the money supporting these businesses disappeared, so did the jobs they provided.they provided.
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• Between 1929 and 1932 more than 100,000 businesses closed.
• All those jobs were gone…
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• This created a run on banks as people panicked and rushed to pull out their life savings.
• With no money to operate, banks began to fail.to fail.
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In 1929 630 banks closed their doors.
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In 1930 1,352 banks closed their doors.
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In 1931 2,994 banks closed their doors.
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• Because there was no banking insurance, everyone who had money in the bank simply lost it.simply lost it.
• More than $1,000,000,000 in savings simply disappeared.
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• By 1932, the United States was producing half of what it had before the crash.
• One out of every four people was unemployed.
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The Great Depression was on its way…
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Summary: Causes of the Great Depression
1. People over-speculated on stocks, using borrowed money that they could not repay borrowed money that they could not repay when stocks crashed
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Summary: Causes of the Great Depression
2. The Federal Reserve failed to prevent the collapse of the banking system
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Summary: Causes of the Great Depression
3. High Tariffs Discouraged International Trade
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$150.00
Made in Great Britain, 1930