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The Great The Great Depression Depression Chapter 5 Chapter 5 Lesson 20 Lesson 20 TCAP Coach TCAP Coach

The Great Depression Chapter 5 Lesson 20 TCAP Coach

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The Great DepressionThe Great DepressionChapter 5Chapter 5

Lesson 20Lesson 20

TCAP CoachTCAP Coach

The Great DepressionThe Great Depression

The The Great DepressionGreat Depression was a ten- was a ten-year period of economic hardship. It year period of economic hardship. It affected nations throughout the affected nations throughout the world. No one factor led to the Great world. No one factor led to the Great Depression. Rather, many trends Depression. Rather, many trends combined to cause the economic combined to cause the economic disaster that began in 1929.disaster that began in 1929.

From Boom to BustFrom Boom to Bust

During the 1920’s, the economies of During the 1920’s, the economies of Europe were trying to recover from Europe were trying to recover from World War I.World War I.

But the US economy But the US economy boomedboomed, and , and many people invested money in the many people invested money in the stock market.stock market.

From Boom to BustFrom Boom to Bust

In the 1920’s, people bought many In the 1920’s, people bought many things on credit.things on credit.

The economy was strong and The economy was strong and businesses were confidents. So they businesses were confidents. So they readily lent money to people.readily lent money to people.

StoresStores gave customers credit to gave customers credit to encourage buying.encourage buying.

BanksBanks also made many loans during also made many loans during the 1920’s.the 1920’s.

From Boom to BustFrom Boom to Bust

People borrowed money for People borrowed money for cars, cars, homeshomes, and other large purchases., and other large purchases.

As a result, very few people had As a result, very few people had savings.savings.

Almost everyone had debt. Almost everyone had debt. Debt Debt is is money that is owed.money that is owed.

From Boom to BustFrom Boom to Bust

Many people even used credit to buy Many people even used credit to buy stocks.stocks.

As a result, most of the money in the As a result, most of the money in the stock market was really just credit, stock market was really just credit, not real money.not real money.

On October 18, 1929, the value of On October 18, 1929, the value of stocks began to drop.stocks began to drop.

By October 29, 1929, stocks had lost By October 29, 1929, stocks had lost almost half of their value.almost half of their value.

From Boom to BustFrom Boom to Bust

People did not have the money to People did not have the money to pay back the loans they had used in pay back the loans they had used in buying the stocks.buying the stocks.

The day became known as The day became known as Black Black Tuesday.Tuesday.

The crash of the stock market did not The crash of the stock market did not cause the Great Depression.cause the Great Depression.

In fact, both were caused by many of In fact, both were caused by many of the same problems.the same problems.

Hard TimesHard Times

By 1933, 1 in every 4 workers in the By 1933, 1 in every 4 workers in the US was unemployed, or did not have US was unemployed, or did not have a job.a job.

Few people had money or credit to Few people had money or credit to buy things.buy things.

Prices for consumer goods kept Prices for consumer goods kept dropping. dropping.

This drop is called This drop is called deflation.deflation.

Hard TimesHard Times

People also could not pay back their People also could not pay back their loans to banks.loans to banks.

When loans were not paid back, the When loans were not paid back, the banks did not have enough money.banks did not have enough money.

Also, banks had invested in the stock Also, banks had invested in the stock market, just as people had.market, just as people had.

When the stock market crashed, the When the stock market crashed, the banks lost a lot of money. banks lost a lot of money.

Hard TimesHard Times

People began to worry about their savings.People began to worry about their savings. Bank runsBank runs became frequent. became frequent. People would try to withdraw all their People would try to withdraw all their

money form one bank at the same time.money form one bank at the same time. This led to the collapse of the banking This led to the collapse of the banking

system in 1932.system in 1932. The country was experiencing an The country was experiencing an

economic economic bust.bust.

Business Failures and EmploymentBusiness Failures and Employment

Big companies use loans to keep their Big companies use loans to keep their businesses going. businesses going.

With the collapse of the banking system, With the collapse of the banking system, companies could not get loans.companies could not get loans.

Big companies such as General Motors Big companies such as General Motors (GM) could not make the same number of (GM) could not make the same number of cars than before.cars than before.

Also, there were not as many people who Also, there were not as many people who could afford to buy cars. could afford to buy cars.

The number of GM cars dropped by more The number of GM cars dropped by more than half.than half.

Business Failures and EmploymentBusiness Failures and Employment

Big companies also had to cut the Big companies also had to cut the number of their employees. number of their employees.

The unemployment rate rose.The unemployment rate rose. The The unemployment rateunemployment rate is the is the

percentage of people who want to percentage of people who want to work but who cannot find jobs.work but who cannot find jobs.

In 1933, 15 million people, more than In 1933, 15 million people, more than 25% of the people who wanted to 25% of the people who wanted to work, were unemployed.work, were unemployed.

Business Failures and EmploymentBusiness Failures and Employment

With no money, people could not afford to With no money, people could not afford to buy housing.buy housing.

As a result, shantytowns were common.As a result, shantytowns were common. ShantytownsShantytowns were places where were places where

thousands of people lived in shacks.thousands of people lived in shacks. Many Americans blamed Many Americans blamed Herbert HooverHerbert Hoover, ,

who was president from 1929 to 1933, for who was president from 1929 to 1933, for the Great Depression. the Great Depression.

They called the shantytowns They called the shantytowns Hoovervilles.Hoovervilles.

The Dust BowlThe Dust Bowl

Farmers also suffered because the Great Farmers also suffered because the Great Depression.Depression.

In the 1930’s, Midwest farmlands suffered In the 1930’s, Midwest farmlands suffered a terrible economic and environmental a terrible economic and environmental disaster.disaster.

First, crop prices had dropped.First, crop prices had dropped. Farmers had over-planted crops to make Farmers had over-planted crops to make

more money.more money. However, farmers didn’t use soil However, farmers didn’t use soil

conservation.conservation.

The Dust BowlThe Dust Bowl

The soil was vulnerable to erosion, or The soil was vulnerable to erosion, or wearing away, from wind.wearing away, from wind.

Second, there was a drought, which Second, there was a drought, which means it did not rain, and land was means it did not rain, and land was very dry.very dry.

The topsoil, or first layer of soil, dried The topsoil, or first layer of soil, dried up and blew away.up and blew away.

Huge dust storms blew across the Huge dust storms blew across the Midwest.Midwest.

The Dust BowlThe Dust Bowl

Farmlands were destroyed.Farmlands were destroyed. In some places, so much dust fell In some places, so much dust fell

that homes were buried up to their that homes were buried up to their roofs.roofs.

This disaster became known as the This disaster became known as the Dust Bowl.Dust Bowl.

Farmers could not pay back money Farmers could not pay back money they had borrowed from banks, any they had borrowed from banks, any many lost their land.many lost their land.

Rural MigrationRural Migration

Many farmers who were ruined by Many farmers who were ruined by the Dust Bowl set off for the West on the Dust Bowl set off for the West on a road called Route 66.a road called Route 66.

Many were from Oklahoma.Many were from Oklahoma. These people were called the These people were called the OkiesOkies.. There were not enough jobs in the There were not enough jobs in the

West for all the Okies.West for all the Okies. When they reached When they reached CaliforniaCalifornia, most , most

were unable to find jobs.were unable to find jobs.

Rural MigrationRural Migration

Many people in the South were also Many people in the South were also without jobs.without jobs.

Some went north to work in factories.Some went north to work in factories. Many people moved to Detroit to Many people moved to Detroit to

work in car factories. work in car factories. This This migrationmigration, or movement of , or movement of

people from one area to another, people from one area to another, changed America forever.changed America forever.

Rural MigrationRural Migration

Before the migration, America was Before the migration, America was made up mostly of farmers and made up mostly of farmers and people living in small towns.people living in small towns.

Today, that figure is about 20 Today, that figure is about 20 percent.percent.

Almost 80 percent of Americans Almost 80 percent of Americans today live in or near cities.today live in or near cities.

The New DealThe New Deal

In 1932, In 1932, Franklin D. RooseveltFranklin D. Roosevelt was was elected president.elected president.

Roosevelt said he had a “Roosevelt said he had a “new dealnew deal” ” for the American people.for the American people.

Before Roosevelt was elected, the Before Roosevelt was elected, the federal government had not helped federal government had not helped the people or the economy very the people or the economy very much.much.

The New DealThe New Deal

Roosevelt’s New Deal changed all that.Roosevelt’s New Deal changed all that. The The New DealNew Deal was a series of government was a series of government

programs designed to help the country.programs designed to help the country. The New Deal helped America through the The New Deal helped America through the

Great Depression.Great Depression. The program also boosted Americans’ The program also boosted Americans’

confidence in the Govt.confidence in the Govt. Many of Roosevelt’s program are still in Many of Roosevelt’s program are still in

effect.effect.

The New DealThe New Deal

By By 19401940, conditions in the US had , conditions in the US had improved.improved.

In 1941, the US entered In 1941, the US entered WWIIWWII.. Suddenly, the government needed Suddenly, the government needed

huge amounts of weapons, planes, huge amounts of weapons, planes, tanks, and other war materials.tanks, and other war materials.

By 1944, there were so many jobs By 1944, there were so many jobs available that the unemployment available that the unemployment rate and dropped to 1 percent.rate and dropped to 1 percent.

1. Why did the stock market crash 1. Why did the stock market crash and the banking crisis occur?and the banking crisis occur?

A.A. The economy was doing wellThe economy was doing well

B.B. World War II beganWorld War II began

C.C. People had bought too much on People had bought too much on creditcredit

D.D. Unemployment was highUnemployment was high

C. People had bought C. People had bought too much on credittoo much on credit

2. In which direction did many 2. In which direction did many people migrate during the Great people migrate during the Great

Depression?Depression?A.A. From California to DetroitFrom California to Detroit

B.B. From Oklahoma to CaliforniaFrom Oklahoma to California

C.C. From cities to farmsFrom cities to farms

D.D. From Detroit to the SouthFrom Detroit to the South

B. From Oklahoma to B. From Oklahoma to CaliforniaCalifornia

3. Which 2 problems caused the 3. Which 2 problems caused the Dust Bowl?Dust Bowl?

A.A. Bank failures and over-plantingBank failures and over-planting

B.B. Drought and migrationDrought and migration

C.C. Drought and over-plantingDrought and over-planting

D.D. World War I and bank failuresWorld War I and bank failures

C. Drought and over-C. Drought and over-plantingplanting

4. Two features of an economic 4. Two features of an economic bust arebust are

A.A. High employment and inflationHigh employment and inflation

B.B. High debt and high employmentHigh debt and high employment

C.C. High unemployment and business High unemployment and business growthgrowth

D.D. High unemployment and high debtHigh unemployment and high debt

D. High unemployment D. High unemployment and high debtand high debt