The Great Depression

Ch. 8

Standards• DoDEA Social Studies Content Standards: • Standard: • 11SS6: • Students analyze the different explanations for the Great Depression and how the New Deal fundamentally

changed the role of the federal government. • Components: • 11SS6.a: • Describe the monetary issues of the late nineteenth and early twentieth centuries that gave rise to the

establishment of the Federal Reserve and the weaknesses in key sectors of the economy in the late 1920’s.• 11SS6.b:• Explain the principal cause of the Great Depression and the steps taken by the Federal Reserve, Congress, and the

Presidents Herbert Hoover and Franklin Delano Roosevelt to combat the economic crisis• 11SS6.c: • Discuss the human toll of the Depression, natural disasters, and unwise agricultural practices and their effects on

the depopulation of the rural regions and on political movements of the left and right• 11SS6.d:• Analyze the consequences of New Deal economic policies and the expanded role of the federal government in

society and the economy since the 1930’s.• Examples: Works Progress Administration (WPA), Social Security, National Labor Relations Board, farm programs,

regional development policies, and energy development projects such as the Tennessee Valley Authority

Objectives

• The student will be able to describe the principal causes of the Great Depression.

Agriculture

Causes:• Farmers made up ¼ of workforce • Increased harvest yields to meet the demands

of WWI• Invested in more land and equipment, lead to

increasing amounts of debt• Despite the drop in demand farms continued to

produce large crop yields• Failed to sell huge crop surpluses to may debts

Agriculture

• Forced to sell properties in a glutted market• Did not have cash to by consumer goods

produced by American industries • Lived on credit from month to month

Uneven Distribution of Wealth

• Wages rose gradually, worker productivity increased.

• Under consumption of the lower- income industrial workers

• Buying on Credit

The Stock Market Crash

• Speculation: the practice of making high-risk investments in hopes of obtaining large profits

• Buying “on the margin”: paying a percentage of the down payment (the margin) and the covering the rest with a loan.

• Black Tuesday: October 29, 1929, when stock prices fell sharply in the Great Crash

Business Cycle: periodic growth and contraction of the economy

Banks Collapse

• The Great Depression (1929-1941)• Crisis in confidence lead depositors to

withdraw their money • 1929 Federal Reserve raised interest rates to

discourage lending– The result: not enough money in circulation after

the crash

Unemployment Rises

• The collapse of stock prices, reduced consumer spending

• Business leaders believed that to survive they should– Depend on production cutbacks– Maintain price levels– Layoffs to reduce payroll

Hawley-Smoot Tariff

• Raised prices on foreign imports to such a level that they could not compete in the American market.

• Inspired European countries to retaliate and enact tariffs of their own

destroyed international tradeunable to move surplus goods

Global Effects

• Reparation payments• war debt payments• International imbalance of trade • The international economy had largely been

funded by American loans to Europe

Homework:

• Point out the similarities and differences between the Great Depression and current Financial Crisis – Use at least three web articles – Provide URLs – Suggestions, make a venn-diagram, write a

paragraph, use bullet points. – Due: THURS – Jan