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SSUSH 17 Identify the causes and consequences of the great depression.
Vocabulary • Shantytowns=public lands where homeless people would set up tents and shacks. • Hoovervilles= nickname for shantytowns, because people blamed Hoover for the Depression.
Vocabulary • Margin=paying a small percentage for a stock now, with the promise to repay the rest later. (Hopefully the stock would be worth more when you went to sell it) • Speculation=buying risky stocks in hopes that the stock will continue to increase in value and selling it quickly at a profit.
Vocabulary • The great depression= the period of American history from 1929 -WWII. (known for it’s low production and high unemployment. )
Causes of the Great Depression • Overproduction • Under consumption • Stock market crash
Overproduction and under consumption • People would max out their credit buying refrigerators, cars, and houses. • Soon they had to stop buying “extra” products and start paying off debts. • Stores selling these products would stop ordering as much. • As fewer products were being ordered less products needed to be made. • Since less products were being made fewer people were needed to work in the factory. • As more people were laid off from the factories, less people had money to buy products being sold at the stores.
Stock market crash • In the late 1920’s there was a long bull market. • This led many people to invest in the market and buy stocks on margin. • As long as stock prices continued to rise, people could buy stock and sell it at a profit. • As a result, if there was any decline in the price of stocks people had to sell quickly so they would not lose their money.
Stock market crash • When professional investors started selling off their stocks, the prices of stocks began to fall. As the prices began to fall everyone started selling off their stocks and stock prices plummeted. • Black Thursday=13 million shares were traded • Black Tuesday= 16 million shares traded the worst day of the crash.
Banks in trouble • Many banks loaned speculators money to buy stocks. • Many banks invested their money in stocks. • After the crash speculators could not pay back their loans. • The bank also lost the money they invested in the market.
Banks in trouble • When people heard that banks were running out of money and closing, many people made bank runs to get their money out of the banks. • Banks do not keep money depositors put in. They invest it. • Since banks no longer had money to invest, they could not make any money. They also could not pay back all the people that deposited money in their banks.
Dust Bowl • Crop prices fell and farmers began planting more crops to offset the losses. • This caused soil to erode and blow away. • Drought and over farming caused dust storms to travel across the Great Plains. • Dust Bowl=the name given