Presentation Notes on the Causes of the Great Depression

Income Gap:

1) What percentage of Americans lived below the poverty line in the 1920s? - 64%

2) What is happening to wealth inequality in the 1920s?

It increases dramatically, with most wealth going to the richest in the country.

3) How did wealth inequality contribute to overproduction?

Since worker wages are not rising, they cannot afford to purchase all the products produced, leading to overproduction

4) Explain when consumer debt comes to a peak and begins to decline.

Consumer debt rises drastically until 1929 when the stock market crashes.

5) What does the amount of consumer debt show about our economy in the late 1920s?

The large amount of consumer debt shows how unstable the economy is.

Farming:

1) Why did demand for American crops increase during World War I?

American crops were needed to supply the allied war effort in WWI.

2) What is happening to the price of wheat after World War I ends?

The price of wheat drops dramatically after WWI because the demand for crops decreased

3) What is happening to the number of farms in the 1920s?

The number of farms is shrinking rapidly since many are in foreclosure.

4) What was the Dust Bowl?

The Dust Bowl was an environmental and economic disaster. The soil was depleted by overgrazing and poor farming techniques. This combined with a long drought and high winds led to giant dust storms, and most of the land of the Great Plains became impossible to farm on.

Limited Government Regulation 1) For each President during the 1920s, identify the years they served and which party they belonged to.

Harding 1921-1923-Republican Coolidge 1923-1929-Republican Hoover 1929-1932-Republican

2) Identify and explain the term used to describe these Presidents’ approaches to the government’s role in the economy.

Llaissez Faire Capitalism: hands off approach to the economy. With little to no gov’t regulation

3) What was a major trade policy passed during the Harding administration

Fordney-McCumber Tariff-tax on foreign imports

4) Explain what Hoover meant by the term “rugged individualism”

-people should not depend on the gov’t, they should work harder to solve problems.

5) Explain what is happening to the income tax rate during the 1920s.

-Going down for the very rich.

Stock Market Speculation

1) Explain the meaning of the term “buying on the margins.”

Person purchases stock with down payment, but borrow to pay for the rest.

2) Explain what is happening to the value of stocks in the 1920s.

Increase dramatically until 1929, then drops rapidly

3) What was the date for “Black Tuesday” and what happened?

Oct 29, 1929- Huge sell off of stocks AKA stock market crash

4) What happens to several banks after the stock market crash?

Thousands of banks close across the country.

5) What happens to the unemployment rate after the stock market crash?

The unemployment rate skyrockets up to 25% in the 1930s.