1920's and Great Depression Notes - Rabourn American Lit Class

**aqalieh95** Tue Dec 14, 2010 2:53 pm

Reasons For the Great Depression

Labor saving techniques like the assembly line were developed
Production increased because productions is cheaper, and overproduction occured
Companies needed to sell their supply, but there wasn't enough demand, so they started doing:
--Advertise to get people to buy things they don't need
--Buy on credit - buy now, pay later, which made many people to go into debt just to get the latest product
People borrowed money to buy stocks
Most people bought stocks on margin because they couldn't afford it, and went into debt

Farmers suffered the Depression before the rest of America

There was a slump in prices after WWI because there was no more demand overseas in Europe
Dust bowls formed because the ground is flat, so there is nothing to block the wind, and farmers over cultivated so it became into dust. Droughts made the ground completely dry, and then dust bowls formed

The Actual Crash

The stock market crash caused ripples in the economy
Increased trade barriers slowed down international trade
British investors sold their stocks in the US stock market, which causes a panic
Banks declare bankruptcy when everybody pulls out their money
1932 is the peak of the Depression, with about 25% of people unemployed
The Depression was caused primarily by:
--Overproduction
--Excessive Borrowing
--Decreased Trade

Government after the Crash

President Hoover thought that the Invisible Hand from economics would fix the economy by itself, but it only fixes it slowly
Created the Reconstruction Finance Corporation to help businesses borrow, but had little positive effects
People built shanty towns in front of the White House called "Hoovervilles" to insult President Hoover

Franklin Roosevelt Comes to Help