Historical Significance

Uganda, 1980

Jim Crow Laws

Scottsboro Trials

Recovering from the Great Depression

Racial Injustice

Poor South

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).

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

Recession: When your neighbor loses his or her job.

Depression: When you lose your job.

Worst economic disaster of the 20th century.

Cause or causes are still debated.

A defining event, especially for the government’s involvement in the economy.

Useful for learning important macroeconomic concepts.

Inflation: A sustained increase in the general price level (often calculated in terms of the Consumer Price Index (CPI)).

Deflation: A sustained decrease in the general price level.

Money Stock: The stock of assets that serve as media of exchange (e.g., coin, currency, checking accounts).

• Real output (GDP) fell 29% from 1929 to 1933.

• Unemployment increased to 25% of labor force.

• Consumer prices fell 25%; wholesale prices 32%.

• Some 7000 banks failed.

How Great was the Great Depression?

Stock market crash

Didn’t realize the effect it would have

No money to replenish what was borrowed

Many found being broke humiliating.

Credit systemPeople didn’t really

have the money they were spending

WWIThe U.S. was a major

credit loaner to other nations in need

Many of these nations could not pay us back

The new concept of “credit”

People were buying:AutomobilesAppliancesClothes

Fun times reignedDancingFlappersDrinking

People bought stocks on marginsIf a stock is $100 you can pay $10 now and the rest later when the stock rose

Stocks fallNow the person has less than $100 and no money to pay back

With people panicking about their money investors tried to sell their stocksThis leads to a huge

decline in stocksStocks were worthless

nowPeople who bought on

“margins” now could not pay

Investors were average people that were now broke

0

5

10

15

20

25

30

35

Jan-21 Jan-23 Jan-25 Jan-27 Jan-29 Jan-31 Jan-33 Jan-35 Jan-37 Jan-39

Sept. 1929

July 1932

S&P Composite Index

Historical Significance

Milk Coronet

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

Farmers were already feeling the effectsPrices of crops went downMany farms foreclosed

People could not afford luxuriesFactories shut downBusinesses went out

Banks could not pay out moneyPeople could not pay their taxes

Schools shut down due to lack of fundsMany families became homeless and

had to live in shanties

Some families were forced to live in shanty townsA 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.

$ value imports of 75 countries

“The Dust Bowl”

Crops turned to dust=No food to be sent out

Homes buriedFields blown awaySouth in state of emergency

Dust Bowl the #1 weather crisis of the 20th century

Historical Significance

Integrated

Circuit, 1959

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!

Rapid money supply growth (end of banking panic, gold inflows)

rising price level

falling real interest rate

and increased spending.

20000

25000

30000

35000

40000

45000

50000

55000

1929

1930

1931

1932

1933

1934

1935

1936

1937

1938

1939

$ m

illi

on

s

10

11

12

13

14

15

16

17

18

19

20

con

sum

er p

rice

in

dex

(19

82-8

4 =

100

)

money stock(left scale)

price level(right scale)

0.0

2.0

4.0

6.0

8.0

10.0

12.0

-4

-1

2

5

8

11

14

Real Interest Rate

Business Investment

Business Investment, Billions of Dollars; Annual Data Treasury bill yield minus inflation rate

percent change: fourth quarter to fourth quarter

-30

-20

-10

0

10

20

30

40

1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941

GNP

M2

Rapid money supply growth (end of banking panics, gold inflows) rising price level, falling real interest rate and increased spending.

FDR and the New Deal?Restored confidence in banking system

(FDIC)Early years marked by regulation/reform,

little new spending (alphabet programs, e.g., NRA, WPA, PWA, CCC, etc.)

Later years saw increased spending

Rapid money supply growth (end of banking panics, gold inflows) rising price level, falling real interest rate and increased spending.

FDR and the New Deal?Restored confidence in banking system

(FDIC)Early years marked by regulation/reform,

little new spending (alphabet programs, e.g., NRA, WPA, PWA, CCC, etc.)

Later years saw increased spendingWorld War II (when unemployment

finally fell below 10%)

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

The Depression was not a failure of capitalism or markets, but rather a failure of the Federal Reserve.

Monetary policy should maintain price stability – avoid deflation and inflation.

The Fed should respond to financial crises that increase the demand for money or threaten to disrupt the payments system.