Causes of the Great Depressionof the 1930s

WORD MEANING EXAMPLES

DEPRESSIONde-pres-sion

(noun)

1. sadness; gloom; dejection

2. a period during which business, employment, and stock-market values decline severely or remain at a very low level of activity.

1. After Sally broke up with her boyfriend, she experienced feelings of _________________.

2. The Great ______________ of the 1930s was worldwide, and was a time of mass _________________.

During the Great ____________________, many people went without ______________________.

Buying on Credit

• Many people bought refrigerators, cars, etc. on credit.

• People could make payments on an item they wanted or needed. – When the stock market

crashed, people lost their jobs, so they could not pay back their debts.

Buying on Margin

• In the 1920s people could buy stocks on margin, (credit) for only 10% down!

• The buyer would wait for the stock price to rise and then sell it for a profit. – As long as the stock prices kept going up, the

system worked.

Supply & Demand

These unemployed workers didn't have money to buy anything.

SO, the factories continued to lay off people.

This downward trend continued until 25% of the population was unemployed.

BUT factories and farms still continued to produce at the same rate. Since fewer people were buying, farms

and factories produced less. SO, they had to lay off more and more

workers.

American farms and factories produced lots of expensive goods and products in the 1920s.

BUT, people's wages stayed the same. SO, they stopped buying.

The Stock Market Crash

• In the summer of 1929, a few stock market investors begin to sell.– Others soon followed creating a domino

effect. • This caused stock prices to fall. • Investors who had bought large amounts

of stock on margin were forced to sell, causing stock prices to fall even more.

• By Tuesday, October 29, 1929, stock prices plummeted because there were no buyers for the stock offered by desperate sellers.

• Millions of dollars were lost in one day! http://www.youtube.com/watch?v=RJpLMvgUXe8

• Black Tuesday led directly to the Great Depression of the 1930s.

http://www.youtube.com/watch?v=xvkmcxLGAvk&NR=1

http://www.youtube.com/watch?v=UJOjTNuuEVw