Transcript Great Depression

American Gothic
by Grant Wood,
1930
Adam Smith, Dead
Scottish Economist
Supply
1
• The amount of a product or service
that is available for consumers.
• High supply results in falling prices.
• Low supply results in rising prices.
• Too much of something results in
worthlessness.
Demand
• The desire or need consumers
have for a product or service
• High demand results in rising
prices.
• Low demand results in lower
prices.
2
The Relationship
• Supply and demand are related.
• If supply increases, demand
decreases.
• If supply decreases, demand
increases.
3
When supply
and demand are
equal, prices of
goods stabilize.
Supply
Demand
Business Cycle
4
• The economy moves in cycles.
• Boom - It expands when business
grows and money is easily available.
• Bust - It contracts when business
declines, people lose jobs, and
money is harder to earn.
Business
Cycle
A slow economic period
characterized by high
unemployment, homelessness,
business failure, and poverty
5
Dow Jones Industrial
Average
6
• An average of the prices of stocks
of major industries available on the
market
• It indicates the health of the
economy
• From Jan 1928 to Sept 1929 – the
Dow had climbed from 191 to 381
Or . . . how the
bottom
fell out
Contributing Factors
•
•
•
•
•
•
•
7
Agricultural overproduction
Industrial overproduction
High tariffs
War debts
Unequal distribution of wealth
Over speculation in the stock market
Financial panic
Farmers’ Troubles
8
During World War I
• Europeans were desperate for food
shipments from the U.S. (Demand
increased)
• The U.S. govt. passed price supports,
promising farmers high prices for
produce.
• Farmers began overproducing.
Continued
Farmers’ Troubles
At the end of World War I
• U.S. govt. removed price supports.
• Europeans grew more self-sufficient.
• Demand for our farm products fell.
• Farm prices fell drastically.
• Also farmers were in debt for new
technology, such as tractors.
8
Boy, Am I
in debt!
Tractor
Farmer
Decline in Overseas
Trade
• Exports dropped 50% during
the 1920s because of less
demand after WWI
• We raised tariffs, so nations
in Europe raised theirs – a
“tariff war”
9
Unpaid War Debts
European nations refused to pay
their WWI debts, claiming they
had already paid “in blood”
10
Economic Disparity
11
(unequal distribution of wealth)
• Disparity – unfairness, inequality
• The rich grew richer, while the
poor grew poorer.
• Few “middle class”
Overuse of Credit
• Most Americans were in debt
for the first time in U.S. history,
especially farmers.
12
Stock Market Dangers
• Over speculation
• Buying stocks on margin
13
Buying Stocks “on the Margin”
• You pay only a fraction of the price
of the stock. If the stock increases
in value, you keep the profit. If the
stock decreases in value, you have
to pay the broker, or sell the stock
at a loss. Very risky, especially
since there were no regulations on
this practice.
Black Thursday
• Thursday, October 24, 1929
• Dow Jones Average had fallen
21 points the closing hour the
day before.
• Investors began to sell their
shares of stock before the
prices fell more.
14
Black Tuesday
• Tuesday, October 29, 1929
• Investors started to panic
• 16.4 million shares were sold
on the stock market.
15
The “Great Crash”
16
• Stock prices continued to fall.
• Investors continued to sell their
shares of stock at a loss.
• By November, the Dow had fallen
to 198.7 (down from 381 in Sept.)
• Total stock market losses were
$30 billion.
Record High
381
The Crash
Record Low
199
The Crash
Makes
World
Headlines
17
Investors
Businesses
lose
millions.
lose
profits.
18
Workers
Businesses
are
laid off.
cut production.
Some fail.
Consumers
spend
less.
19
Businesses
and workers
cannot repay bank
loans.
Banks run
out of money
and fail.
Savings
accounts are
wiped out.
“Bank runs”
occur.
Hoovervilles
20
• Nickname for the shanty towns
built by the homeless during the
Depression.
• Shows the blame the people
placed on President Hoover for
not fixing the crisis.
The Dustbowl
• Over-farming and drought in the
Great Plains (Ok, Texas, Kansas)
• The topsoil began to blow away.
• Dust storms dropped tons of soil
hundreds of miles away.
• Lasted 7 years (1931 – 1938).
• 60% of dustbowl families lost their
farms – Many moved to California.
21
John Steinbeck
• Wrote The Grapes of Wrath.
• Describes the lives of farmers and
workers who lost everything during
the Depression.
• Brings national attention to the
problems facing the less fortunate.
22
John
Steinbeck
The Grapes of Wrath
Dorthea Lange
• Photographed hundreds of
migrant workers coming to
California from the Great Plains
and sharecroppers in the South.
• Portrayed the desperation of
families.
23
From Lange’s
“Migrant Mother”
Series
Her name was Florence.
She was 34 years old.
Migrant Workers from Muskogee, OK
Southern Sharecroppers
Refugees
from
Amarillo, TX
1936
Hoover’s Attitude
24
• Believed in laissez-faire - self-regulating
economy with minimal government
control.
• Believed that business would recover on
its own by adhering to voluntary
controls, such as minimum wage rates.
Hawley-Smoot Tariff
25
• 1930 - Highest tariff in history.
• Hoover hoped it would help
American businesses by raising
prices of imported goods.
• Caused a tariff war.
• Slowed international trade and the
U.S. economy further.
Representative Hawley and Senator Smoot
R.F.C.
26
• Reconstruction Finance Corporation
• Gave government credit to industries, RR’s,
insurance companies, and banks.
• The theory was that prosperity at the upper
levels of society would trickle down to all of
society.
• But the poor believed the government was
only helping the rich.
The Bonus Army
27
• 1932 – 20,000 jobless WWI veterans
marched on Washington, demanding
their pensions early.
• Hoover called in the Army.
• Troops under Gen. Douglas MacArthur
forced the protesters away from the
Capitol and set fire to their camp.
• Hoover was blamed for the debacle.
Bonus March
Bonus Army Camp
Army called in
Troops burn down
Bonus Army camp
The public blames Hoover for
not doing enough to help.
28
Herbert Hoover, the
Incumbent - Republican
Franklin Delano Roosevelt
NY Governor - Democrat
Continued
28
• Roosevelt
promises
Americans a
“New Deal.”
• FDR wins by 7
million popular
votes.
• 1933
• Repealed the 18th Amendment
• Ends Prohibition
• FDR – “The country needs a beer.”
29
• FDR’s relief, recovery, and reform
program for the economy.
• Aggressive government action.
• “The only thing we have to fear is
fear itself.”
30
Can you find
FDR in this
political
cartoon?
Radio broadcasts FDR used to calm the
fears of Americans during the Depression.
31
What is this
cartoonist
suggesting
about the
“New Deal”?
• On his 1st day in office, FDR
declares a banking holiday.
• All banks are forced to close for
one day.
• Once the bank proved its solvency,
it was allowed to reopen.
32
33
• The federal government would
insure bank deposits, to
prevent more banks from
failing and boost peoples
confidence about banks.
• Securities and Exchange Commission
• Regulated the stock-market to help
prevent another crash like the one in
1929.
• Can freeze trading when stocks drop
too much, too fast.
34
• Provides pensions, disability
payments, and unemployment
benefits to citizens who qualify.
• Helps provide for those with little
or no income.
35
36
• Civilian Conservation Corps
• Put young, single men to work
maintaining parks, beaches, and
forests to help reduce the crime rate.
• Paid $30/month.
CCC Camp in Michigan
More CCC Camps
Civilian Conservation Corps Workers
building a road in Ohio
CCC
Advertisement
on a
pillowcase on
display at the
CCC Museum
in Michigan
CCC Staircase at Temperance River State Park
Civilian Conservation Corps
Ludington Beach House at
Ludington State Park, Michigan
CCC cabin at Pokegon State Park in Indiana
•Civil Works
Administration
•Provided jobs
in construction
of roads, parks,
airports.
37
Hobbie Airport,
Houston, Texas
38
• Agriculture Adjustment Administration
• Farmers were paid to reduce production
of certain crops and livestock.
• It was hoped that the reduction in
supply would lead to an increase in
prices.
39
• Tennessee Valley
Authority
• Built hydroelectric
power plants to
provide cheap
electricity and
flood control.
Douglas Dam in
Construction 1942
Norris Dam
40
• Works Progress Administration
• Employed people in building
construction and arts programs.
• Built the River Walk in San
Antonio.
San Antonio, Texas
River Walk
San Antonio
River Walk
41
• Many of FDR’s reforms were cancelled by
the supreme court.
• FDR proposed legislation to add 6 more
justices to the court.
• He would then appoint justices who would
allow his reforms to stay in place.
• Critics accused him of trying to “pack the
court” and create a dictatorship.
42
1941 – The U.S.
enters WWII. This
helps end the
Great Depression
by creating jobs
in factories
providing for the
war efforts.
43
• Showed that only government intervention
can end a major economic crisis through
massive programs to create jobs and
stimulate the economy.
• After the Great Depression, the public
expected the government to be involved in
the economy and business.