THE GREAT DEPRESSION

THE CRASH OF 1929

• October 24th: economic slowdown caused panic selling of stocks
• Stock prices plummeted and people lost their investments
• Investors were forced to sell at any price they could
• People were unable to pay back loans; banks crashed
• Most people lost the entirety of their savings

THE CRASH OF 1929 (cont.)

• People couldn't afford to buy things
• Consumer demand decreased
• Businesses couldn't sell their goods; huge surpluses
• Businesses cut production and fired people to compensate
• Huge unemployment led to decreases in demand (cycle)

FAMILIES

• Wages plummeted due to business failure
• Women were laid off to make jobs for men
• Highest unemployment rate was 25-30% in 1933
• Shantytowns were collections of shacks without amenities
• The unemployed ended up living in Shantytowns

THE NEW DEAL

• Subsidies for farmers; farmers paid to keep fields fallow
• Jobs created on public dam building on the Tennessee River
• The Works Progress Administration gave people jobs building highways and parks
• Keynes said inadequate demand must be stopped by fighting unemployment
• Keynes advocated public works projects and lowering interest to encourage investment