Transcript Great Depression ppt

1929-1939
• Stock market
crash
• Didn’t realize
the effect it
would have
• No money to
replenish what
was borrowed
Many found being broke
humiliating.
The Roaring 20’s
• The new concept of
“credit”
• People were buying:
– Automobiles
– Appliances
– Clothes
• Fun times reigned
– Dancing
– Flappers
– Drinking
Why was this bad?
• Credit system
– People didn’t really have
the money they were
spending
• WWI
– The U.S. was a major
credit loaner to other
nations in need
– Many of these nations
could not pay us back
EASY MONEY (CREDIT)
• INTEREST RATES ON LOANS WERE TOO LOW =
TOO MUCH BORROWING INTEREST RATES ON
SAVINGS WERE TOO LOW = TOO MUCH
SPENDING (INFLATION) EXCESSIVE REAL
ESTATE CONSTRUCTION = OVERSUPPLY
GHS Rules
Buying on
Credit
Borrowing Money
Causes of
Depression
80% of radios &
60% of cars were
on credit
Wealth is Distributed Unevenly
• Corporate profits rose 65% during the 20s.
• The rich became much richer and the
workers became less poor.
1920s and 30s salaries
• Bus driver: no power
steering or brakes
• $1300 or $0.43/hr
• Teacher
• $1227
• Waitress
• $520 or $0.20/hr
• Farmhand
• $216 or $0.07/hr
• First minimum wage
under FDR?
• Highest paid
production workers in
the 1920’s – Ford
Motor Company
• $5.00/day or $0.48/hr.
• Farm Prices: Potatoes,
Cotton, Pork?
• $0.01/pound potatoes
• $0.05/pound cotton
• $0.05/pound pork
Uneven distribution of Wealth
• Many Poor and Very Few Rich!
• Workers earn so little they can’t buy the
products they produce!
• Wages were as little as 20 – 25 cents per
hour!
• Even the best employer Ford Motor
Company paid only $5.00/Day for a 6AM6PM shift!
Uneven
Distribution of
Wealth
Rich got richer
Buying on
Credit
Borrowing Money
Causes of
Depression
80% of radios &
60% of cars were
on credit
The Stock Market
• People bought stocks
on margins
– If a stock is $100 you
can pay $10 now and
the rest later when the
stock rose
• Stocks fall
– Now the person has
less than $100 and no
money to pay back
And then….
• With people panicking
about their money
investors tried to sell
their stocks
– This leads to a huge decline
in stocks
– Stocks were worthless now
• People who bought on
“margins” now could not
pay
• Investors were average
people that were now broke
Uneven
Distribution of
Wealth
Rich got richer
Buying on
Credit
Borrowing Money
Causes of
Depression
Stock
Speculation
•Buying on Margin
•Black Tuesday
• Farmers were already feeling the effects
– Prices of crops went down
– Many farms foreclosed
• People could not afford luxuries
– Factories shut down
– Businesses went out
• Banks could not pay out money
• People could not pay their taxes
– Schools shut down due to lack of funds
• Many families became homeless and had
to live in shanties
AGRICULTURAL
OVERPRODUCTION
• INCREASED TECHNOLOGY
• GOOD GROWING CONDITIONS
• SUPPLY GREATER THAN DEMAND
The Great Dust Bowl
• Over use & Over grazing
– No crop rotation
•
•
•
•
•
No soil conservation
No wind breaks
Loss of natural grasses and animals
Climatic change – the drought of the 30’s
Agriculture
Overproduction
Great Dust bowl
Uneven
Distribution of
Wealth
Rich got richer
Buying on
Credit
Borrowing Money
Causes of
Depression
Stock
Speculation
•Buying on Margin
•Black Tuesday
OVERSPECULATION
•
•
•
•
“GET RICH QUICK SYNDROME”
MARGIN BUYING
LACK OF GOVT. REGULATION
PANIC SELLING
• ‘29 MARKET CRASH
•
The New York Stock Exchange
Black Friday, October 24, 1929
Run on Banks
• The crisis in confidence frightened
depositors who feared for their money.
• Millions tried to withdraw their money
because they feared the banks losing it.
• 1929- 641 banks failed
• 1930- 1350 banks failed
• 1931- 1700 banks failed
Agriculture
Overproduction
Great Dust bowl
Uneven
Distribution of
Wealth
Rich got richer
Buying on
Credit
Borrowing Money
Banks Collapse
“Runs” on banks
Causes of
Depression
Stock
Speculation
•Buying on Margin
•Black Tuesday
• Herbert Hoover was
president at the start
• Philosophy: We’ll
make it!
• What He Did: Nothing
• The poor were looking
for help and no ideas
on how to correct or
help were coming
Laissez Faire Economic Policy
• Prior to the Great
Depression the US.
Government ignored
the business cycles of
the US economy. The
Government until
FDR believed that the
American Economy
could fix itself.
Government Today is in charge of
the US Economy!
• Presidents win or lose
elections based on
economic
performance!
Government control
over one third of our
$10 trillion economy!!
THE BUSINESS CYCLE
• BOOM/PROSPERITY/PEAK
• HIGH DEMAND
DESIRE FOR MORE PROFITS
= GREATER INVESTMENT = MORE PRODUCTION
= HIGHER EMPLOYMENT = MORE DEMAND =
HIGHER PRICES (INFLATION)
THE BUSINESS CYLCLE
• CONTRACTION/SLOWDOWN
• INFLATION/OVERPRODUCTION
LESS
PRODUCTION = LAY OFFS = LESS SPENDING =
LOWER CONFIDENCE = LESS INVESTMENT =
HIGHER UNEMPLOYMENT
• UNTIL SURPLUSES ARE USED UP
BUSINESS CYCLE TROUGHS
• RECESSION = TWO SUCCESSIVE 1/4’s (3
MONTH PERIODS) OF DECLINING GDP ($ OF
GOVT, CONSUMER AND BUSINESS
SPENDING)
• DEPRESSION = UNEMPLOYMENT GREATER THAN 12%
THE BUSINESS CYCLE
• EXPANSION/RECOVERY
• HIGHER DEMAND
SURPLUS REDUCTION =
MORE PRODUCTION = RECALL OF WORKERS =
MORE PURCHASING= INCREASED INVESTMENTS =
ECONOMIC GROWTH
POOR MONETARY POLICY
• FED RESERVE INCREASED INTEREST RATES
WHICH MADE MONEY/BORROWING MORE
EXPENSIVE & SAVING MORE ATTRACTIVE
INSTEAD OF LOWERING INTEREST RATES TO GIVE
THE ECONOMY A “JUMP START”
POOR FISCAL POLICY
• HOOVER ADMIN. & CONGRESS CUT SPENDING &
RAISED TAXES TO BALANCE THE BUDGET
INSTEAD OF INCREASING SPENDING & CUTTIN G
TAXES TO “JUMP START” THE ECONOMY
• EX. TEMPORARILY DEFICIT SPENDING
THE CIRCULAR FLOW
$ COSTS
$ INCOMES
RESOURCE
MARKET
RESOURCES
INPUTS
BUSINESSES
HOUSEHOLDS
GOODS &
SERVICES
GOODS &
SERVICES
PRODUCT
MARKET
$ REVENUE
$ CONSUMPTION
THE CIRCULAR FLOW
$ COSTS
$ INCOMES
RESOURCE
MARKET
RESOURCES
BUSINESSES
INPUTS
GOVERNMENT
GOODS &
SERVICES
HOUSEHOLDS
GOODS &
SERVICES
PRODUCT
MARKET
$ REVENUE
$ CONSUMPTION
HIGH TARIFFS
• WE TAXED FOREIGN IMPORTS TO PROTECT OUR
PRODUCTS UNDER HOOVER THE HAWLEY
SMOOT TARIFF IS PASSED – THE HIGHEST
PROTECTIVE TARIFF IN US. HISTORY!!! FOREIGN
NATIONS TAXED IMPORTS FROM THE U.S. IN
RETALIATION
• HIGHER PRICES FED UNDERCONSUMPTION
• NATIONS STOPPED PAYING WWI DEBTS
TO
THE U.S.
Agriculture
Overproduction
Great Dust bowl
Uneven
Distribution of
Wealth
Rich got richer
Buying on
Credit
Borrowing Money
Banks Collapse
Causes of
Depression
Stock
Speculation
“Runs” on banks
Tariffs
Hawley-Smoot Tariff
•Buying on Margin
•Black Tuesday
Christmas Day
Breadlines in
New York City,
1931
Police stand guard outside the entrance to New York's closed
World Exchange Bank, March 20, 1931
Unemployed men vying for jobs at the American Legion
Employment Bureau in Los Angeles during the Great
Depression.
Unemployed workers in front of a shack with Christmas tree,
East 12th Street, New York City. December 1937
Hard Times
Unemployment
· By the early 1930’s,
approximately 25% of the
nation was unemployed.
Man in hobo jungle killing
turtle to make soup,
Minneapolis, Minnesota.
Sept. 1939.
Families
in Crisis
· Marriage
and birth
rates
dropped.
· Fathers
and some
children
left home
to find
work.
Evicted family with
belongings on street,
December 14, 1929.
Homelessness
· Homeless families
build shacks out of
wooden crates and scrap
metal.
· These shacks were
known as Hoovervilles.
Seattle, Washington
Central Park,
New York City
“Hooverville,"
New York City,
December 8
1930
[Sign on shack
reads:
"House of
Unemployed"]
Hoover Takes Action
• At first,
President
Hoover was
against
offering
direct
government
relief.
• Instead, he
asked private
charities,
such as the
YMCA, to
help.
Many waited in unemployment
lines hoping for a job.
People in cities would wait in line for
bread to bring to their family.
Some families were forced to relocate
because they had no money.
“Hooverville”
• Some families were
forced to live in
shanty towns
– A grouping of shacks
and tents in vacant
lots
• They were referred to
as “Hooverville”
because of President
Hoover’s lack of help
during the depression.
A drought in the South lead to
dust storms that destroyed crops.
“The Dust Bowl”
The South Was Buried
• Crops turned to dust=No food to
be sent out
• Homes buried
• Fields blown away
• South in state of emergency
• Dust Bowl the #1 weather crisis
of the 20th century
Two Families During
the Depression
A Farm Foreclosure
Some families tried to make money by
selling useful crafts like baskets.
*FDR*
• When he was
inaugurated
unemployment had
increased by 7
million.
• Poor sections (like
Harlem) had 50% of
the pop. unemployed
• Instated the “New
Deal”
• Yea! Frankie!
• People everywhere were
effected by the depression
• It wasn’t till President
Roosevelt took over and tried
to put the economy back
together that people even saw
a glimmer of hope
Major Historical Happenings...
• Jim Crow Laws
• Scottsboro
Trials
• Recovering
from the Great
Depression
• Racial Injustice
• Poor South
Jim Crow Laws
• After the American Civil War most
states in the South passed anti-African
American legislation. These became
known as Jim Crow laws.
• These laws included segregation in…
– Schools
-- Hospitals
– Theaters
-- Water fountains
– Restaurants
– Hotels
– Public transportation
– Some states forbid inter-racial marriages
• These laws were instituted in 1896 and
were not abolished till the late 1950’s
(even then still not completely).
• 9 young AfricanAmerican men (1320) accused of
raping 2 white girls
in 1931
• Immediately
sentenced to death
• Trials went on for
nearly 15 years
before all the men
were dismissed
• Started on a train bound for
Memphis
• Several white men boarded and
picked a fight with the black men
• Whites were forced off train by the
12 black men. The white men
reported the the black men had
raped two white girls on the train to
authorities
• They were immediately arrested and
tried in front of an all-white jury.
The trials caused a huge uproar
amongst the black community.
• Wrote To Kill a
Mockingbird in
1960
• Based the story on
her life growing
up in Monroeville,
Alabama
• TKAM was the
only novel she ever
wrote
• The character of
“Dill,” Scout and Jem’s
playmate in the novel
was based upon Lee’s
actual neighbor,
Truman Capote
• Capote is famous for
amongst other things,
In Cold Blood and
Breakfast at Tiffany’s.
• It has been said that he
gave Lee Mockingbird
as a gift.
• In 1962 the novel
was turned into a
film starring
Gregory Peck.
• It received a
humanitarian
award and several
Academy Award
nominations