CH 32- Beginning of the Great Depression*1930’s poorest time period in US History (1/3 of

Americans unemployed)• Analyze the factors that Caused the Great Depression, how American lives

were negatively impacted, and Government’s negligence in reacting to help Americans in need

1.ID the 4 factors that caused the Great Depression

2.For each of the four factors analyze a way that the Government could try and prevent that factor from happening again.

1st Cause of Depression- Farm Problems

• Farm Problems (1/3 of Americans) • Overproduction (grew more food than could be sold)

– What is the problem for farmers with growing too much food? (hint- answer is not that it will spoil)» price of food dropped

• Loans- borrowed money to grow more food (earn money they lost with low food prices), food prices dropped more– Impact on Farmers- could not pay back loans, lost farms– Impact on US- farmers could not buy new products (truck, tractor), US industries made

less (laid off workers)

2nd Cause of Depression- Middle Class (wages did not go up in 1920’s)

• Credit- Americans borrowed money in 1920’s to keep up their standard of living– Why is borrowing to buy big ticket items (cars, radios,

washing machines) a bad way to fuel your lifestyle?• Americans ended up putting more and more money back into

what they loaned, rather than buying new products• Industries suffered as Americans bought less

3rd Cause of GD- Rich vs. Poor- wealthiest 5% earned 33% of the money, poorest 40% earned only 10%

• Why would this disparity in wealth hurt ordinary Americans?– $ is not being shared and circulated, so ordinary Americans

have less access to money to buy new products

4th Cause- Industry (made $ in 1920’s, put profits into stock market, not workers salaries)

• What problem will not increasing salaries create?– Overproduction (by 1927 companies made more goods

than were sold because people could not afford those products)

Summary- the depression is created because

• 1) Farmers have less $ and borrow more• 2) MC has less $ and borrows more– *Both have trouble paying loans back and have to spend

less $• 3) Rich have majority of $ which prevents other

Americans having $ to spend• 4) Industry invests $ to make the co. richer, not it’s

workers

EXIT TICKET

• ID the 4 factors that caused the Great Depression