Economic Collapse &
The Great Depression
US History | Unit 6
Postwar Economic Boom

The “Roaring Twenties”
 Many
believed that the United States was a place of unlimited
growth, opportunity, and achievement.
 Americans were earning more money than ever.
 Americans had more money to spend on luxury goods.
 Technological advances increased the number goods produced.
 The U.S. Stock market was at an all-time high.
However…

By late 1929
 Unemployment
was on the rise.
 Farmers were losing their land.
 Stock prices were dropping.
 The number of Americans living in poverty increased, thus few
people could afford the new luxury goods.
Six Factors That Led to
The Great Depression
1.
2.
3.
4.
5.
6.
Domestic and International Economic Policies
Stock Market Speculation
The Stock Market Crash and
The Banking Industry Collapse
Overproduction of Goods
The Decline of the Farming Industry
Unequal Distribution of Wealth
1. Domestic Economic Policies
 Trickle-down
•
Economic policies that benefited big business and America’s
wealthiest citizens would eventually benefit all Americans.
 Tax
•
economics
Cuts
Increased the gap between the rich and the poor.
1.
International Economic Policies
After WWI, most European nations were in economic ruin
and could not repay the U.S.
 United States lent the European nations even more money in
an attempt to help them repay the original debt.
 As a result, nations like England, France, and Germany fell
deeper and deeper in debt.

2. Stock Market Speculation

Speculation
–



When a person or organization makes a risky investment in the
hope of making a quick, large profit.
Investors believed that the stock market would go up indefinitely.
Investors bought and sold stocks for inflated prices that had little correlation to
the companies’ actual worth.
Many investors began buying on margin
–
paying a small percentage of a stock’s price and using the stock as
collateral
Black Tuesday

October 29, 1929
3. The Stock Market Crash and
The Banking Industry Collapse

In 1929 many investors began
selling their stocks while the prices
were still high.
–


As investors began withdrawing from
the market, stock prices fell.
On October 28 investors sold their
stocks at a loss of $4 billion.
On October 29 investors lost $16
billion.
3. The Banking Industry Collapse





The stock market crash triggered a
collapse of the U.S. banking industry.
Government did not interfere or
regulate banking before the Great
Depression.
Families lost all their savings.
People could not repay mortgages
and loans.
Even people who had not speculated
in the stock market lost all their
money.
4. Overproduction
Technological advances during WWI.
 Demand did not keep up with supply and the market was
flooded with goods that few Americans could afford to buy.
 After WWI farmers continued producing large quantities,
but lost their European markets—this caused surpluses.

5. The Decline of the Farming Industry
During the 20s farmers borrowed heavily from banks to buy
new, technologically advanced equipment.
 When they could not sell their surplus crops they could not
repay their loans or mortgages.
 Banks could not sell farms or equipment (this added to the
problem of bank failures).
 The Dust Bowl swept across the mid- and southwestern
United States.

6. Unequal Distribution of Wealth
As the 1920s wore on, the gap between the rich and the poor
grew wider.
 In 1929, 1% of the American population possessed over 59%
of the country’s wealth.
 60% of U.S. families lived on or below the poverty line.
 Workers were being replaced by machines.
 Americans fell deeper and deeper in debt as they purchased
goods on credit.

John Green – Recap

Go up to 7 minutes
–
https://www.youtube.com/watch?v=GCQfMWAikyU
Synthesis

Complete the graphic organizer on your handout.