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Causes of the Great DepressionThe Dustbowl-20955010350500The?Dust Bowl was a period of severe?dust storms?that greatly damaged the ecology and?agriculture?of the?US and?Canadian?prairies?during the 1930s. In addition to the already rocky times of the Great Depression, much of the nation (but especially the mid-west) was faced with severe drought. The drought and erosion of the Dust Bowl affected 100,000,000 acres that centered on the?panhandles?of Texas and Oklahoma and touched adjacent sections of New Mexico, Colorado, and Kansas.The drought was so severe that dust storms would rip through the mid-west. These storms were called “Black Blizzards” & “Black Rollers” because when the dust storm came, you could only see a few feet in front of you. The winds would blow dust all the way from the middle of our nation to the Atlantic Ocean. Millions and millions of acres of profitable farmland became useless. Loans that were taken out to pay for supplies, land and tools were unable to be repaid. Food became scarce because the crops were so few. Thousands of families literally carried the goods that they could and began walking to the West Coast for better opportunities. Prior to the Dustbowl, the government was offering cheap land for new settlers to grow crops. This gave several low income families an opportunity for a better life. Thousands of people began settling in the Midwest and society was beginning to develop in this area of America. The Dust Bowl forced tens of thousands of families to abandon their farms. Many of these families, who were often known as "Okies" because so many of them came from Oklahoma, migrated to?California?and other states to find that the?Great Depression?had rendered economic conditions there little better than those they had left.While the term "the Dust Bowl" was originally a reference to the geographical area affected by the dust, today it is usually used to refer to the event, as in "It was during the Dust Bowl".28575279400Dust storms were frequent and would cause great destruction to homes and crops. Causes of the Great DepressionOverproduction Although farmers were losing ground throughout the 1920s, manufacturing rolled along at top speed. By 1929 stores and warehouses in America were bulging with goods. Assembly lines and new machinery boosted production. As manufacturers saw it, the more goods produced and sold, the more profit there was to be had. Homes in U.S. cities were being electrified, which created a market for new, timesaving electric appliances. Appeals to buy were everywhere. Advertisers touted their products, and movies teased Americans with images of movie stars living with luxuries all around. Although most Americans had little money left over after paying for necessities such as housing and food, they found a way to buy the new automobile, the electric washing machine, and the radio: It was called credit, or installment buying. A small first payment (down payment) was made; then the rest of the price was paid over time. This system worked well as long as the buyer had a job. Installment buying had never been used in America before the late 1920s. Previously, if the total cash price could not be paid up front, the purchase was not made.When the stock market crashed and banks began to fail, people began to panic. Money was not secured by any means and jobs were not guaranteed. This fear made people greatly decrease their spending habits. No longer were people spending money on the latest fashion trends, new furniture, or any frivolous** spending habits; people only bought the necessities. **frivolous = carefree, excessiveBecause of this new spending habit, factories and stores that once sold millions of dollars in new products were now unable to sell hardly anything. Because the products were unable to be sold, the factories did not need to produce as many goods. Because the factories didn’t need to produce as many goods, factory workers would get laid off because they were no longer needed in the factories. More and more goods that were once sold accumulated, or piled up, in warehouses and people began losing jobs left and right. Unemployment reached a record high; 25% of the population was now considered without a job meaning even fewer people were able to continue their regular spending habits. The joy, spending and glamour of the 1920s ended. People were extremely poor because they were falling deeper and deeper in debt, unable to pay back loans or goods bought on credit. Houses and cars that were bought with loans were now repossessed by the bank. It was a great cycle of fear, limited production, unemployment and poverty. -47625113030003867150137160003762375264160Thousands and thousands of people would line up at soup kitchens to receive free meals for those unable to purchase food on their own. 00Thousands and thousands of people would line up at soup kitchens to receive free meals for those unable to purchase food on their own. -171450108585Children protesting the high rates of unemployment during the Great Depression. 020000Children protesting the high rates of unemployment during the Great Depression. Causes of the Great Depression:The Stock Market Crash of 1929-952515240During the Roaring 20’s many people spent more money than they had. Because the Stock Market was such an easy way to make big bucks, people would take a risk by taking out loans to buy more stock. If the economy remained as strong as it did during the Roaring 20’s then taking out loans would not have been such a big deal. During the 1920s, the U.S. stock market underwent rapid expansion, reaching its peak in August 1929, after a period of wild speculation. By then, production had already declined and unemployment had risen, leaving stocks in great excess of their real value. -23241001210310Crowds gathered outside of Wall Street after the Crash. 00Crowds gathered outside of Wall Street after the Crash. Stock prices began to decline in September and early October 1929, and on October 18 the fall began. Panic set in, and on October 24, a record 12,894,650 shares were traded. Investment companies and leading bankers attempted to stabilize the market by buying up great blocks of stock, producing a moderate rally on Friday. However, this promise of a strong Stock Market collapsed on “Black Tuesday,” October 24, 1929 when stock prices that were once high dropped dramatically. More than 16,410,030 shares were traded on the?New York?Stock Exchange in a single day. Billions of dollars were lost, wiping out thousands of investors, and stock tickers ran hours behind because the machinery could not handle the tremendous volume of trading.Typically, people buy, sell, and trade stock all the time; however, once after the Stock Market Crash of 1929, everyone wanted to get rid of their stock as fast as possible. Stocks that were once very expensive dropped to a very cheap price, causing the Stock Market to crash. The Stock Market Crash did not directly cause the Great Depression itself, but it was one of the biggest events that influenced the Depression. The Stock Market Crash caused fear to spread across the nation and its effects were felt all across the globe. Because billions of dollars were essentially erased from the American money supply, people who once loaned money stopped giving, employers stopped hiring, customers stopped buying goods, and eventually America and the rest of the world faced the hardships of The Great Depression. 19050109855 Newspapers everywhere documented the panic of the Stock Market Crash, causing even more fear throughout the nation. Causes of the Great DepressionBank FailureMany people began to take out loans during the Roaring 20s. Farmers would buy land, tools, and supplies on credit, taking out loans to pay for their goods. Crops were selling at low costs making it very difficult to pay back interest on the loans. People in the cities were buying cars and other goods on credit also. Sometimes people would spend so much money on credit they were unable to pay back their loans to the bank. Because people did not pay back loans, banks began to go bankrupt and many people lost their savings. People put money in savings accounts at the bank to keep it safe and grow interest on savings. In turn, banks use this money in savings loaning it out to customers because it is an easy way to make money if customers pay back loans on time. However, banks were passing out loans so quickly and so few people were able to actually repay these loans that banks shut down. Billions of dollars disappeared because so many banks failed during the Great Depression. In the four years of 1930-1933 alone, nearly 10,000 banks failed or were suspended.? These banks held deposits of over $6.8 billion (equivalent to perhaps $60 billion today’s dollars, but representing a much larger share of depositor’s wealth then).? The depositors in these banks lost nearly 20% of these deposits when the banks failed.? Since there was no FDIC yet, and most state deposit insurance schemes had shut down already, this meant that everyday folks lost their savings, their money.The fear of bank failure sent a panic throughout the nation. Thousands of people went to the bank to withdraw money from their savings accounts but banks kept a limited supply of money available, meaning that banks would close their doors and shut down when the money supply ran out. This left many people penniless. 190576200This is the motto many people lived by during the 1920s. Credit was easily available and much of the population would spend way more money than they actually had.4000020000This is the motto many people lived by during the 1920s. Credit was easily available and much of the population would spend way more money than they actually had. 1905164465Hundreds of people would line up outside of banks trying to take their money out of the bank. This flood of people created panic and hysteria that shut down many small banks. 4000020000Hundreds of people would line up outside of banks trying to take their money out of the bank. This flood of people created panic and hysteria that shut down many small banks. ................
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