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What is a Snowball Effect Can you give an example???

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Great Depression: The period between 1929-1941 of economic hard times that followed the crash

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The stock market crash did NOT cause the Depression BUT it shook peoples confidence of the economy People were shocked & confused as to how the 20s prosperity vanished

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Causes: Overproduction Factories & farms produced vast amount of products Wages didnt keep up with prices = workers could NOT afford to buy goods Farmers had little $$ for cars & other items Factories/ farms produced more goods than people were buying As orders slowed, factories closed or fired people

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Unemployment Rate 1929 - 1941

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Causes: Weakness of the banking system Banks made unwise loans Banks lent $$ to people who invested in the stock market When the market crashed, borrowers could not repay their loans Without the $$ from loans, the banks could not give depositors their $$ when they needed it Result: many banks were forced to close

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Bank Closures 5,000+ banks closed between 1929-1932 If bank closed depositors lost the $$ that they had deposited Often, a familys life savings vanished overnight

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A Good Old Timey Bank Run http://www.youtube.com/watch?v=qu2uJWSZkck

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The Snowball Effects of the GD

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After the crash, the economy slid downhill at a fast pace Stock market crash ruined investors no $$ from investors businesses could NOT grow or expand businesses could NOT get loan $$ from banks BECAUSE the crash landed banks in trouble too

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Bankrupt: when businesses are unable to pay debts Factories cut back on production wages were cut people were fired unemployed workers had little $$ to spend the demand for goods fell further businesses went bankrupt & closed more people were fired from working

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WW1 Loans After WW1, U.S. had loaned large amounts of $$ to European nations to pay off war debtsstock market crash U.S. banks stopped making loans as they were hemorrhaging $$ U.S. banks demanded repayment of European loans European banks began to fail

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Hard Times When the crash happened, millions of Americans lived in cities and worked in factories When factories closed, the jobless had no $$ for food & no land to grow any on

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Rising Unemployment As depression spread, unemployment rate soared workers were jobless Millions worked shortened hours or took pay cuts so people literally worked themselves to death

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Rising Unemployment The jobless lost their homes Streets filled with peddlers, beggars, scavengers Shoe shiners Apple stands Those who were rich now experienced how the other half lived

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The Human Cost Marriage & birth rates dropped Marriage & birth rates dropped Hungry people searched through dumps Hungry people searched through dumps Many families split up as men & boys left to find work & hopefully one day return Many families split up as men & boys left to find work & hopefully one day return

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Many rode the rails living in railroad cars & hitching A return to tenement housing & slum situations Families starting canning to preserve food The Great Depression shook the belief in an American identity total failure replaced confidence The Human Cost

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Hoover was deeply concerned as well as confused BUT didnt think the govt should become directly involved in helping to end the business crisis He thought that would cause govt to become too powerful We just fought with other countries led by dictators He felt it was up to businesses to work together to end the downslide

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Government Relief Programs: programs to help the needy At first, Hoover was against these & he urged business leaders to keep workers employed/ maintain wages At first, Hoover was against these & he urged business leaders to keep workers employed/ maintain wages Hoover called on private charities to help the needy Hoover called on private charities to help the needy Churches set up soup kitchens: places where the hungry could get a free meal Churches set up soup kitchens: places where the hungry could get a free meal

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More Govt Relief Ethnic communities organized their own relief efforts Ethnic communities organized their own relief efforts Conditions grew worse Conditions grew worse Hoover realized other steps were needed Hoover realized other steps were needed He set up public works: projects built by the govt for public use He set up public works: projects built by the govt for public use Govt hired workers to build schools, dams & highways Govt hired workers to build schools, dams & highways

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More Govt Relief By providing jobs, it enabled people to earn $$ By providing jobs, it enabled people to earn $$ Hoover asked Congress to approve the Reconstruction Finance Corporation (RFC): 1932 loaned money to banks, railroads & insurance companies to help them stay in business Hoover asked Congress to approve the Reconstruction Finance Corporation (RFC): 1932 loaned money to banks, railroads & insurance companies to help them stay in business The hope was that by saving these businesses, he would save thousands of jobs

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