the great depression: it begins. essential questions how did the economic, political and cultural...
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THE GREAT DEPRESSION: IT BEGINS
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ESSENTIAL QUESTIONS
How did the economic, political and cultural choices in the U.S. contribute to the Great Depression?
How did/has the Great Depression affect(ed) our world, both in the past and the present?
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FOCUS QUESTIONS
What caused the Great Depression?
Could it have been avoided? How? Why not?
Can we avoid it in the future?
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BACKGROUND/REVIEW
1920s – consumption goes up, GNP goes up, stock market goes up
1928 – Hoover nominated by Republicans-emphasized competition, but voluntary cooperation between labor and management
- Democrats nominate Alfred E. Smith (1st Catholic)
We know prosperity was mostly in suburbs – upper/middle class; farmers and poor see little of the ‘Roaring ‘20s’
Farmers had increased harvest to meet WWI demands-bought land and equip – often going into debt-War ends – demand for crops ends – prices fall-Mother Nature also a factor-lived on credit from month to month – similar to sharecropping
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INCREASING DEBT (GOOD OR BAD?)
Increasing debt of Americas – doubled over decade (3 billion to over 6 billion)
Uneven distribution of wealth-between 1923-1929 output/person jumped 32%, wages only 8%; corporate profits up 65%-rich became richer, worker less poor-1929 wealthiest 1% earned as much as bottom 42% -1% did not spend more or buy more; didn’t do enough to keep economy booming-underconsumption and overproduction create economic instability-early credit hides/masks the issue -1929 sees 80% of radios and 60% of cars purchased on credit
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THE CRASHBlack Tuesday – October 29, 1929
-Billions lost-marks the traditional beginning of the Great Depression-banks collapse - people make a ‘run’ on the banks – want all of their money -few banks survive
Misguided monetary policy-Federal Reserve – regulates amount of money in circulation – cuts interest rates
to stimulate economy-In 1929 worried about overspeculation, limited amount of money supply in circulation -when market crashes, less money in circulation -as people went to banks to get money, banks cleaned out of cash and forced
to close