HANDOUTS The Causes of the Great Depression

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Secondary U.S History

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Lesson Plan: The Causes of the Great Depression

Objective Students will be able to analyze the causes of the Great Depression by completing a storyboard.

Preparation Copy 1-per-student, back-to-back: The Economic Collapse Fill-In Lecture (pages 1 & 2) Copy 1-per-student: The Great Depression Story

Anticipatory Set Pair-Share

Instruction 1. Pass out the WORKSHEETS to students. 2. Review the PowerPoint Presentation. The presentation

will prompt the actions for the students. Students will complete Cornell Notes. For homework, students will complete the questions.

3. When you see , click the icon to play YouTube film clip. If you don’t have access to YouTube at your school site, you can download YouTube video’s for free. Simply Google, “download YouTube video’s”.

Wrap-up 1. Students will complete The Great Depression Story

Supplies 1. WORKSHEET: The Great Depression Story 2. WORKSHEET: The Economic Collapse Fill-In Lecture 3. Power Point Presentation: The Causes of the Great Depression 4. Access to YouTube.com

Time Approx. 1 Hour

Lecture Notes: THE CAUSES OF THE GREAT DEPRESSION

The Postwar Economic Boom

Twenties’ Prosperity

During the 1920s, Americans believed that in the U.S. would be eliminated. Due

to increased earnings, many Americans had more money to spend on luxury goods such as

radios and . By 1929, the U.S. stock market was at an all-time high, over

billion shares of stock was traded.

The Depression Foreshadowed

By late 1929, began to surface. was on the rise, were

losing their land, and prices were dropping. The number of Americans living in

increased , and people could afford luxury goods. On October 29, 1929 the stock market crashed.

Causes of the Great Depression

1. laissez faire in domestic affairs. 2. stock speculation 3.

banking institutions 4. of goods 5. of the farming industry

6. distribution of wealth.

Cause #1: Republican Economic Policies

Domestic Economic Policies

Republican Presidents Calvin Coolidge and Herbert Hoover believed in “ ” economics. They believed that economic policies that benefited business and the

wealthy would eventually “trickle down” to Americans. For example, if the gov-

ernment gave tax cuts to the wealthy they would that money into the economy

for the benefit of all. However wealth did not trickle down. The wealthy spent the money on

expanding their work facilities and it for themselves.

International Economic Policies

After WWI, European countries were in debt to the U.S and began to on their

loans. The U.S. placed high on foreign goods to discourage Americans from

buying their merchandise. This meant that European goods would not be sold here causing

Europeans to more money and further on their loans.

Cause #2: Real Estate and Stock Speculation

Unchecked Stock Market Speculation

Speculation is when a person or organization makes a risky on the hopes of

Page 1

Review Activities

Create an illustration to depict the prosperity of the 1920’s.

Understanding the policies of

Conservative Republicans, What do

you think are economic policies of

Liberal Democrats?

If you were a stock analyst what signs

would make you predict that the stock

market was going to eventually crash?

getting . Investors believed that the stock market would go in-

definitely and that companies’ profits would continue to _. So, investors specu-

lated which companies’ stocks would rise and then bought large amounts of _. They

would then turn around and the stock for a higher price, making a easy

profit. The value of a company’s stock became artificially and did not corre-

late to the companies’ actual worth.

Stock analysts began to predict the market was headed for a fall. They warned that stock prices

could not continue to rise at such an rate and that the were

exceeding the stock’s actual worth.

Cause #3: The Stock Market Crash and the Banking Industry Collapse

The 1929 Stock Market Crash

In late 1929 investors began selling their stocks while they could still get a from

them. As investors began selling, prices began to fall. On 10/29/29, or

What could have prevented the stock market

from crashing?

“ ” investors flooded the NYSE with at any price orders. By the end of the day, investors lost $ billion. By October’s end, the stock market was in

and the Great Depression had officially .

Unregulated Banking Institutions

Banks collapsed because of the Republican policy of and banks’ over-

extension of to stock investors. The government did not prevent banks from specu-

lating depositor’s on high risk ventures. It did not also demand that banks keep a

certain percentage of money on and available. Therefore, when banks folded after

the stock market crash, their customers had no way of getting their _____. http://www.teacherspayteachers.com/Store/Chalk-Dust-Diva

What regulations could have been in place

to prevent the banks from closing?

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Lecture Notes: THE CAUSES OF THE GREAT DEPRESSION Page 2

Banks permitted investors to buy stocks on large margins of . For example, if an

investor wanted to buy $20,000 worth of stock, he only had to put up % ($2,000) of his

money. The bank would then loan the remaining 90% or $18,000. The bank would seize the

stock if they could not repay the loan as if it were . Banking officials thought that

stocks were as good as money and would not go _.

The Banking Industry Collapse: Results

1. Families that played the stock market lost all their . 2. Investors who had

bought stocks on margin had to sell them at a fraction of their original price. This meant that

they could not the bank the amount it had loaned him. This meant that the bank

could not replace its money, which it had used to fund the speculator’s loans.

So, even people who did not invest in the stock market lost their money. 3. Unemployment

increased which meant that people began to on their mortgages. This meant that

banks lost even more money. By 1932, of the nation’s banks closed.

Review Activities

The bank is failing. How do you think the

depositors trying to get their money are

feeling?

How do you think bank failures affected the

nation?

Cause #4: Overproduction

Industrial Goods

demand for goods was high after WWI. Americans wanted to enjoy life after

the horrors of WWI. enticed Americans to purchase more and more goods. As

a result, business owners continued to the market with a huge supply of goods. By

1929, there were more products available than people to them.

Agricultural Goods

American farmers during WWI because they provided food to the U.S. and

Europe. After the war, farmers mechanized farming techniques to increase .

However, Europe did not need American food anymore resulting in a of

crops. Farmers were stuck with a of crops they could not sell, or could only sell

for a price.

Create Questions:

Level 1: What_______________________

____________________________________

____________________________________

_________________________________

Level 2: Why_________________________

____________________________________

____________________________________

____________________________________

Level 3: Predict_______________________

____________________________________

____________________________________

____________________________________

_______________________ Cause #5: The Toll on the Farming Industry

The Farming Industry Decline

During the 1920s, farmers borrowed heavily from banks to pay for new .

When farmers could not sell their crops, they could not their . Farmers defaulted on

their loans and lost their farms to bank . The banks would then

try to the farm, but their were few that could afford to buy it. This meant that the

bank lost even more money.

The Dust Bowl

A severe caused the soil to turn into . Farmers and their families

fled the Dust Bowl and headed west to in search of employment. People

referred to these migrating farmers as “ .” Unable to pay for adequate housing,

the Okies were forced to live in .

Create a picture of the Dust Bowl

Cause #6: Unequal Distribution of Wealth The Gap Between the Rich and Poor

During the 1920s, the gap grew and the of wealth grew unequal. In 1929, % of the population owned % of the nation’s wealth. _% of U.S families

lived on or below the poverty line. Workers struggled to survive in the 1920s. Companies re-

placed workers with that produced goods and . Corpo-

rations rarely passed profits onto workers with wages. Instead they kept wages

low and used the money to improve their facilities.

Purchasing Power is Lost

and businesses tried to encourage spending by allowing people to

buy things on credit. But Americans fell deeper and deeper into as they pur-

chased items they could not afford and paid the high interest on them. By 1929, Americans

could not afford necessities let alone goods. A small handful of

wealthy Americans could not fill in the gap for the entire _.

dropped and companies began to

How would a gap between the rich and

poor contribute to the economic collapse of

the 1920s?

Wrap-Up question: Which cause of the

great depression was the most significant

and why?

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Directions: Using the pictures, create a story about the Great Depression.

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