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Bell Ringer

Bell Ringer. Predict what you think happened during the Great Depression. The Great Depression. 1929-1939( ish ). What events do you think led to the Great Depression?. Economic Policies & issues. Laissez-Faire. Free Market or “hands off” economy Minimal gov’t influence on the economy

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Bell Ringer

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  1. Bell Ringer • Predict what you think happened during the Great Depression.

  2. The Great Depression 1929-1939(ish)

  3. What events do you think led to the Great Depression?

  4. Economic Policies & issues

  5. Laissez-Faire • Free Market or “hands off” economy • Minimal gov’t influence on the economy • Practiced by Presidents Harding, Coolidge, & Hoover

  6. Major Acts • Fordney- McCumber Act: High tariff (tax) on foreign goods; encouraged Americans to buy American goods • Business is America’s Business: Help businessmen become rich • Rugged Individualism: People’s problems go away if they work harder

  7. The Economic Cycle • The economy moves in a cycle (has its highs and lows) • Down turns are called recessions • One starts in summer 1929

  8. 1929 • Consumer spending drops • Unsold goods pile up • Production slows • What happens when we don’t buy things and companies don’t keep producing?

  9. Distribution of Wealth • Imbalance between rich and poor • 0.1% earning same total income as 42% • Poverty ensued • Estimated 60% of the population in 1929 was considered poor

  10. Effects of Poverty • Low marketplace demand • Prices drop • Unemployment rises

  11. How • Could low market place demand effect the rest of the economy?

  12. Bell Ringer • Explain distribution of wealth

  13. The Stock Market • Stock prices continue to rise • Investors buying on margin (making a down payment & borrowing the rest of the investment) • How can this cause a problem?

  14. Buying on Margin • Investors make a down payment • Borrow rest of the investment (stocks) • Value of investments dropped, unable to pay back the loan • Causes banks to fail

  15. Example • Mr. Tafoya buys 5 head of cattle from Mr. Anway for a total cost of $5000. At the time of purchase he pays $1000. The cattle are worth $5000 at the time of purchase. • Consumers stop buying beef. The value of the cattle drop from $1000 each to $500. Tafoya is only able to pay Anway $2500 on top of the original $1000. Anway lost $1500.

  16. The Bottom Falls Out • Stock prices drop • Investors unable to pay back loans • Causes problems with the banking industry

  17. Crash • Investors begin to sell rapidly • Oct. 24, 1929: 12.9 million shares traded • Oct. 29, 1929: 16 million+ shares traded (Black Tuesday) a. Day the market crashed

  18. Effects • Investors who bought on margin wiped out • Shares are worthless • Consumer confidence plummets

  19. Deflation • General decrease in the demand for goods and services • Causes producers to lower prices • Leads to an increase in the real value of money • Negative effect: people don’t make money!

  20. Bell Ringer • What were the effects of the Stock Market Crash?

  21. Bell Ringer • Explain the Stock Market Crash

  22. Crisis

  23. What were they? • Several natural and manmade disasters contributed to the Great Depression • Unemployment • Government programs • Farmer Migrations • Dust Bowl

  24. Unemployment • Increases during 1920s • Made worse by unequal distribution of wealth • Demand for consumer goods dropped, lowering prices

  25. Companies don’t have $ to pay worker/consumer Worker/ consumers don’t have $ to buy goods Companies layoff workers to cut costs = unemployment goes up

  26. Unemployment 1929: 3.2% 1937:14.3% 1930: 8.9% 1938: 19% 1931: 16.3% 1939: 17.2% 1932: 24.1% 1933: 24.9% 1934: 21.7% 1935: 20.1% 1936: 16.9%

  27. Government Programs • Bread Lines contributed to unemployment • Capable workers stand in line to receive share • Makes it hard to look for work

  28. Bread (Food) Lines • Free meals to the hungry • Run by charitable organizations • Food donated by people raising “soup gardens” • Al Capone ran multiple soup kitchens in Chicago

  29. Bonus Army • June -July 1932 • 20,000 WWI veterans seeking cash payment for veterans’ bonus certificates (they’re broke) • Evicted by U.S. Army

  30. President Herbert Hoover • Took office in 1929 • Failed to recognize the severity of depression • Ignorant of suffering of Americans

  31. Hoovervilles • Shanty towns built primarily outside major cities • Occupied by poor and homeless • Named after President Hoover

  32. Bell Ringer Explain the unemployment cycle

  33. Bell Ringer What was the Bonus Army?

  34. Bell Ringer Describe a Hooverville.

  35. Geography of the Central U.S.

  36. The Breadbasket of America • Western Pennsylvania to the Rocky Mntns. • North Texas to the Canadian border • The Great Plains

  37. Continued… • Open farmland • Hills in some areas but relatively flat • Has the Ohio, Mississippi, & Missouri Rivers

  38. Effects on the Ag Market

  39. On the Farm • Prices of agricultural goods decrease • Farmer take out more loans, increase their debt • Have to buy new machinery to keep up with production demands • Dust Bowl causes production problems

  40. Answer me this… • Would it be cheaper to buy a new tractor or to hire more workers to work on a farm? • Answer: Buy a tractor!

  41. Post-WWI Production • Production stays at war-time levels • European markets slow buying • Prices drop • Wheat 1917: $2.14/bushel • Wheat 1921: $0.92/bushel

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