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Hi, I'm John Green, this is Crash Course U.S. history and Herbert Hoover's here,0:04which is never a good sign. Today we're gonna return to two of my favorite0:07topics: economics and inaccurate naming conventions. That's right, we're gonna be talking about0:12the Great Depression, which was only great if you enjoy, like, being a hobo or selling0:17pencils. Now some of you might get a bit frustrated0:19today because there's no real consensus about the Great Depression, and simple, declarative0:23statements about it really say much more about you than they do about history.0:27Why are you looking at me, Mr Green? I didn't say anything. I thought it.0:31Because, Me From the Past, you always want things to fit into this simplistic narrative:0:34she loves me, she loves me not, the Great Depression was caused by x or was caused by y. It's complicated!0:43Many people tell you that the Great Depression started with the stock market crash in October0:521929, but a) that isn't true and b) it leads people to mistake correlation with cause.0:57What we think of as the Great Depression did begin AFTER the stock market crash, but not1:02because of it. Like, as we saw last week, the underlying1:04economic conditions in the U.S. before the stock market crash weren't all moonshine1:08and rainbows. The 1920s featured large-scale domestic consumption of relatively new consumer1:13products, which was good for American industry. But much of this consumption was fueled by1:17credit and installment buying which, it turned out, was totally unsustainable.1:21The thing about credit is that it works fine unless and until economic uncertainty increases1:26at which point POW. That's a technical historian term, by the way.1:31
Meanwhile the agricultural sector suffered throughout the 1920s and farm prices kept1:35dropping for two reasons. First, American farms had expanded enormously during World1:39War I to provide food for all those soldiers, and second, the expansion led many farmers1:45to mechanize their operations. As you'll know if you've ever bought a1:48tractor, that mechanization was expensive, and so many farmers went into debt to finance1:52their expansion. And then a combination of overproduction and low prices meant that often1:57their farms were foreclosed upon . And other signs of economic weakness appeared2:00throughout the decade. Like by 1925, the growth of car manufacturing slowed, along with residential2:05construction. And, worst of all was what noted left wing2:07radical Herbert Hoover labeled "an orgy of mad speculation" in the stock markets2:12that began in 1927. By the way I'm kidding about him being a left wing radical. Just2:16look at him. According to historian David Kennedy, "By2:191929, commercial bankers were in the unusual position of loaning more money for stock market2:24and real estate investments than for commercial ventures."2:28I wonder if we would ever find ourselves in that position again. Oh right we did in 2008.