What goes up must What goes up must come down!come down!

Essential QuestionEssential Question—How did —How did economic choices made in the 1920s economic choices made in the 1920s lead to the stock market crash and lead to the stock market crash and

the Great Depression? the Great Depression?

OverviewOverview

The economic boom of the 1920s The economic boom of the 1920s collapses in 1929 as the United collapses in 1929 as the United States enters a deep economic States enters a deep economic depression. Millions of Americans depression. Millions of Americans lose their jobs, and president Hoover lose their jobs, and president Hoover is unable to end the downslide. is unable to end the downslide.

Main IdeaMain Idea

As the prosperity of the 1920s As the prosperity of the 1920s ended, severe economic problems ended, severe economic problems gripped the nation. gripped the nation.

Why it matters now?Why it matters now? The Great Depression has had lasting The Great Depression has had lasting

effects on how Americans view effects on how Americans view themselves and their government themselves and their government

Critical Thinking Critical Thinking

How did the economic trends of the How did the economic trends of the 1920s help cause the Great 1920s help cause the Great Depression? Pg. 670-672 Depression? Pg. 670-672 – Industries in troubleIndustries in trouble– Farmers struggleFarmers struggle– Consumers have less moneyConsumers have less money– Living on creditLiving on credit– Uneven distribution of incomeUneven distribution of income

Crisis in the Farm DistrictCrisis in the Farm District

Farmers struggled as a result of the Farmers struggled as a result of the end of WWI.end of WWI.

Prices fell with the decreased Prices fell with the decreased demand after the war. demand after the war.

Farmers began producing more Farmers began producing more trying to sell more. Made problems trying to sell more. Made problems worse. worse.

Banks began to foreclose on land. Banks began to foreclose on land.

Old Decaying IndustriesOld Decaying Industries

Railroads, textiles, steel making little Railroads, textiles, steel making little profits after the war. profits after the war.

Trucks, buses and private cars hurt Trucks, buses and private cars hurt the R.R. industries. the R.R. industries.

New forms of energy hurt lumber and New forms of energy hurt lumber and coal. coal.

Improved technology made America Improved technology made America too productive. too productive.

Living on CreditLiving on Credit

By the late 1920s consumers buying By the late 1920s consumers buying less due to rising prices, stagnant less due to rising prices, stagnant wages, unbalanced distribution of wages, unbalanced distribution of income and consumer debt due to income and consumer debt due to credit. credit.

Many Americans lived beyond their Many Americans lived beyond their means. (wasteful spending)means. (wasteful spending)

Uneven Distribution of IncomeUneven Distribution of Income

Rich got richer while the poor got Rich got richer while the poor got poorerpoorer

Unequal distribution of wealth meant Unequal distribution of wealth meant that Americans could not participate that Americans could not participate fully in the economic advances of the fully in the economic advances of the 1920s1920s

Tariffs and War Debts Tariffs and War Debts

Hawley-Smoot Tariff Act- highest Hawley-Smoot Tariff Act- highest protective tariff in history designed protective tariff in history designed to protect American farmers and to protect American farmers and manufactures. Reduced competition, manufactures. Reduced competition, hurt exports, therefore creating loss hurt exports, therefore creating loss of jobs. Countries retaliated by of jobs. Countries retaliated by raising their tariffs as well. raising their tariffs as well.

Reduced global tradingReduced global trading

Dreams of Riches in the Stock Dreams of Riches in the Stock Market… p. 673Market… p. 673

The stock market was the most visible The stock market was the most visible symbol of American prosperity in the symbol of American prosperity in the 1920s. 1920s.

Define: Dow Jones Industrial Average, Define: Dow Jones Industrial Average, “bull market”, speculation, buying on “bull market”, speculation, buying on marginmargin

Describe the financial climate of the Describe the financial climate of the stock market during the 1920s.stock market during the 1920s.

The Stock Market CrashesThe Stock Market Crashes

The “snowball effect”The “snowball effect”– In 1929 stocks prices began to dip. This shook In 1929 stocks prices began to dip. This shook

peoples confidence and so they started to sell peoples confidence and so they started to sell their shares. their shares.

– This created a chain reaction that would cause This created a chain reaction that would cause prices to plummet which encouraged more prices to plummet which encouraged more people to sell. people to sell.

– ““Black Tuesday”—the day of financial collapse in Black Tuesday”—the day of financial collapse in the stock market. (October 29, 1929) Investors the stock market. (October 29, 1929) Investors lost billions and those involved were stuck with lost billions and those involved were stuck with huge debt and lost savings. huge debt and lost savings.

Main IdeaMain Idea

The stock market crash of The stock market crash of 1929 signaled the 1929 signaled the Great Great DepressionDepression-period of time in -period of time in which the economy which the economy plummeted and plummeted and unemployment skyrocketed.unemployment skyrocketed.

Skillbuilder—p 676Skillbuilder—p 676

Unemployment vs. Income and Unemployment vs. Income and SpendingSpending

What conclusions can you draw by What conclusions can you draw by comparing the two graphs. comparing the two graphs.

Failure in the Economy (Banking)Failure in the Economy (Banking)

People panicked and withdrew money People panicked and withdrew money from banks. “from banks. “run on the bank”run on the bank”

Banks could not give all money back Banks could not give all money back because they invested in the stock because they invested in the stock market market

By 1933 11,000 of the nations 25,000 By 1933 11,000 of the nations 25,000 banks closed. Millions of people lost banks closed. Millions of people lost their savings their savings

Failure in the Economy (business) Failure in the Economy (business)

The nation’s total output of goods The nation’s total output of goods and services was cut in half. Meaning and services was cut in half. Meaning loss of jobs and investmentloss of jobs and investment

90,000 business went bankrupt. 90,000 business went bankrupt. Unemployment rose from 3% to 25% Unemployment rose from 3% to 25%

by 1933 (13 million workers)by 1933 (13 million workers) Hawley-Smoot Tariff Hawley-Smoot Tariff further hurt further hurt

international trade further hurting international trade further hurting business.business.

Causes of the Great Depression Causes of the Great Depression

1.1. Tariffs and war debt policies that cut Tariffs and war debt policies that cut down the foreign market down the foreign market

2.2. A crisis in the farm sectorA crisis in the farm sector3.3. The availability of easy creditThe availability of easy credit4.4. Unequal distribution of incomeUnequal distribution of income5.5. Old Decaying IndustriesOld Decaying Industries

AssignmentAssignment

How do you think the Great How do you think the Great Depression changed people’s lives? Depression changed people’s lives? Write a diary entry from the point of Write a diary entry from the point of view of the man in this cartoon.view of the man in this cartoon.

Draw an original cartoon to illustrate Draw an original cartoon to illustrate the impact of financial collapse the impact of financial collapse following the stock market crash. following the stock market crash. Use the characters in this cartoon or Use the characters in this cartoon or invent your own. invent your own.

Main IdeaMain Idea

During the Great Depression, During the Great Depression, Americans did what they had to do to Americans did what they had to do to survive. survive.

Why it matters now? Why it matters now? Since the Great Depression, many Since the Great Depression, many

Americans have been more cautious Americans have been more cautious about saving, investing, and about saving, investing, and borrowing. borrowing.

Hardship and Suffering (Cities)Hardship and Suffering (Cities)

Great Depression brought hardship, Great Depression brought hardship, homelessness, and hungerhomelessness, and hunger

People lost jobs and homes and were People lost jobs and homes and were forced to the streets or forced to the streets or shantytownsshantytowns

Soup kitchens Soup kitchens and and bread lines bread lines provided food for unemployed and provided food for unemployed and joblessjobless

Hardship and Suffering (Rural)Hardship and Suffering (Rural)

Thousands of farmers lost their landThousands of farmers lost their land 1929-1932 400,000 farms were lost1929-1932 400,000 farms were lost The drought and over planting The drought and over planting

created the Dust Bowl which created the Dust Bowl which destroyed the American Great Plains destroyed the American Great Plains region forcing many Americans to region forcing many Americans to migrate West abandoning the land. migrate West abandoning the land.

OkiesOkies were migrates from were migrates from Dust bowl Dust bowl statesstates

Hardships and Suffering (Family)Hardships and Suffering (Family) Making ends meet was a daily Making ends meet was a daily

struggle, families broke apart. struggle, families broke apart. Men struggled with frustration from Men struggled with frustration from

becoming workers to wonderers. becoming workers to wonderers. Some men abandoned their families. Some men abandoned their families.

Women battled to keep the family Women battled to keep the family together through budgeting, together through budgeting, shopping together, etc. shopping together, etc.

Women were the backbone of the Women were the backbone of the American family during the Great American family during the Great DepressionDepression. .

Hardships and Suffering (Children)Hardships and Suffering (Children)

Poor diets and lack of health care Poor diets and lack of health care lead to serious health problems. lead to serious health problems.

Schools were either forced to shorten Schools were either forced to shorten the school year or shutdown the the school year or shutdown the school. school.

Boys and girls abandoned families Boys and girls abandoned families and were forced to ride the rails in a and were forced to ride the rails in a free-for-all type atmospherefree-for-all type atmosphere

Hardship and Suffering (Social)Hardship and Suffering (Social) 1928-1932 suicide rates rose more than 1928-1932 suicide rates rose more than

30%30% Mental hospitals grewMental hospitals grew Economic problems forced people to make Economic problems forced people to make

sacrifices and readjust prioritiessacrifices and readjust priorities Stigma of poverty and having to skimp Stigma of poverty and having to skimp

and save never disappeared. and save never disappeared. People depended on one another more. People depended on one another more. All of the effects of the Great Depression All of the effects of the Great Depression

shaped your Grandparents and has had shaped your Grandparents and has had some affect on your upbringing. some affect on your upbringing.

Main IdeaMain Idea

President Hoover’s President Hoover’s conservativeconservative response to the Great Depression response to the Great Depression drew criticism from many Americans.drew criticism from many Americans.

Why it matters now…Why it matters now… Worsening conditions in the country Worsening conditions in the country

cause the government to become cause the government to become more involved in the health and more involved in the health and wealth of the people. wealth of the people.

Hoover and the DepressionHoover and the Depression

Hoover believed in Hoover believed in rugged individualismrugged individualism meaning people should succeed through meaning people should succeed through their own efforts. their own efforts.

Should not depend on government to bail Should not depend on government to bail them out. (welfare) them out. (welfare)

Handouts would weaken peoples self-Handouts would weaken peoples self-respect and create a welfare state. (Sense respect and create a welfare state. (Sense of entitlement) of entitlement)

Hoover believed that the economy would Hoover believed that the economy would fix itself and rebound in time. (It did not) fix itself and rebound in time. (It did not)

Hoover and the DepressionHoover and the Depression

Boulder Dam- public works project that Boulder Dam- public works project that provided work relief, provide electricity, and provided work relief, provide electricity, and irrigation to CA, CO, UT, WY, & NM. irrigation to CA, CO, UT, WY, & NM.

Read 686—“Democrats Wind in 1930 Read 686—“Democrats Wind in 1930 Congressional Elections”Congressional Elections”

Hoover began providing Hoover began providing direct relief direct relief to people. to people. – Federal Home Loan Bank Act-Federal Home Loan Bank Act- lowered lowered

mortgage rates & refinanced farmer loansmortgage rates & refinanced farmer loans– Reconstruction Finance CorporationReconstruction Finance Corporation- $2 - $2

Million for banks, life insurance comp., Million for banks, life insurance comp., railroads, businessrailroads, business

Hoover and the DepressionHoover and the Depression

Why was Hoover destined to lose the Why was Hoover destined to lose the Presidential Election of 1932 after Presidential Election of 1932 after the Bonus Army incident? the Bonus Army incident? – P. 688 &689 P. 688 &689

FDR and the New DealFDR and the New Deal Franklin D. Roosevelt won the election of Franklin D. Roosevelt won the election of

1932. 1932. Prior to taking office, Roosevelt organized Prior to taking office, Roosevelt organized

the “Brain Trust”- who were a group of the “Brain Trust”- who were a group of advisers who formulated a set of policies advisers who formulated a set of policies that would later become known as the that would later become known as the New Deal. New Deal.

From March 9 to June 16, 1933 the first From March 9 to June 16, 1933 the first hundred days of FDR’s presidency he hundred days of FDR’s presidency he passed 15 major legislations. passed 15 major legislations.

First action First action conducted by FDR was to conducted by FDR was to declare a “bank holiday”declare a “bank holiday”

First and Second New Deal (p. 706)First and Second New Deal (p. 706)

FDR and the DepressionFDR and the Depression

The New Deal forced FDR to practice The New Deal forced FDR to practice deficit spending deficit spending which meant which meant spending more money than the spending more money than the government received in taxes. government received in taxes.

Supreme Court declared many New Supreme Court declared many New Deal legislations unconstitutional Deal legislations unconstitutional because they gave the Executive because they gave the Executive Branch and the federal government Branch and the federal government to much power over states and to much power over states and people. people.

Impact of the New DealImpact of the New Deal

Expanded the government’s role in Expanded the government’s role in the economy.the economy.

Created the FDIC and the SEC.Created the FDIC and the SEC. Social Security Social Security Tennessee Valley Authority built a Tennessee Valley Authority built a

number of dams that improved an number of dams that improved an depressed area of the country.depressed area of the country.

Most importantly it restored hope.Most importantly it restored hope.

New Deal LegacyNew Deal Legacy Labor- standard wages Labor- standard wages

and rights, eliminated and rights, eliminated child laborchild labor

Farmers- price Farmers- price support, improved support, improved farming methodsfarming methods

Banking/Finance- Banking/Finance- reformed the stock reformed the stock market, insurance on market, insurance on bank accounts bank accounts

Social Welfare- Social Welfare- expand government expand government role to provide for role to provide for people people

Environment- increase Environment- increase protection of land protection of land

Wagner Act, Fair Labor Wagner Act, Fair Labor Standards, National Standards, National Labor Relations BoardLabor Relations Board

Soil Conservation Soil Conservation Service Service

Securities Exchange Securities Exchange Commission, FDICCommission, FDIC

Social Security Social Security CCC, Soil Conservation CCC, Soil Conservation

Service, Tennessee Service, Tennessee Valley Authority Valley Authority