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The Great Depression: How Overextending Finances Led to Economic Collapse

Explore the factors that precipitated the Great Depression in the late 1920s as the U.S. economy faced severe challenges. From industrial decline due to foreign competition and new technologies to agricultural problems arising from reduced demand post-WWI, the situation was dire. Increasing consumer debt, stagnant wages, and an uneven wealth distribution compounded these issues. Investors speculated recklessly in the stock market, leading to catastrophic losses when the market crashed. Understanding this history helps prevent future economic crises.

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The Great Depression: How Overextending Finances Led to Economic Collapse

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Presentation Transcript

  1. (top left side) Opener: What would happen if you spent more money than you actually had?

  2. The Nation’s Sick Economy The Great Depression Begins U.S. History Mrs. Janiak

  3. (left side) Video Notes: Describe the optimism (positive attitude) of the late 1920s.

  4. #1 Problems in Industry • Some industries: • lost business to foreign competition and new American technologies • Some suffered from declining consumer purchases at the end of the 1920s (less cars and items bought) • Coal industry declined because of the development of new energy sources • New housing declined= affecting all businesses dependent on house construction

  5. #2 Problems in Agriculture • Demand for farm products fell after WWI (less production needed) • Many farmers couldn’t pay off their debts and lost their farms= some rural banks had to close • Congress tried to pass federal price supports for farm products but President Coolidge vetoed them

  6. # 3 Problems with Consumer Spending • Buying on credit was easily available->businesses encouraged Americans to pile up large consumer debt • American consumers faced: • Rising prices on products • Stagnant wages • High levels of debt = Americans decreased their purchasing

  7. # 4 Uneven Distribution of Wealth Among Americans • Nearly half of U.S. families earned less than the minimum amount needed for a decent standard of living • The rich got richer =most consumers didn’t have enough money to buy the goods produced in American factories

  8. # 5 Stock Market Problems • Investors= any American who could afford to invest in stocks and bonds in the stock market • speculated= bought stocks and bonds in hopes of a quick profit, ignored the risks • Buying on margin= paying a small % of a stock’s price as a down payment and borrowing the rest (never paid the full price). • When the market crashed- many investors lost their life savings.

  9. Highlight the main terms/ notes • Answer the focus question (located above the agenda on the whiteboard wing)

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