One of the reasons we study history is so that we can learn from the mistakes of others and not repeat them. Keep that in mind as we study Unit 10. Are we really learning from the financial mistakes of the past????
CHECK OUT THIS INFOGRAPHIC ABOUT AMERICAN SPENDING HABITS TODAY!This isn’t one of your documents, but it’s something you might find interesting!
Now let’s look at some of the causes of the Great Depression….
Causes of the Depression■Weak Industries:1.Mass-production of consumer goods led to overproduction2.People did not need as many appliances & cars bytheendofthedecade (under-consumption)3.Railroads, textiles, steel, coalmining,construction were barely profitable “Traditional industries” faced new competition in the 1920: Cars, synthetic clothes, natural gasPeople only need 1 vacuum or 1 stove. Overtime, the demand for those products slowed down, but companies were still making them in large numbers.
Overproduction of Consumer GoodsToo much inventory…Not enough buyers
“Traditional” industries suffered in the 1920s Profits for Coal MiningProfits for Railroad CompaniesCorporate Profits for Coal and Railroad Industries, 1920-1930
Causes of the Depression■Depressed Farming:1.The end of WWI led to a decline in demand for agricultural products–Too much food led to a 40% drop in crop prices 2.Farmers could not pay back loans & many had their farms foreclosed 3.Some rural banks failedFarmers couldn’t afford to pay the loan payments on their equipment or the mortgages on their farms. After awhile, if you don’t pay your loans back, the bank comes and takes your property, or forecloses.
Causes of the Depression■Credit:–Many Americans used easy credit to live beyond their means–By“buyingnow&paying later,” Americans generated large debtsdebts–As a result, Americans cut back on spending by the end of the decadeWhat they can afford based on what they earn!
Americans bought goods on credit & did not have much in savings accountsAs a nation, we became “use” to debt. “Everyone has it, so it’s okay”. NO!!! Debt is bad!! Bad, bad, bad!! That way of thinking has landed us an almost 20 TRILLION dollar national debt!! That’s about $61K per citizen!Want to see where the national debt stands now? Check out the real time National Debt Clock @
Causes of the Depression■UnevenDivisionofWealth–Despite rising wages, the gap between the rich & poor grew wider in the 1920s–70% of Americans were considered “poor” –Most of the spending in the 1920s was done by 30% of the population
Distribution of Wealth in the 1920s* An income of $2,500 per year was considered the minimumamount needed for a decent standard of living If the statement on the right is true, what does the graph on the left tell you about the population of the US?
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- Fall '17
- Brook Mirabal
- Great Depression, Wall Street Crash of 1929