Transcript Crash, Great Depression and New Deal

Hard
Times
…are Hoovering over us.
The1928 Election
Herbert Hoover vs. Al Smith
Issues of the 1928 election & the outcome…
Objective…
• Describe Hoover’s
background &
philosophy on
government.
Herbert Hoover
• Iowa – Republican
• Quaker
• Self made man
• Food Administration
• WWI Food Relief
• Sec. of Commerce
• “Dry”
The irony of the 1928
election…
Hoover’s philosophy on
government…
• American Individualism (1922)
• “Volunteerism”…
• “a cooperative, socially responsible
economic order”…
Objective…
• Explain the basic concepts
of the stock market.
The Bull Market
• Stock prices rise in the 20s
• The market is viewed as a get rich quick opportunity
• The basic concept of the stock market…
Watching the ticker
tape at the height of
the bull market.
The most basic concept of the stock
market…
Stock Market 101
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What is a share of stock?
Why do companies sell shares of stock?
Why do people buy stock?
What determines the value of stock?
What does it mean for stock to be over
valued (vs. under valued)?…
Stock Market
Simulation
1) Bull Market vs. Bear Market
• Making money in the stock market:
• Long term investment…
• Speculation…
3) Margin buyers…
Stock Market
Simulation
II
How will you invest your money?
Objective
Identify & explain the causes of
the 1929 stock market crash.
G-Docs Mini-Project
Causes of the 1929 Stock Market Crash
• Using G-Docs create a “Presentation “ and connect me to the
“Presentation”
• HW: Read the assigned articles & complete the summary sheets for
the assigned homework.
• In class, your assigned group will complete a “Presentation”
prioritizing the 6 most significant causes of the 1929 Market Crash.
(#1 = most... #6 = least) .... Use Mozilla Foxfire
• Make sure the first slide (title slide) was has the names (first & last)
of your group members.
• Each of the 6 slides (7 counting Title slide) dedicated to a cause will
have “cause statement” at the top & below it a clear explanation of
the cause.
• Identify the person in your group who prepared the slide with their
full name in the cause statement.
• Place a asterisk (*) at the beginning of the cause statement if it
correlates to NYT article
• The project will be graded, but will not be presented.
Google Docs Mini-Project:
Causes of the 1929 Stock Market Crash
Objective... Determine the causes of the 1929 Market Crash.
II. NYT Primary Source Articles on the 1929 Market Crash:
– NYT, 1929: Primary 1 - "Wall Street Hums on the Day of Rest to Catch Up on Work“
http://www.nytimes.com/library/financial/102829crash-sunday.html
– NYT, 1929: Primary 2 - "Stock Prices Slump $14,000,000,000 in Nation-Wide Stampede to Unload;
Bankers to Support Market Today"
http://www.nytimes.com/library/financial/102929crash-slump.html
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NYT, 1929: Primary 3 - "Stocks Collapse in 16,410,030-Share Day, but Rally at Close Cheers Brokers;
Bankers Optimistic, to Continue Aid"
http://www.nytimes.com/library/financial/103029crash-lede.html
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NYT, 1929: Primary 4 - "Stocks Mount in Strong All-Day Rally; Rockefeller Buying Heartens Market; 2-Day
Closing Ordered to Erase Strain"
http://www.nytimes.com/library/financial/103129crash-mount.html
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NYT, 1929: Primary 5 - "Stocks UP Again On Flood Of Buying; Discount Rate Cut Here And In London;
Back to Normal, Reserve Board Finds"
http://www.nytimes.com/library/financial/110129crash-stocks.html
III. Secondary Article on the causes of the 1929 Market Crash:
http://www.economicshelp.org/blog/76/economics/wall-street-crash-1929/
2) The weakness developing
within the market?...
… the # of Americans owning stock?
The Stock Market Crash
* Not a 1 or 2 day event
Wall Street on Oct. 29, 1929
What happened on "Black Tuesday?”…
The Stock Market Crash
• The market lost 40 billion
from Oct 29 to April of
1930
• The market crash is
followed by The Great
Depression
• The low point: 1932-33
• The only solution to the
Great Depression will be
WW II
“the fundamental business of
America is sound” - Hoover
The Crash
4) Why did the stock market crash? …Relate to the games
The Causes of the
1929 Market Crash
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Speculation & “Irrational exuberance”
Margin purchase...
PANIC selling to avoid loses
Confidence in the market is replaced with fear…No demand for stock
The availability of credit for business allowed for over expansion...
Over production
The banking system collapses...
Lack of government regulation…
* 5) What was
Andrew Mellon’s
evaluation of the
slump?
What did Mellon mean when
he said that the market
crash & economic slump
will...
• “Purge the rottenness out
of the system”
• “The high cost of living
will come down”
• “People will work harder”
• “People will live more
moral lives”
Think…
Where did the 40 billion in market
assets (money) go when the
market crashed?
Paper profit…
Think…
Is paper profit real?...
The impact of the Wall Street Crash…
· 12M people out of work
· 20K companies bankrupt
· 1600 banks close
· 1 in 20 farmers evicted
· 23K suicides in one year–highest
ever
All of the above become issues in the
Great Depression.
Objective
Summarize the reasons why the
Great Depression occurred.
Recession v. Depression
Objective…
Explain the differences between a
recession & a depression
Venn Diagram: Recession v. Depression
Recession
An economic slow down...
• Consumer spending drops
• Production (GDP), investment, household incomes,
business profits & inflation drop
• Increased bankruptcies
• Unemployment rise
• Governments response: Increasing money supply, increasing
government spending & decreasing taxation.
Depression
A long-term downturn in economic activity...
• Effect more than one country
• Lasting a long time
• No buyers…suppliers cut production
• Large increases in unemployment
• No availability of credit
• Price deflation
• Bank failures
Underlying Weaknesses
6) Why is it inaccurate to say that the stock market
crash caused the Great Depression?
GNP:
Gross National Product…
The total amount of goods & services
produced within our economy
1929: GNP = $104 billion
1933: GNP = $56 billion
7) The underlying causes of the Great
Depression?...
“the worst economic slump in U.S. history”
• Stock market crash & financial panic
• High Tariffs limiting trade
• Over production in industry
• Weak agricultural economy
• Unequal distribution of wealth
Activity…The 5 Causes of
the Great Depression
Unite the cause of the Great
Depression you have been given with
four other causes and prepare to
explain one of the causes when
called upon.
Interpret the following quote…
“In effect, the automobile of American
capitalism had one foot pressed to
the accelerator of production and
another on the brake of
consumption.”
- # of Americans owning stock?
8) Mass Unemployment 1929–1945
Mass Unemployment
9) What did it mean to be unemployed and without
hope in the early 1930s?
10) Which groups found it easiest to keep work?
Selling apples to survive
Unemployment:
Men line up outside an employment
agency hoping to find work.
Answer the following questions…
Does the government have a responsibility
to help people in need? Why?
What objections might there be if the
government helps people in need?
Objective…
Analyze President Hoover’s
philosophical and leadership response to
the market crash and depression.
Hoover’s beliefs…
• This is “a business cycle” …“a temporary
slump”…“The economy would fix itself”
• Government should play a limited role in
socio-economic problems.
• Government’s role was to encourage &
facilitate cooperation, not to control it.
• Private solutions to socio-economic problems
• Preached:“American Individualism”…“Welfare
is not useful for society”
Hoover’s Failure
*11) What was Hoover’s response to the
Depression and its massive suffering?
• Slow to respond
• Calls for city, state & private aid
• Meets with key business leaders…
Hoover’s Failure
12) How were the needs of the
unemployed addressed in the early
years of the Depression?
Hoover’s Failure
14) What was Hoover’s plan and what
assumption was it based on?
Hoover: Too little, too late
Hoover takes action…
• Emergency Committee for
Employment (1930)…
• The Reconstruction Finance Corp.
(RFC) (1932)…
- Emergency financing for banks, life insurance,
railroads and other large businesses.
- “Trickle down” economics
• Emergency Relief Act (1932)…
On what forces outside the
U.S. did President Hoover
blame the country's economic
problems?...
Objective… Describe the “human
cost” of the Great Depression.
“No event of the twentieth century had a more profound
impact on American life”
Photo Journalist Project
A picture is worth one thousand words.
Mass unemployment….
•1929… 3% unemployment
•1933… 25% unemployment
Urban unemployment:
-Lowell, MA 90% -Cleveland,OH 50% -Akron, OH 60% -Toledo, OH 80%
The Depression Devastates
Peoples Lives
- Massive unemployment
- Homeless/ Hoovervilles/ Shanty towns…
- Soup kitchens & breadlines…
- The younger generation travels – Hobos
- African Americans: Lowest paid, first fired,
targets of violence
- People stop going to doctors/dentists
- People give up dreams
Where are the conditions of the Great
Depression the most difficult to manage?
Rural or urban?
Why?...
The Human Cost
• Mortgage failures
• Multiple families live
together
• Divorce rate decreases
• Marriages decrease -25%
• College enrollment drops
• Males: Anxiety related to
unemployment… Low self
esteem
• 3x normal the # admitted to
mental hospitals
• 1928-32: Suicide rate + 30%
Poverty brings long term
health effects for children…
Malnutrition cause long
term health issues for
children
The later impact on health…
50% of the men drafted for World War II in 194041 were rejected for medical or dental
reasons…
A letter to Hoover…
December 1st, 1932
Dear President Hoover,
My name is ___________________________________ and I have witnessed
firsthand the economic hardships of the Great Depression. I have
witnessed…
As a citizen of this once great country I ask that you….
Sincerely,
Hooverville, USA
Soup line / Breadline
What irony is expressed in his picture?
Hoboes or
“Wild Boys” of the rails
Rural homeless…
Penny auctions…
http://xroads.virginia.edu/~ma04/hess/Slang/Hooverisms.html
“Hooverisms”…
Hoover is a “scapegoat”
– “Hoover-flag”…
– “Hoover-blanket”…
– “Hoover-hog”…
– “Hoovervilles”…
Why do Americans hate Hoover?…
“Mellon pulled the whistle
Hoover rang the bell
Wall Street gave the signal
And the country went to Hell.”
15) The 1932 protests…
- Farmers’ Holiday Association…
- The “Bonus Army”…
Farmers’ Holiday
Association Meeting
Dumping milk…
The WWI “Bonus Army”
Who?
What?
Where?
When?
http://www.youtube.com/watch?v=dWvCCxOUsM8
Why?
Hoover’s Administration
• Congress passes the SmootHawley Tariff (1930)…
- International trade down 50%
http://www.youtube.com/watch?v=dxPVyieptwA
The 1932 Election
Herbert Hoover (Republican)
vs.
Franklin D. Roosevelt (Democrat)
Activity: Article review…
On Ending the Great Depression…
Count off by 3..
1) Hoover - Different
2) Roosevelt - Different
3) Hoover Roosevelt - Similar
4) Review your assignment with your group
and write the differences or similarities on
the board.
…Be prepared to share with the class.
Hooverball
Quiz terms….
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Black Tuesday
GNP
Bull Market
Smoot-Hawley Tariff
Speculator
Margin purchase
Paper profit
Recession v. depression
Emergency Committee on Unemployment
Andrew Mellon
Over valued v. under valued stock
Causes of the Market Crash
Causes of the Great Depression
Reconstruction Finance Corporation (RFC)
Who did Hoover’s efforts to end the Great Depression most help?