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?