UNIT 12- The Great Depression and the New

Deal

Unequal Distribution of Wealth:

Why is this a problem? 1920s- rich got richer ; poor got

poorer 70% of nation below $2,500

2007

Overproduction- Factories and Farms

1- Overproduction Farm goods- surplus, prices drop, can’t

get out of debt Manufactured goods- Americans buying

less Orders slow; factories lay off workers

Consumer debt Consumer goods bought on credit

throughout 1920s (living beyond means)

growing debt- people cut back on spending

LAST 50

YEARS

Stock Market speculation speculation- trying for quick profit;

ignoring risks Buying on margin- pay a small

percentage of a stock’s price & borrow the rest from a bank

Stock Market Crash- Onset of Great

Depression “Black Tuesday”- October 29, 1929 $30 Billion in “wealth” disappears

New York Stock Exchange, Black Tuesday:

Bank Failures “Bank runs”- people panic- run to get

$$ out of banks Banks had lost $$ in stock market 11,000 banks close- people lose all

their savings http://www.youtube.com/watch?v=qu2uJWSZkck

Business failures/ production falls/ unemployment 90,000 businesses went bankrupt

“GDP” (national production) cut in half from 1929- 1933

13,000,000 unemployed by 1933 (25%)

Those with jobs- pay cuts, fewer hours…

“Hardship and Suffering” Cities: 1000s evicted from homes-

live in shantytowns (“Hoovervilles”)

“Hardship and Suffering” Cities…- soup kitchens/ breadlines

“Hardship and Suffering” Rural areas: At least they could eat 1000s of farmers lose land through

foreclosure

“Hardship and Suffering” Dust Bowl- Drought hits in early

1934- destroys overfarmed land “Okies”- 1000s of farmers pack up and head to CA

Life in Depression Unemployment soars- Hunger Homelessness “hobos” on freight trains…

Cycle of disaster

How are these connected? Banks fail---

Businesses fail-

Unemployment up—

Consumer spending/ income down--

A cycle of

disaster

businsess

faliures

unemployment

consumer income and

spending

Bank failures