American History Unit 17 – The Great Depression

1. American History Unit 17 – The Great Depression Photo courtesy of Library of Congress

2. The years after World War I actually planted the seeds for the Great Depression. These years were the “Roaring Twenties” and “Jazz Age”. It was a period marked by a general prosperity, “anything goes” behavior, bootleg booze, speakeasies, “flappers” dancing the “Charleston”, Ford Model T’s, ordinary people buying things on the installment plan, and the wealthy getting into the booming stock market.

3. World War I • _______________________________________________________________________________________________________________. • This meant plenty of jobs at good wages for U.S. factory workers. • Huge profits were also harvested by farmers. • People with money began buying up agricultural land, thus __________________.

4. When the Soldiers Came Home • Although wages had risen, so had the cost of living. • Prices were up for food, rent, and clothing. • A quart of milk went from 9 cents in 1914 to 42 cents in 1919! • The prices of steak and eggs had almost doubled. • _______________________________.

5. The Spring of 1919 • When the doughboys returned from the war, the wheels of industry were turning day and night. • _________________________________. • The horizon looked bright. • The word for life at this time was prosperity.

6. Wall Street • No where did the future look brighter than on Wall Street. • ________________________________________________________________________________________________________________________________________________________________________________________________________________________. • It is also a generic term for anything associated with investing or the stock market.

7. “On Margin” • The business of stock trading was so brisk that the clerks who did the paperwork complained that they could barely keep up with the buying and selling. • Much of the buying was done “on margin,” __ ____________________________________________________________________________________________________________________.

8. Buy Now, Pay Later • In the 1920’s, thanks to alluring ads for enticing products, the idea of _________________ was born. • To make the idea of buying on credit appetizing to the average American, clever advertising men came up with a sweetener called “buying on the installment plan.” • With money in your pocket and seemingly boundless prosperity, the old notion of saving for a rainy day was very out of date!

9. Why Should A Manufacturer Go Along With the Installment Plan? • ___________________________________________________________________. • Throughout the 1920’s, _______________ _________________________________. • American manufacturers were churning out so much in the way of consumer goods that people’s demands weren’t keeping up with the supply of goods in overstocked warehouses.

10. This abundance was the result of an astonishing increase in the productivity of workers. • In the 1920’s the output per worker in American industry leapt by nearly 2/3. • However, this happened at a time when wages were not keeping up. • As a result, manufacturers were making ______________________________________. • ____________________________________________________________________________! • Hence, the appeal of the installment plan in moving products from shelves and off the sales floor.

11. Reasons for the Wall Street Boom • You have underpaid workers turning out goods in record amounts that they can only afford to buy on credit. • _______________________________________________________________________________________________________________. • Those with more than enough money bought outrageous amounts of stock shares. • __________________________________________________________________________.

12. How To Get Rich Without Working • If you think that people bought and traded stocks so that they could own a piece of a prosperous or a promising company, you’re wrong. • ____________________________________________________________________________________________________________________________________________________.

13. Making a Killing • The popular term for this was (and still is) “________________________________.” • Economists call it “__________________.” • Historians looking into the causes of the Great Depression cite this practice as one of the reasons for the bursting of the prosperity bubble in the autumn of 1929.

14. The Economy of the Late 1920s • “Everybody ought to be rich” • 200 large companies controlled 49% of all American industry • Too many goods, not enough demand • Farm prices fell after WWI • Farmers not able to repay their debts Figures courtesy of Prentice Hall

15. The Market Crashes • The market crash in October of 1929 happened very quickly. • _______________________________________________________________________________________________________________________________________. • On October 23 and 24, the Dow Jones Average quickly plummeted, which caused a panic.

16. On Black Tuesday, October 29, 1929, most people sold their stocks at a tremendous loss. • ___________________________________________________________. • Overall losses totaled $30 billion. • _________________________________________________________________________________________.

17. Great Crash World Payments Investors Businesses and Workers Overall U.S. production plummets. Investors lose millions. Banks Businesses and workers cannot repay bank loans. Consumer spending drops. U.S. investors have little or no money to invest. Allies cannot pay debts to United States. Businesses lose profits. Businesses cut investment and production Some fail. Savings accounts are wiped out. Banks run out of money and fail. Workers are laid off. Europeans cannot afford American goods. U.S. investments in Germany decline. Bank runs occur. German war payments to Allies fall off. Effects of the Great Crash, 1929

18. The Stock Market CrashFrom Riches to Ruin • Many wealthy families lost everything • Some even committed suicide • ________________________________________________________________________ • The crash triggered a much wider, long term crisis known as the Great Depression • The Depression had a ripple effect that hurt the _________________________________

19. Question 1: How many people were unemployed in 1925? In 1929? In 1932? __________________________________________________________________________________________________________________________________

20. Question 2: How much did a bushel of wheat cost in 1925?1932? ______________________________________________________________________________________________________________

21. Great Crash Question 3: What was the average stock value in 1929? 1932?_______________________________________________

22. Question 4:How many banks were suspended in 1925? In 1933?__________________________________________________

23. Activity: Letter writing • It is the day before Thanksgiving, 1929. • You own a small shoe store. An investment broker convinced you to spend your life savings in the stock market. He told you that you could triple your money if you invest it with him. You even bought some stock on margin, thinking that you would be able to pay it off when your stock went up. • To your absolute horror, the stock market crashed in October and completely wiped you out. • Write a letter back to your husband or wife telling them what has happened. Make sure to use evidence for why this happened from your notes.

24. The Great Depression • The economic contraction that began with the Great Crash triggered the most severe economic downturn in the nation’s history—the Great Depression. • ____________________________________________________________________________________________________________________________________.

25. The stock market crash of 1929 did not cause the Great Depression. • ___________________________________________________________________________________________________________________________________________________________________________________________________________.

26. The Election of 1928 • Herbert Hoover (1874-1964) was a representative of the Anglo-Saxon class, born into an Iowa Quaker family.

27. Supporting business and Prohibition, Hoover was the Republican candidate for President in 1928. His campaign slogan promised: “___________________________________________________________________________________________________."

28. The Hoover Administration • Once the Hoover Administration realized that the economy was not having another of its periodic, temporary re-adjustments, the question was how to provide relief to the unemployed. • “___________________________________________________________________________________________________________________________________________________.”

29. No matter how hard Herbert Hoover tried to be optimistic and encouraging to the American people, reality was sinking in. • One observer noted, the stock market “continued to act like a rubber ball bounding down statistical stairs.”

30. Poverty Spreads • ____________________________________________________________________. • Unemployed laborers, unable to pay their rent, became homeless. • Sometimes the homeless built shacks of tar paper or scrap material. • ___________________________________________________________________________________________. Photo courtesy of Library of Congress

31. Farm families suffered from ______________. • As a result of a severe drought and farming practices that removed protective prairie grasses, dust storms ravaged the central and southern Great Plains region. • __________________________________________________________________________. • The combination of the terrible weather and low prices caused about 60 percent of Dust Bowl families to lose their farms.

32. Impact on Health ____________________________________________________________________________________________________________________________________________________________. Stresses on Families Living conditions declined as families crowded into small houses or apartments. Men felt like failures because they couldn’t provide for their families. ____________________________________________________. Discrimination Increases _____________________________________________________________________________________________________________________________________________. Lynching increased. Aid programs discriminated against African Americans. Poverty Strains Society

33. Americans Pull Together • Throughout the country, people pulled together to help one another. • __________________________________________________________________________. • ____________________________________________________________________________________________________________________________________________________. • These sales became known as penny auctions.

34. _______________________________________________________________________________________________________________. • They believed that a fairer distribution of wealth would help to end the hard times. • Jokes and humor helped many people to fight everyday despair.

35. Signs of Change Prohibition Is Repealed! • _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.

36. The Empire State Building • 2,500 to 4,000 people worked on the construction. • ____________________________________________________________________. • At that time, it was the world’s tallest building and had 102 stories and 67 elevators.

37. The End of an Era • Many things that symbolized the 1920s faded away. • ________________________________________________________________________. • Calvin Coolidge died. • ____________________________________.

38. Hoover’s Limited Strategy • Hoover convinced business leaders to help maintain public confidence in the economy. • _______________________________________________________________________________________________________________. • European countries also raised their tariffs, and ________________ suffered a slowdown.

39. Hoover set up the Reconstruction Finance Corporation (RFC), which gave government credit to banks, industries, railroads, and insurance companies. • __________________________________________________________________________. • ____________________________________________________________________________________________________________________________________________________. • Hoover did not support federal public assistance because he believed it would destroy people’s self-respect and create a large bureaucracy.

40. Finally, public opinion soured for Hoover when he called the United States Army to disband a protest of 20,000 unemployed World War I veterans called the Bonus Army.

41. A “New Deal” for America • FDR promised a New Deal for the American people. • ___________________________________________________________________________________________________________.

42. As governor of New York, Roosevelt had set up an ___________________________________________________________________________.

43. FDR’s wife, Eleanor, was an experienced social reformer. • ________________________________________________________________________________________________________________________. • When the Roosevelts campaigned for the presidency, they brought their ideas for political action with them.

44. The Election of 1932 Franklin Roosevelt • ____________________________________________________________________________. • Called for a reappraisal of values and more controls on big business. • Helped many Americans reassess the importance of “making it on their own” without any help. • __________________________________________________________________________________________________________________. • Roosevelt won 57 percent of the popular vote and almost 89 percent of the electoral vote.

45. Herbert Hoover • ____________________________________________________________________________. • Argued that federal aid and government policies to help the poor would alter the foundation of our national life. • __________________________________________________________________________________________________________________. • Hoover gave very few campaign speeches and was jeered by crowds.