impact of the great depression part1
TRANSCRIPT
The Great Depression
Economic weaknesses and unequal distribution of wealth• No middle class• 60% of families could not afford consumer goods • Many who did buy consumer goods did it on
credit/hire purchase• The richest owned all consumer goods they
wanted• Supply not equal to demand• Credit cards created false demand
Overproduction
• By 1929, Industry was running out of customers• Everyone who wanted a fridge and a freezer
now had one• The market was saturated• Due to overproduction, there was a growing
surplus of manufactured goods
Laissez - Faire
• Republican Party policy was to « leave it to the market »• Federal government policy was
not to get involved with the economy and let the market sort everything• Non intervention
Speculation•Many people became speculators• Shares were bought 'on the margin'
(paying only 10% of the share value, the rest to be paid from profit on sale). • People were BUYING, BUYING, BUYING
stocks in businesses that were not worth the amounts they were paying
Americans perceived the stock market as a possible rags to riches
Panic!!!• Banks were loaning out more money than what
peoples’ investments were worth.• Losses of confidence in March and September
but banks reacted by mass-buying shares. • Thursday 24th October 1929, nearly 13 million
shares were sold in a panic, and prices crashed. • Banks stopped buying shares.• Speculators panicked at being stuck with huge
loans and worthless shares. •
Thursday, October 24, 1929
• 29th October 16 million shares were sold.•many investors who bought stocks, lost
everything!
The Stock Market Crash of 1929
The crash caused others topanic and sell the stock they had.Banks were recalling loans. Thismeant they made people pay back loans early. But, many could NOT pay!
The Stock Market Crash of 1929• People could NOT pay, so
banks ended up closing. • People who put their
money in the bank lost their life savings.
The!
From Crash to Depresion
•With only 1.5 million shareholders• And 600,000 speculators •Why should their banktrupty cause a
Depression in a country of 123 million?
Why did it become the Great Depression
“The Domino Effect…”
• People lost their jobs after the stock market crashed.
They needed to spend their savings.Large numbers of people tried to take money
out of the banksMany banks went out of business because they
had no money!With less money, people bought less goods.
Why did it become the Great Depression ?
“The Domino Effect” Continued…
• Producers could not sell what they made so they did NOT make profit!
Without profit, factories could not pay their employees so factory workers lost their jobs.
When workers lost their jobs, they could not pay what they owed to banks or businesses.
So more banks and more businesses began to fail.
The Great DepressionIt was the worst economic crisis in US history.• People had to rely on soup kitchens, which gave out
free food to the poor, because they could not survive without this.
Farmers Farmers struggled even before the Depression.• During WWI, farmers did well, because as war created
demand for farm produce and raised farm prices.• Overproduction after the Great War• Collapse in prices with depression
Farmers
• Some farmers could manage to grow their own food.• Unable to keep up loan
repayments•Were evicted and forced to
leave• 1929-1932 over 400,000
farms were lost to foreclosure
• Many people packed up and moved to California looking for agricultural work.
• Between 1925 and 1930 more than 5 million acres of previously unfarmed land was plowed
• they covered the prairie with wheat in place of the natural drought-resistant grasses and left any unused fields bare
• Introduced new mechanized farming techniques
• These methods left the land dry, useless, and uncovered by crops.
Disaster Meets Disaster!
The Dust Bowl 1933-1936During the early ‘30s, the Midwest experienced a
drought, which made the soil drier.• The Dust Bowl was a series of windstorms that
carried the soil high in the air and created massive dark clouds of dust.• Some of these storms buried entire homes and cities.
The Dust Bowl forced many Midwest farmers to leave and move to other parts of the country.
• Dustbowl • Stories
A traveler noticed a nice new hat by the side of the road, and he stopped to pick it up. Under the hat was a man, buried up to his neck in the dust! As he dug the poor fellow out, the traveler asked if he wanted a ride into town. "No, I'll get there myself," the man replied, "I'm on a horse." (Excerpt from THE DUST BOWL by Tricia Andryszewski, p. 33.)
Dust Bowl
• The “ground zero” of the Dust Bowl included parts of Colorado, New Mexico, Texas, Oklahoma, and Kansas.• The effects of the Dustbowl would physically
impact about 26 states.• The overall effect would be felt throughout the
whole nation.
Great Depression in the Cities
•People in the cities not only lost their jobs, they lost their homes! This led to:• Shantytowns or
Hoovervilles/Hoovertowns• Soup Kitchens• Breadlines
In Detroit…
• The Great Depression crippled the industries. • Henry Ford was one of the many tycoons
who resisted the idea that the economy was bad. • He Actually gave raises. • Then a year later decreased pay.
Impact on Workers August 1931 – Ford
closed its Detroit factories.75,000
unemployed in one day.
Millions others unemployed.
Impact on Workers Because large
factories closed – small businesses and restaurants began to fail too.No customersNo merchandiseRich people laid
off staff
Unemployment•Before the Great Depression unemployment
rate 3.2%.•1933 25% of population unemployed, 13
million people out of jobs.-Many could but mortgage or rent payments and ended up homeless.-Many had to scrounge in garbage cans for food or beg on street corners from the wealthy people that passed by.
Homeless familiesMost citizens blamed Hoover for the crisis.During the depression many lost their homes and had nowhere to liveThey built shacks out of scrap pieces of wood and metal.These soon became communities where poor homeless people lived. They were called “Hoovervilles” after Herbert Hoover.
