The Great Depression - 5 Minute History Lesson

Summary

This script explores the economic boom of the 1920s, the rise of consumerism, and the stock market frenzy, leading to the 1929 crash and the Great Depression. It highlights the dangers of unchecked speculation and greed, and the global impact of the economic downturn, ultimately setting the stage for WWII.

Takeaways

• 🏆 The aftermath of World War I in 1918 led to a period of economic prosperity and cultural change in America known as the Roaring '20s.
• 📈 The 1920s saw a boom in consumer spending and innovation, with new inventions like the vacuum cleaner and electric washing machine becoming popular.
• 📻 The first radio advertisement in 1920 marked the beginning of a new era in advertising, contributing to the economic boom.
• 🚗 The widespread availability of loans and the popularity of Henry Ford's Model T made cars accessible to many, further fueling economic growth.
• 💰 The stock market became a popular investment avenue, with many people, including average Americans, investing in stocks, hoping to become richer.
• 📉 Overconfidence in the stock market led to a speculative bubble, with people borrowing money to invest, which set the stage for a potential crash.
• 📉📉 The Great Depression began with Black Thursday on October 24, 1929, when investors started selling stocks, leading to a massive drop in the stock market.
• 💔 The crash wiped out a significant portion of America's wealth, with many losing their life savings and banks failing, leading to widespread unemployment and poverty.
• 🌐 The effects of the Great Depression were not limited to the United States but were felt globally, contributing to political instability and the rise of extremist movements.
• 🛡️ In response to the crisis, President Franklin D. Roosevelt introduced the Federal Deposit Insurance Corporation (FDIC) and the Securities Exchange Commission (SEC) to protect financial institutions and deposits.
• 📚 The lessons from the Great Depression highlight the dangers of unchecked greed, speculation, and debt, emphasizing the importance of financial regulation and caution.

Q & A

What was the economic period following World War I known as?

The economic period following World War I was known as the Roaring Twenties.

Why did the economy see a boost in the 1920s?

The economy saw a boost in the 1920s due to factors such as returning troops from the war, delayed projects resuming, more women entering the workforce, and banks giving out loans to everyone.

What was the significance of the first radio advertisement in 1920?

The first radio advertisement in 1920 marked the beginning of a new era in advertising, helping to promote products like vacuum cleaners and electric washing machines.

How did the popularity of the stock market contribute to the economic bubble of the 1920s?

The popularity of the stock market led to widespread investment, with many people, including those from non-traditional backgrounds, investing heavily in stocks, often using loans. This led to an economic bubble as stock prices rose beyond what the actual production and earnings of companies could justify.

What was the impact of the economic bubble on the general public's perception of wealth?

The economic bubble led to a widespread belief among the general public that they could easily become wealthy through stock market investments, even leading some to take out loans to invest more.

What event is considered the start of the Great Depression?

The start of the Great Depression is often considered to be Black Thursday, October 24, 1929, when investors began selling off stocks in panic.

Why did the stock market crash on Black Thursday and Black Tuesday?

The stock market crash on Black Thursday and Black Tuesday was due to a combination of factors including investor panic, the realization that stock prices were not supported by actual company values, and a slowing economy.

How did the Great Depression affect the banking system?

The Great Depression led to the collapse of many banks as people lost their life savings and banks could not recover the money they had lost in the stock market. This resulted in widespread bank failures and a loss of public trust in the banking system.

What measures were introduced by Franklin D. Roosevelt to protect the financial system?

Franklin D. Roosevelt introduced measures such as the Federal Deposit Insurance Corporation (FDIC) and the Securities Exchange Commission (SEC) to safeguard financial institutions and protect the wealth of Americans.

How did the Great Depression impact the global economy and lead to political changes?

The Great Depression had a global impact, causing economic hardships worldwide. It also contributed to the rise of extremist political movements, such as the Nazi Party in Germany, which capitalized on the despair of the people.

Outlines

00:00

🌟 The Roaring 20s and the Stock Market Boom

This paragraph delves into the economic prosperity of the 1920s, following the end of World War I. America experienced a surge in economic growth, with a boost in consumer spending and the entry of more women into the workforce. The period saw the rise of radio advertisements and the popularity of new inventions like vacuum cleaners and electric washing machines. Banks were liberal with loans, enabling widespread consumerism and investment in stocks. The stock market became a focal point for wealth accumulation, with many people, including those from humble backgrounds, investing heavily. This led to a speculative bubble, with banks even borrowing from customer accounts to invest in stocks, setting the stage for a potential economic crisis.

05:01

📉 The Great Depression: Crash and Consequences

The second paragraph discusses the catastrophic economic downturn known as the Great Depression, which began with the stock market crash on Black Thursday, October 24, 1929. The crash led to a massive sell-off, with investors panic-selling stocks and the Dow Jones Industrial Average plummeting. This resulted in the loss of fortunes, joblessness, and widespread financial ruin. The aftermath saw the closure of banks, skyrocketing unemployment rates, and a general economic malaise that lasted through the 1930s. The paragraph also touches on the global impact of the depression, including the rise of extremist movements like the Nazi Party in Germany, which capitalized on the public's despair. The narrative concludes with the eventual economic recovery spurred by the onset of World War II, highlighting the cyclical nature of economic crises.

Keywords

💡First World War

The First World War, also known as World War I, was a global war that lasted from 1914 to 1918. It involved many of the world's major powers, organized into two opposing alliances: the Allies and the Central Powers. In the video, the end of the war in 1918 is noted as a turning point, leading to a period of economic prosperity and cultural change in America, setting the stage for the subsequent events discussed.

💡Roaring Twenties

The Roaring Twenties refers to the 1920s, a decade marked by significant economic prosperity and cultural dynamism in the United States. The video highlights this period as a time when America saw a surge in consumerism, technological advancements, and social changes, which ultimately contributed to the economic bubble that would later burst.

💡Radio Advertisement

Radio advertisement is a form of advertising that uses radio as the medium to convey information about a product, service, or event. In the script, the first radio advertisement in 1920 is mentioned as a symbol of the burgeoning consumer culture and the beginning of mass media's influence on consumer behavior.

💡Stock Market

The stock market is a platform where shares of publicly traded companies are issued and traded, either through exchanges or over-the-counter markets. The video discusses the stock market's role in the 1920s, where it became a popular investment vehicle, leading to widespread speculation and eventually contributing to the stock market crash of 1929.

💡Great Depression

The Great Depression was a severe worldwide economic depression that took place mostly during the 1930s, beginning in 1929. It is the longest, deepest, and most widespread depression of the 20th century. The video describes the Great Depression as the economic downturn that followed the stock market crash, leading to widespread unemployment, poverty, and a significant loss of wealth.

💡Investment

Investment in the context of the video refers to the act of committing money or capital to an endeavor with the expectation of obtaining profit. The script illustrates how the pursuit of wealth through investment in the stock market became a widespread practice during the Roaring Twenties, eventually leading to the economic collapse.

💡Loan

A loan is a sum of money that is borrowed and expected to be paid back with interest. The video mentions that banks were giving out loans to everyone, which allowed more people to buy consumer goods and invest in the stock market. This easy access to credit is depicted as a factor that contributed to the economic bubble.

💡Henry Ford's T Model

The Ford Model T, often called the T Model, was an automobile produced by Henry Ford's Ford Motor Company. It was introduced in 1908 and became a symbol of the era of mass production and consumerism. In the video, the T Model is mentioned as an example of the consumer goods that became popular during the economic boom of the 1920s.

💡Black Thursday

Black Thursday refers to October 24, 1929, when the New York Stock Exchange experienced a record-breaking volume of share trading. The video describes this day as the start of the stock market crash that led to the Great Depression, marking a turning point in the economic history of the United States.

💡Dow Jones

The Dow Jones Industrial Average (DJIA) is a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States. The video uses the Dow Jones as a measure of the stock market's health, noting its significant drop during the stock market crash of 1929 and the subsequent years.

💡Federal Deposit Insurance Corporation (FDIC)

The Federal Deposit Insurance Corporation is a U.S. government agency that provides deposit insurance to depositors in U.S. commercial banks and savings institutions. The video mentions the FDIC as one of the institutions created during Franklin D. Roosevelt's presidency to safeguard financial institutions and protect the wealth of Americans in response to the banking failures during the Great Depression.

Highlights

The year is 1918 and after four years of conflict the first world war is finally over.

America has emerged as one of the victors and enters a period of economic prosperity and cultural change known as the roaring 20s.

In 1920, the first radio advertisement is seen, indicating a boost in the postal economy and the return of troops from the war.

Recent inventions like the vacuum cleaner and the electric washing machine become hot commodities.

Banks are giving out loans to everybody, allowing more people to buy the latest gadgets.

The stock market becomes a popular practice with many people buying stocks, making it easy for investors to make money.

Everyone from cooks to taxi-drivers are trading stocks, hoping to become rich.

Banks begin borrowing money from customer bank accounts to buy stocks, unnoticed by the public.

By 1929, America's wealth has doubled and investments are up 218 percent since 1922.

Stocks are rising so fast that companies struggle to justify their stock price.

Wages are falling and easy credit is dead, leading to a decrease in production and consumer spending.

Investors ignore economic problems and continue buying stocks, leading to a false sense of prosperity.

October 24th, 1929, known as Black Thursday, marks the start of the Great Depression as investors start selling stocks.

Black Tuesday sees the Dow Jones fall 12 percent, erasing large chunks of America's wealth.

The Great Depression is the worst economic downturn in the history of the industrialized world.

The Dow Jones continues to fall for another three years, losing ninety percent of its value from its high in 1929.

Many lose their jobs, companies shut down, and banks lose a lot of money, leading to widespread bank closures.

Unemployment reaches its highest level in US history at 24.9 percent.

The Great Depression's effects are felt globally, leading to the rise of Hitler and the start of the Second World War in 1939.

The war ironically ends the Great Depression by creating jobs in America.

Laws are introduced to safeguard financial institutions and deposits, including the Federal Deposit Insurance Corporation and the Securities Exchange Commission.

The lessons of the Great Depression highlight the power of greed and fear in the markets and the destructive potential of speculation and debt.

Transcripts

in the world of finance we are often

quick to forget the tragedies of the

past yet valuable lessons are to be had

by exploring their causes and effects

after all in world of ever-changing

rules products and services history is

the one constant that can guide us

through the ambiguity so let's take a

five-minute history lesson on today's

plain bagel

the year is 1918 and after four years of

conflict the first world war is finally

over America has emerged as one of the

victors and his boat enter a period of

economic prosperity and cultural change

known as the roaring 20s things start

off pretty strongly as the postal

economy has seen a boost troops are back

from the war delayed projects are

springing up again and hey more women

are entering the workforce meaning that

more people have a salary to spend and

companies are looking for a piece of the

money pie

so in 1920 we see our first radio

advertisement and it seems to be working

recent inventions like the vacuum

cleaner and the electric washing machine

are becoming hot commodities and hey

since things are looking pretty good the

banks are giving out loans to everybody

meaning that even more people can buy

the latest and greatest gadgets before

you know what everyone's getting the car

- Henry Ford's T model to be exact and

with it life is becoming a lot easier

now you can do the Charleston across

town we hope for your evening smoke all

of this is making companies very rich

then the average American is making good

waves themselves in fact people are

starting to look for things to do with

their newfound wealth by another laundry

machine nah a new car don't need it oh

wait what about investing yeah

that's it after all why be rich when we

could be more rich so the stock market

becomes a pretty popular practice and

with so many people buying investors are

finding it very easy to make money on

stocks soon enough everyone thinks

they're 1920s Warren Buffett and I mean

everybody cooks shoeshines taxi-driver

so you name it and everyone is trading

like a Wall Street tycoon pouring their

life savings into whatever security is

hot that day in fact there's so much

money to be made people are taking out

loans to invest even more and banks are

probably collecting the interest by the

way those same banks are looking to

invest more money too and soon enough

they begin borrowing money from customer

bank accounts to buy stocks but since

things are looking up no one's noticing

and overall things are going pretty well

in America financially anyway and as we

experience flapper culture prohibition

and the rise of jazz music people are

making good money on the markets by 1929

America stole wealth has doubled and

investments are up 218 percent since

1922 in fact

stocks are rising so fast companies are

having a hard time keeping up and

justifying their stock price wait

and hold on production actually seems to

be slowing down Henry's not making as

many team models and people aren't

buying as many things it looks like

companies may have overestimated their

growth and now wages are falling and all

that easy tax is dead well people have

taken know quite a bit and oh oh

interest rates are starting to rise but

wait a minute the stock market is still

up that doesn't seem right even though

the economy is looking worse for wear

under the hood investors are more or

less ignoring these problems in buying

some as if everything were exceptional

sure we see a few shake ups and close

calls but things are still largely

positive and people are still gambling

on the markets but over time the voice

of reason is getting louder and investor

uncertainty is increasing which brings

us to October 24th 1929 Black Thursday

as it's called the theorized start of

the Great Depression investors have been

royally spooked with headlines reading

and when markets open they start to sell

and I mean so twelve point nine million

shares to be exact a new record and that

opening bell things fall 11 percent

people are selling so much that price

tickers can't keep up with the volume so

people don't even know what they're

selling races and all of this selling is

dragging the stock market down erasing

large chunks of America's wealth and

things are about to get horse while

markets recovered later that day come

black Tuesday it's an outright panic the

Dow Jones Falls twelve percent and that

record we set last Thursday yeah we just

broke it again the markets loose forty

million dollars in one day some shares

are now worthless people have lost their

life savings and Americans who borrow to

invest are absolutely crushed and so

friends here we are the Great Depression

the worst economic downturn in the

history of the industrialized world the

Dow Jones Falls for another three years

after this losing ninety percent of its

value from its high in 1929 many lose

their jobs this company shut down and

it's not just investors that are hit

remember that many of the bank's poor

old well a bunch of it is lost in the

markets too

and people are only getting back ten

cents for every dollar they had in their

account banks across the country shut

down and unemployment reaches its

highest level in US history twenty four

point nine percent by this point redline

soup kitchens and homelessness are

common sights whether you invested

borrowed money or even just held money

in a bank account the depression found a

way to hurt you financially times would

be tough throughout the 1930s and fiscal

intervention from Franklin D Roosevelt

would do little to resect ivities in

fact it wouldn't be until the rise of

the Third Reich in Germany that we

to end to the crisis you see the Great

Depression wasn't just felt in America

rather with recent globalization its

effects were felt around the world and

in the darkness we saw the rise of

Hitler who used the despair of the

German people as a rallying call

ultimately leading to the creation of

the Nazi Party in the start of the

Second World War in 1939 the war created

jobs in America ironically ending one

tragedy with the start of another

experts can't agree on why the Great

Depression was as bad as it was but the

were valuable takeaways from the

hardship it demonstrated just how

powerful the greed and alternatively the

fear of the markets can be when they get

out of control while demonstrating the

destructive potential of speculation and

debt laws would later be introduced to

safeguard financial institutions and

deposits during his time in office

Franklin D Roosevelt would introduce the

Federal Deposit Insurance Corporation

and the Securities Exchange Commission

institutions targeted at protecting the

wealth of Americans that still exists to

this day few are left to remember the

hardships of the depression but we'd be

foolish to forget the lessons it

provided after all fear greed and

speculation are far from dead hey guys

thank you so much for watching if you

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plain bagel thanks again

you