The Great Depression:

An End to the Good

Times
What Factors Caused and Made the Great
Depression So Damaging?
 Connecting to the Modern Day and Your
Own Experiences

▪ Every single one of you here

has lived through times of
economic uncertainty and were
in one shape or another
affected by them
▪ If we are going to understand
what made the Great
Depression so awful, we must
first understand what caused
the Great Recession
▪ The Great Recession was the
economic crisis our nation
underwent from 2008-2009
 Reflect and Discuss Amongst Yourselves
These Questions In Groups of Four

▪ Do you know anyone who lost their job because of this

recession, perhaps a member of your family or a neighbor?
▪ How long did it take for that person to find another job, and
did they make less than they did before?
▪ Did your life get worse during this period? An example of this
would be a decrease in vacations or having to move because
of an inability to pay a mortgage or rent
In Five Minutes I will Call Upon Four Students to
Share
 The Great Depression Was Caused by
Multiple Factors

▪ While the Stock Market Crash is often seen as the start of

the Great Depression it did not cause it rather it was caused
by it
▪ The conditions for the Great Depression had already
existed beforehand for several years
▪ While much has written, a consensus has emerged among
historians and market speculation, a weak banking system,
an overreliance on credit and the decline in world trade are
seen as four of the key causes for the Great Depression 
 Rampant Speculation in the Stock Market

▪ Starting in 1927, the price of stock would begin

to rise dramatically, encouraging more and
more people to invest, starting a cycle
▪ People had begun to view the stock market as a
quick way to get rich, and they believed stock
prices would just get higher and higher
▪ By 1929 banks were loaning more money for
stock and real estate investment than they
were for setting up new business
Rampant Speculation in the Stock Market
Cont.

▪ Starting in September 1929, stock prices, which had been at an all-time

high, began to fall slowly
▪ October would see the price of stocks begin to fall rapidly as people
started to sell like crazy in order to recoup their investment, but it wasn't
until October 29th that the true extent of the situation became clear 
▪ October 29th, also referred to as Black Tuesday, saw 16,410,030 shares
of stock sold for far less than they were worth 
▪ Investors, both individuals, and banks lost billions, and the stock market
would take years to recover 
▪ People lost faith in the economy, and as a result, spending and
investments declined 
Critical Question

▪ Examine the reasons why the Stock Market Crash of

1929 caused people to lose faith in the economy?

▪ -Discuss this question in groups of 2-4 for 3 minutes;

you will then be asked to share your responses to the class 
A Weak Banking System

▪ The banks of the 1920s were not the large

centralized forms business we think of
today such as Wells Fargo Or Bank of
America; rather, they were small and often
local
▪ These small banks depended on the trust
of the community they served for
investment money through their deposits
▪ When and if people lost confidence in the
bank, there was a very real risk for their
bank to be a run on the bank as people
rushed to take out their deposits
A Weak Banking System Cont.

▪ If the bank is unable to repay

everyone who wants their
money back, they go broke,
and the bank fails
▪ 1930 saw a series of
widespread bank failures take
place starting in Kentucky
before spreading to
neighboring states
▪ By 1931 it's estimated that
around 2294 banks had failed,
a number which was double
that of 1930
Critical Question

▪ Discuss the various ways people might be affected if they

lost all of their savings in a bank failure, from how their
lives might be affected to how they might view banks in the
future?

▪ -Discuss this question in groups of 2-4 for 5 minutes; you

will then be asked to share your responses to the class 
The Over Reliance on Credit
▪ The 1920s saw a flood of new consumer goods like
radios and cars hit the market; however, the slow rise
in wages kept many Americans from buying them
▪ To counter this, businesses and banks offered easy
credit and installment plans to ensure Americans kept
buying
▪ While credit and installments are not bad in practice,
they can prove terrible should a person lose their job
or for some, another reason is no longer be able to
make payments
The Over Reliance on Credit Cont.

▪ American farming had boomed during WW1 as food

prices rose to address the increased demand in Europe
▪ To take advantage of these increased prices, Farmers
used credit and installment plans to mechanize their
farms and increase yields
▪ After the war, however, food prices fell back to normal,
and farmers were left with massive amounts of debt they
couldn't pay back, leading to farm foreclosures
▪ During the height of the Depression in 1933, around
55,000 farms were foreclosed on
Critical Question

▪ Can you recall a time when a member of your family might

have purchased something using credit or an installment
plan? If so, what was it and how long did it take to finish
paying off? 

-Discuss this question in groups of 2-4 for 5 minutes;

you will then be asked to share your responses to the
class 
The Decline in World Trade

▪ As Americans began to lose their

jobs and domestic spending fell, the
U.S. government decide to take
measures to ensure that citizens
spent their money on U.S. goods to
support local businesses
▪ This is an example of protectionism
▪ The Smoot-Hawley Act drastically
raised the average tariff rate in the
United States by 20%; this made
the price of foreign goods
skyrocket 
The Decline in World Trade Cont.

▪ While the Smoot-Hawley Act encouraged

Americans to buy local products, it had the
unintended side effect of angering trade
partners
▪ In response, other nations increased tariffs as
well to ensure their citizens didn't buy
American goods 
▪ By 1932 American exports and imports had
fallen by 2/3rds what they had been in 1929 
▪ The tariffs, which had been intended to
protect American jobs and business,
inadvertently led to millions more losing their
jobs.
Critical Question

▪ If you were a politician at the time could you have

predicted that the Smoot-Hawley Act would have led other
nations to raise tariffs on American goods? If so why or why
not?

-Discussion this question in groups of 2-4 for 5 minutes

several of you will be asked to share your responses