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The Great Depression

(in 45 minutes)

WWI caused the US to have the best economy in the world and it grew rapidly in the 1920s

Farms and factories greatly expanded production during the War to supply the Allied Powers.

After the War ended, production continued at a high rate but there weren’t as many people to buy the goods, so prices dropped.

WWI and the American Economy

In the 1920s, the value of stocks rose by 400%.

This was because there were so many new businesses and new products on the market that could be bought by the “common man” using credit.

Cars Radios Vacuum Cleaners Washers Etc.

The “Roaring 20s”

Spending had been slowing down and investors became nervous (they didn’t want to hold on to their stocks if the price was about to fall) and sold their stocks – unfortunately, everyone had the same idea and tried to sell their stocks at the same time.

The price of stocks plummeted and the stock market crashed.

October 29, 1929

Investorslost money when stock

market crashed & businesses went

bankrupt

Bankslost money when

people/investors & businesses couldn’t repay credit/loans

Businesseslost money when

people bought less goods & investors stopped investing

Peoplelost money when

banks closed & when lost jobs

By 1933, 25% of Americans were unemployed. Without jobs, they couldn’t buy goods and so the economy became even worse (cycle of economy depression).

Banks failed because people couldn’t repay their loans.

The Great Depression

Great Britain Still paying back debts to the US in the

late 1920s – to raise the money they had to increase interest rates which caused people to spend less, making businesses fail and people lose jobs

By 1930, 2.5 million were unemployed and there was much unrest.

The Great Depression Spreads

France WWI destroyed farmland, forests, villages,

cities, and labor (people) The government was bankrupt after the

war and couldn’t rebuild the country. Unemployment was high and there was

much unrest.

The Great Depression Spreads

Hyperinflation video

The Great Depression Spreads

Germany Still paying back reparations for WWI – to

do this they printed more and more money, making their currency worthless. (Hyperinflation)

The Great Depression Spreads

Canada – 30% unemployed by the 1930s Australia – 32% unemployed by 1931 South America – US had invested in

South American economies so many countries were hard hit

Etc.

The Great Depression Spreads

What effect is this worldwide depression going to have on the interwar period?

So what?