What is this?. Cabbage Patch Kids - 1982 to 1986: declared most popular doll in history of toys -...

What is this?

Cabbage Patch Kids- 1982 to 1986: declared most popular doll in history of toys- In1986, a company named ‘Coleco’ made over 600 million dollars on these things!- People waited in lines at the toy store for days to get one - “The Cabbage Patch Kids craze will never die!” Time Magazine, 1986

$ 590 million dollars cash

Cabbage Patch Kid

COLECO GOES UNDER!Coleco decides to manufacture 90 million dolls in 1987

- Less than 1 million dolls were sold that year….

- People got bored and moved on to purchasing other toys like action figures

- Ghostbusters and Ninja Turtles were in popular demand

-Coleco files for bankruptcy in 1988

OOPS!!!!

WHAT IS A FAD??

DEFINITION: “an interest followed with exaggerated zeal” or “an item that is taken up with great enthusiasm for a brief period of time”

How does the fiasco of Cabbage Patch Kids dolls in the 1980s compare to the Stock Market Crash of 1929?

YES, THIS IS A SERIOUS QUESTION!

The The GlobeGlobe.VOLUME XVI TORONTO, CANADA, TUESDAY, OCTOBER 29, 1929

PAGE A1

V.

THE GREAT DEPRESSION

WALL STREET CRASH!

1929 - 1939

BLACK TUESDAY

IN AMERICA

V.

Economics in 1920sDemand for Goods

Higher Production

Greater Sales

Higher

Employment

Greater Profits

Higher Purchasing Power

Economics in 1930sDemand for Goods

Lower Production

Lower Sales

Higher

Unemployment

Lower Profits

Lower Purchasing Power

OOPS!!!!

THE GREAT THE GREAT DEPRESSIONDEPRESSION

• DEFINITION: The Great Depression was a severe and prolonged economic downturn. [1929 - 1939]

PAGE A2 Tuesday, October 29, 1929

• The Great Depression

• ‘Roaring Twenties’ Q: “Stock Market prices have reached what looks like a permanently high plateau.” -- Yale economist Irving Fisher 1929, two weeks before the market collapsed.

• OCTOBER 29, 1929 WALL STREET & BLACK TUESDAY

• Canada argued to be the worst hit country in the Western World (TRADE) “The grasshoppers came in clouds…”-- from an eyewitness account of the Great Depression



• Changed economic world for eternity

• A domino affect of crises; one after another. (WWI)

• STOCKS: shares of ownership in a company held by investors [grow and decline with the economy]


In the years after the First World War, the economy boomed. People were racing to buy stocks as a way to invest for the future. Many investors even borrowed money so they could buy stocks, since they expected their value to rise. At the beginning of 1929, the stock market looked strong. In September, stocks hit an all-time high.

Then the first signs of trouble began. Throughout the early fall, stocks rose

and fell. The market began slipping seriously on October 24 ‘Black Thursday’. People panicked, but the next day the market rallied a little. Then on Monday stocks fell even more, and the next day Black Tuesday, was even worse than Black Thursday had been.

In only a few hours, thousands of people had lost their entire life savings, and many were in debt for the money they had borrowed to buy now-

worthless stock. Many companies did not survive the stock market crash. Thousands of people were left unemployed as their jobs disappeared in company bankruptcies. The 1920s had been a time of wealth and luxury for many, but that time was over. The widespread hardships of the Great Depression had only just started.




• Roaring 20’s at Highest Peak

• Black Tuesday: October 29 [shows drastic decline]

• Short Recovery

• The Bottom / ‘Height of Depression’ [1932]



• Between the prosperous Roaring Twenties and WWII

• Arguably most significant 10 years in Canadian economic history

• Watershed period that hurt but then laid groundwork for transformation of country

• Dirty Thirties decade of social and economic crisis - led to abandonment of old economic and social ideas & limited role of state

• Old ideas replaced by new economic, social & political model which emphasized expansion of state responsibility for economy & for social welfare.


INDEXINDEX

B.. ... The B.. ... The CausesCauses

C.. ... The C.. ... The DamageDamage

D.. ... D.. ... Old IdeasOld Ideas

E.. ... E.. ... New IdeasNew Ideas

F.. ... The F.. ... The Transformation Transformation [Keynesian [Keynesian Economics]Economics]

G.. ... G.. ... Influence Influence of of World War IIWorld War II


• Misdistribution of wealth in 1920’s

THE CAUSESTHE CAUSESPAGE B1 Tuesday, October 29, 1929

• World War I: Major impact

• US loans between economies is the basis of the depression [KEY]

• Gambling in stock market in ‘20s highly encouraged


• High tariffs placed on goods [following Black Tuesday]

• Drought hits North America in 1930: Affects Trade.

• Market Crash + Great Loss of Money + Companies because could not survive crash + Employment = CAUSE of DEPRESSION ITSELF


Wall Street

Black Tuesday

October 29

1929

Drought hit North America in 1930s.

Black Thursday: October 24, 1929

Black Monday: October 28, 1929

• World War I Influence

THE CAUSESTHE CAUSES

TOP 10 CAUSES SUMMARIZED TOP 10 CAUSES SUMMARIZED [take note][take note]

PAGE B4 Tuesday, October 29, 1929

• Too few people with too much money [35% of personal income going to 5% of the people]

• Too many could only purchase on credit

• Bad management = bankruptcy [ex. overspending & maldistribution]

• Drought Conditions

THE CAUSESTHE CAUSES

TOP 10 CAUSES SUMMARIZED TOP 10 CAUSES SUMMARIZED [take note][take note]

PAGE B5 Tuesday, October 29, 1929

• 1920’s false economic confidence: “End of an Era”

• Stockbrokers encouraged gambling in stock market

• Banks made bad loans so people could invest in stock market

• High tariffs killed industries because no foreign competition

• After: Lack of demand for goods meant thousands of workers laid off = reason to unemployment

THE DUST BOWL

Palliser’s Triangle: The Breadbasket of Canada

Dust Bowl Test Notes- Took place in Canadian Prairies the mid

United States between 1930 to 1938

- Massive drought took place in Palliser’s Triangle, no vegetation survived

- Top soil was blown into the air creating large dust clouds which had the potential to suffocate farmers and their families

- Grasshoppers infested what ever crops grew in moderate harvest seasons

- “Wheat Rust” + Drought + Dust + Grasshoppers destroyed the Canadian wheat industry

- Thousands of families simply abandoned their farms altogether

http://www.weru.ksu.edu/new_weru/multimedia/dustbowl/big/8b29767ub.jpg

Catalyst? What’s that?

• Catalyst: (something that causes an important event to happen) "the invasion acted as a catalyst to unite the country"

Historians before the 1900s., focused on creating some sort of “String Theory” or “Single Cause” theory to simplify the complexities of historical occurrences.

PAGE C1 Tuesday, October 29, 1929

CANADA AND THE GREAT DEPRESSION [cont’d C1]

String Theory History: Links events together to paint a picture holistic picture of a major event

Single Cause Theory: A single occurrence is the reason another, much more catastrophic historical event happens

- “Trigger History” is when an historian tries to boil down an event to one single cause (thus puling the trigger of the event)

For example: “The Great Depression would not have occurred if the Stock Exchange never collapsed in 1929”

“Now, it is your job to debate this….

• TRADE


THE DAMAGETHE DAMAGE

CANADA AND THE GREAT DEPRESSIONCANADA AND THE GREAT DEPRESSION

• Drought: influence upon trade destroyed most trade. “…the breadbasket was now a dustbowl.”

• Toronto Stock Exchange Crash



CANADA AND THE GREAT DEPRESSION [cont’d C1]

MACKENZIE KINGMACKENZIE KING R.B. BENNETTR.B. BENNETT

LIBERAL CONSERVATIVE

WILLIAM LYON LYON MACKENZIE KINGMACKENZIE KING

• 10th PM of Canada • 11th PM of Canada

RICHARD BEDFORD BENNETT

• “…faced Depression seemingly uncomprehendingly.”

• Looked at economic crisis as a political problem & not realistically

• In power from 1921 - 1930: Beat out by conservatives

• Reclaimed office in 1935: After worst of Depression

• 1 view: Aggressive, hard-working military lawyer from Calgary

• Another view: ‘erratic, emotional, insensitive, conceited & self-obsessed’

• Bad: The Plan [Raise tariffs] “…blast our way into the markets of the world or perish in attempt.”

• Creative leader in some areas

• Overall income fell 50%



STATISTICS IN CANADASTATISTICS IN CANADA

• Imports = 55%

• Exports = 25%

• Jobless rate went from 4% in 1920s to a 27%

• Out of 10 million Canadians, 2 million were living on relief handouts

THE DAMAGETHE DAMAGEPAGE C4 Tuesday, October 29, 1929

Commonly posted signs along cities for the unemployed

Typical urban areas in 1930 once Depression begins to set

Dorthia Lange’s Migrant Mother depicts destitute pea pickers in California, centering on Florence Owens Thompson, a mother of 7 children, age 32. Picture taken March 1933 (the height of the depression).

OLD IDEASOLD IDEASPAGE D1 Tuesday, October 29, 1929

• In office 1929 - 1933

AMERICA: PRESIDENT HOOVER AMERICA: PRESIDENT HOOVER [republican][republican]

* Effort radically minimal

HERBERT HOOVER

• Laissez-faire thinker– “Doing nothing and letting the economy come back on its own.” [Historian Michael Bliss]

• Almost destroyed America’s economy - could possibly have gone global– Giving banks more money so they could loan more– No help to poor and unemployed– Balancing budget and cutting spending– Cutting on taxes on corporations and rich to encourage investment (made rich richer)


CANADA’S PRIME MINISTER: R.B. Bennett CANADA’S PRIME MINISTER: R.B. Bennett [conservative][conservative]

* ‘The Plan’

““One of the greatest assests any man or One of the greatest assests any man or woman woman can have on entering life’s struggle is poverty.”can have on entering life’s struggle is poverty.”

- R.B. Bennett at height of Great - R.B. Bennett at height of Great DepressionDepression

RICHARD BEDFORD BENNETT

• Relief Camp Protest: On-to-Ottawa Trek

• Compared to Hoover on bad terms: SAME STANDPOINT

• Created idea of keeping tariffs high [very bad]


1929 - 1932 STATISTICS BETWEEN CANADA AND 1929 - 1932 STATISTICS BETWEEN CANADA AND AMERICAAMERICA

• Capital investment dropped from $10 billion to $1 billion

• FIVE THOUSAND banks went bankrupt

• Banks lost over 3 BILLION of people’s life savings

• Production dropped over 50 percent

• Corporate profits dropped from $8.5 billion to $3.5 billion


1929 - 1932 STATISTICS BETWEEN CANADA AND 1929 - 1932 STATISTICS BETWEEN CANADA AND AMERICAAMERICA

• Bankruptcies increased to $100 000 YEARLY

• Average employee had wages cut 60 percent

• Farm income dropped from $12 billion to $5 billion

• Unemployment rose from 4 million (1930) to over 11 million (1932)


WALL STREET GOES BANKRUPT!WALL STREET GOES BANKRUPT!

* The old belief that caused and damaged the economy

The leaders, both Bennett and Hoover, were not fit to lead their countries through such a time as their theories crushed the economy and only worsened it.

This was based on their beliefs that that saving their money was key and the right way to handle the economic crash. The crashs in New York and Toronto may not

have been entirely there fault, but they were the figures who created the depth of the depression itself.

NEW IDEASNEW IDEASPAGE E1 Tuesday, October 29, 1929

• New Leader = New Deal

• Franklin Delano Roosevelt [FDR]

– Elected president 1932 - 1945 (4 terms in office) [until death]

– Created the New Deal [mainly elected because of this promise]

– Biggest change brought: the willingness to take action vs. Hoover

– Began the decline of the Great Depression


THE NEW DEALTHE NEW DEAL

• GOALS:– giving work (relief) to unemployed

– reform of business and financial practices

– recovery of economy during Great Depression

Franklin Delano Roosevelt32nd President of the United States

““The The first hundred daysfirst hundred days in in office saw more progress than office saw more progress than there had been in there had been in 12 years.12 years.””

• First New Deal (1933)– Aimed at short term recovery for all groups

• Second New Deal (1935 - 1936)– ex. Labour Union Support


THE NEW DEALTHE NEW DEAL

• New bank bill passed Congress in eight hours

Franklin Delano Roosevelt32nd President of the United States

Overall impact of FDROverall impact of FDR

• Bill legalized wine & beer (end of prohibition)

• AAA Act [Agricultural Adjustment Act]

• NRA & WPA(Works Progress Administration) • Cheap mortage money was made available to encourage home building


NATIONAL RECOVERY ACT NATIONAL RECOVERY ACT [NRA][NRA]

• Allowed industries to cooperate to improve efficiency and stabilize prices

• Gave unions right to organize and bargain

• Set minumum wages and maximum hours

• Abolished most child labour and set basic health and safety standards


NATIONAL RECOVERY ACT NATIONAL RECOVERY ACT [NRA][NRA]

• Set up Public Works Administration with $3.5 billion to build public works– dams, roads, buildings

• Created Civilian Conservation Corps to employ 18 - 25 year old men to protect national environment

• Set up Tennessee Valley Authority to build damns and hydroelectric-generating stations in one of the poorest areas of the United States

TRANSFORMATIONTRANSFORMATIONPAGE F1 Tuesday, October 29, 1929

• John Maynard Keynes [author: General Theory of Employment]

• Basic Theory– Downswing + monetary policy = increased supply of money and economic rise

KEYNESIAN ECONOMICSKEYNESIAN ECONOMICS

• Influenced FDR’s New Deal policy

• Theoretical Revolution oppose to a Policy Revolution


MONETARY POLICYMONETARY POLICY

• Process where the government or ‘central bank’ of a country controls:

1. Supply of Money

2. Availability of money

3. Cost of money or rate of interest

• “Keynes’ main points (above) in order to attain a set of objectives oriented towards the growth and stability of the economy.” -- Donald Creighton


FISCAL POLICYFISCAL POLICY

• Refers to the overall effect of the budget outcome on economic activity

• Spend more money will return economy into upswing

• Deals with the distribution of taxes and the ‘generosity of allowances’– Influence the direction of the economy through changes in government taxes, or through

some spending


FISCAL POLICYFISCAL POLICY

Overall impact on variables of economy:Overall impact on variables of economy:

Aggregate demand and level of economy activity

Pattern of resource (trade) increase

Distribution of income

PAGE F5 Tuesday, October 29, 1929

TRANSFORMATIONTRANSFORMATION

KEYNESIAN ECONOMICSKEYNESIAN ECONOMICS

Keynes’ main arguments for causes:Keynes’ main arguments for causes:

• Reduction in interest rates

• Government investment in infrastructure

Keynes’ main arguments for solution:Keynes’ main arguments for solution:

• Wages & spending

• Excessive saving

WORLD WAR IIWORLD WAR IIPAGE G1 Tuesday, October 29, 1929

Influence ofInfluence of

• Final exit out of the Depression

• Proved John Keynes’ Theory

• Began with New Deal

• Reaction to WWII resulted from New Deal and agreement to large spending



• Before entering finally rejected Hoover’s laissez-faire belief [the economy needed help]

• HUGE AMOUNTS OF GOVERNMENT SPENDING ON WAR

MATERIALS BROUGHT ECONOMY BACK TO 1929 LEVELS

“It can only be speculated how far FDR’s New Deal took the economy since, ironically, the final exit from the Depression came as a result of foreign conflict and outbreak of WWII.”

-- Amity Shlaes [the Forgotten Man]



Overall impact after WWII leads out of Overall impact after WWII leads out of DepressionDepression

Laissez-faire belief abolished

4.8 billion in relief (welfare) money was given to aid those still unemployed

Social Security Act was set up as a nationwide pension plan Banking Act passed to give government total control of money supply

COMICSCOMICSPAGE H1 Tuesday, October 29, 1929

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