The Great Depression

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The Great Depression

• 1930s

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Circular Flow Model

• Do Now As a class, complete the chart.
• Business circular flow chart.docx

3
Ms. Sanyigos Roller Coaster Ride

• The Business Cycle

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Stock Market

• In the 1920s
• -What is stock?
• -You are investing in a company
• -The company uses the money to expand or grow.
• How?

What does invest mean?
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Stock Market

• In the 1920s
• -Buy on Margin when people buy stock they borrow
  20 or more of the money
• Example-Stock is 10 you pay 2 and borrow 8
• -Speculation taking a risk in the stock market

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The Stock Market

• In the 1930s
• -October 24, 1929 stock prices start to drop so
  people start to sell their stock
• -October 29, 1929 Black Tuesday a million
  shares are sold by November there is 30 billion
  in loses
• Remember people OVERSPECULATED BUY ON MARGIN!

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Who cares?????

• If decrease stock then businesses have less money
  to invest!
• How does this affect everything else?

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Manufacturers/Business

• In the 1920s
• New inventions
• Businesses are making things
• Need workers
• -unemployment is less than 4
• BUT by 1925 everyone has what they need.SO

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Manufacturers/Business

• In the 1930s
• Surplus leftover goods that are not selling
• Where do you see surplus in a store?
• -begin laying off workers or cutting pay
• What is the difference between being laid off
  versus fired?
• -Stock market crash hurts business
• How does one business affect another?
• Ex auto industry-if produce less than steel,
  glass, rubber companies produce less
• -this effects the workers!

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Workers

• In the 1920s
• -people spend after the war but much is paid for
  on credit-buy now, pay later
• -pay decreased but prices are still high
• -pay in installment plans in monthly payments
  for large items
• What are examples of installment plans your
  parents have?

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Workers

• In the 1930s
• -business decreases so workers take pay cuts or
  are laid off
• -owe debt from credit cant pay back
• -no unemployment insurance
• -some families start living together
• -unemployment hits 25 in 1933 approximately 13
  million people

Class example of 25- How would your daily life
change?
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(No Transcript)
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Banks

• In the 1920s
• How do banks work????
• -Only 20 of families have savings
• -Rural (farm) banks suffer more than banks in
  city areas

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Banks

• In the 1930s
• -Businesses, Farmers, Workers cant pay back
  their loans
• -Banks lose money and close
• -5,500 go under because they have no money to
  loan
• -by 1933, 9 million savings accounts are gone

15
Farmers

• In the 1920s
• -decrease production (making things) after the
  war and Prohibition (no alcohol)
• -have surplus (too much left over), crop prices
  low
• -cant repay loans

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Farmers

• In the 1930s
• -Dust Bowl drought in Midwest (no rain)
• -lose farms because they cant repay their
  mortgage or debt from buying new equipment
• -become migrant workers (move around) looking for
  work called Okies
• -some become sharecroppers (share farms)

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Women

• In the 1930s
• -husbands leave looking for work
• -lose jobs to men
• -try to hold the family structure together
• -marriage rate divorce rate decreases
• Why?

18
African Americans

• In the 1930s
• -increased discrimination due to competition for
  jobs
• Scottsboro Boys wrongly accused of a crime on a
  train
• -Showed discrimination in the justice system for
  African Americans