The Great DepressionThe Great Depression

The roaring 20s ends The roaring 20s ends suddenly with the crash of suddenly with the crash of

19291929

What were the causes?What were the causes?

The world economy was producing The world economy was producing too much – people were buying and too much – people were buying and selling shares of stock that they selling shares of stock that they really could not affordreally could not afford US companies were selling lots of goods US companies were selling lots of goods

so people borrowed money to buy so people borrowed money to buy shares in themshares in them

How does buying and selling stock How does buying and selling stock work?work?

1) You buy shares in a company and the company uses your money

2) If the company is successful then more people want to buy the shares, pushing the price of the stock up

3) A shareholder can sell shares and make a profit if the value has risen

4) If the company is not successful then people lose confidence and want to sell their shares. The price goes down and share holders make a loss.

Europe couldn’t afford the US Europe couldn’t afford the US goodsgoods

Europe could not afford US goods and Europe could not afford US goods and many were protecting their own goods by many were protecting their own goods by putting high duties on American importsputting high duties on American imports

There was existing competition between There was existing competition between Canada, India and JapanCanada, India and Japan

Many US producers overproduced; there Many US producers overproduced; there was too much supply and not enough was too much supply and not enough demanddemand US farmers could not afford to buy US farmers could not afford to buy

because they couldn’t sell their own because they couldn’t sell their own produceproduce

US companies had no one to sell their US companies had no one to sell their products to and started to lose moneyproducts to and started to lose money

The Crash of 1929The Crash of 1929

People rushed to sell shares because they People rushed to sell shares because they realized companies were doing poorlyrealized companies were doing poorly

Businesses collapsed and thousands of Businesses collapsed and thousands of people were ruined, by the end of the people were ruined, by the end of the month they were selling shares for month they were selling shares for whatever they could get for themwhatever they could get for them

People were hoping that banks would keep People were hoping that banks would keep the prices up artificially; they could not the prices up artificially; they could not because they were out of money, cash because they were out of money, cash had been loaned and not repaid causing had been loaned and not repaid causing many banks to failmany banks to fail

The Republican govt. did not believe the The Republican govt. did not believe the state should interfere in a free market state should interfere in a free market economy to help businesses, the poor or economy to help businesses, the poor or unemployed; they should help themselvesunemployed; they should help themselves

To Synopsize the Great To Synopsize the Great Depression:Depression:

Early 1920s – BOOM YEARS – people Early 1920s – BOOM YEARS – people borrow to buy sharesborrow to buy shares

Share prices increase and companies over Share prices increase and companies over produceproduce

1928-1929 – there is a difficulty selling 1928-1929 – there is a difficulty selling goods and the confidence is brokengoods and the confidence is broken

People sell shares, production stopped and People sell shares, production stopped and unemployment is highunemployment is high

By October of 1929, there was little money By October of 1929, there was little money in the economy, therefore a DEPRESSIONin the economy, therefore a DEPRESSION

What were the effects of the Great What were the effects of the Great Depression?Depression?

The USA:The USA:

In 1929, the USA In 1929, the USA stopped lending money stopped lending money abroad and called in its abroad and called in its loansloans

By 1930, nearly 2000 By 1930, nearly 2000 banks collapsed as banks collapsed as people rushed to people rushed to withdraw their savingswithdraw their savings

Three years later there Three years later there were over 12 million were over 12 million unemployed in the USAunemployed in the USA

The Dow Jones Industrial The Dow Jones Industrial AverageAverage

The Depression of Britain and The Depression of Britain and EuropeEurope

Britain devaluated the pound in 1929Britain devaluated the pound in 1929 They tried to impose import tariffs but that They tried to impose import tariffs but that

didn’t workdidn’t work Within 3 years there were 3 million Within 3 years there were 3 million

unemployed in Britain and 30 million unemployed in Britain and 30 million overall in Western Industrial nationsoverall in Western Industrial nations

Britain was already suffering from the 1926 Britain was already suffering from the 1926 strike with the minersstrike with the miners

Most industrial nations were affected, Most industrial nations were affected, banks tanked, industry struggled and trade banks tanked, industry struggled and trade came to a haltcame to a halt

The least affected was the USSR! The least affected was the USSR! (SURPRISE)(SURPRISE)

World UnemploymentWorld Unemployment

World MarketsWorld Markets

Was it all bad?Was it all bad?No . . Some good came out of the Depression.No . . Some good came out of the Depression.

Those who were still in work found Those who were still in work found their standard of living was raised, their standard of living was raised, they bought more for lessthey bought more for less

In Britain, the car, aircraft and In Britain, the car, aircraft and electrical goods industry were not electrical goods industry were not affected, industry that used coal affected, industry that used coal (shipbuilding, iron and steel) suffered (shipbuilding, iron and steel) suffered badlybadly

Political ImplicationsPolitical Implications People criticized governments, People criticized governments,

especially democracies with regular especially democracies with regular electionselections

Economic and political problems Economic and political problems meant countries turned to dictatorsmeant countries turned to dictators

Countries like Japan, Italy and Countries like Japan, Italy and Germany decided to expand into Germany decided to expand into other countries, threatening the peaceother countries, threatening the peace The breakdown of trade led to lots of The breakdown of trade led to lots of

international tensioninternational tension

Some effects of the DepressionSome effects of the Depression

1

2

3

4

5

1) America becomes isolationist

2)Democracy survives in France but they begin building defenses against Germany

3) Spanish Civil War from 1936-1939

4) Italy invades Abyssinia in 1935

5) Hitler and other dictators rise

The Effects of the Depression on Major The Effects of the Depression on Major powerspowers

USAUSA – 13 million unemployed, anger towards Republicans – 13 million unemployed, anger towards Republicans because they failed to help with the situationbecause they failed to help with the situation

GermanyGermany – The Weimar govt. broke down by 1933 and – The Weimar govt. broke down by 1933 and people turned to Hitler’s strong govt. which promised a people turned to Hitler’s strong govt. which promised a better lifebetter life

ItalyItaly – Mussolini wanted to take people’s minds of – Mussolini wanted to take people’s minds of problems by increasing its power abroadproblems by increasing its power abroad

BritainBritain – democracy survived but there were 3 million – democracy survived but there were 3 million unemployed, though groups like the ‘blackshirts’ became unemployed, though groups like the ‘blackshirts’ became popularpopular

France – France – the depression hit later than most countries, the depression hit later than most countries, because they could no longer sell luxury goods like wine. because they could no longer sell luxury goods like wine. This left 1 million unemployed and room for extreme This left 1 million unemployed and room for extreme political groupspolitical groups

Japan Japan – goods like silk would not sell and Japan’s economy – goods like silk would not sell and Japan’s economy was badly effected. Therefore Japan decided to take over was badly effected. Therefore Japan decided to take over other countries to try to use its influence in other spheres.other countries to try to use its influence in other spheres.

Was the US to blame??Was the US to blame??

Since the US market Since the US market crashed and crashed and customers had no customers had no money, industry world money, industry world wide was short on wide was short on customers. Add that to customers. Add that to the fact with the fact the fact with the fact that the US was that the US was calling in their loans, calling in their loans, and it makes for a bad and it makes for a bad situation all around.situation all around.

USA?

World??

Main causes of the depression:Main causes of the depression:(to synopsize)(to synopsize)

The Wall Street The Wall Street Crash of 1929Crash of 1929

World War I had World War I had tapped out tapped out resources and resources and money from many money from many European countriesEuropean countries

How did the 1How did the 1stst World War World War contribute to Britain’s depression?contribute to Britain’s depression?

The huge number of soldiers coming home from war The huge number of soldiers coming home from war meant unemployment rosemeant unemployment rose

Industry such as coal and railroads were so busy Industry such as coal and railroads were so busy during the war, there was little time for repair, during the war, there was little time for repair, therefore they were not efficient during peace timetherefore they were not efficient during peace time

Few houses were built during the war, therefore with Few houses were built during the war, therefore with population increase, there was a housing shortage, population increase, there was a housing shortage, forcing the poorest to take substandard housingforcing the poorest to take substandard housing

When the economic slump got worse in Britain more When the economic slump got worse in Britain more unemployment benefits were paid, but less people unemployment benefits were paid, but less people were contributing, therefore the scheme could not were contributing, therefore the scheme could not copecope