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The Great Depression. Impact of the Roaring 20’s. The new concept of “credit” People were buying: Automobiles Appliances Clothes Fun times reigned Dancing Flappers Drinking. Why was this bad ?. Credit system People didn’t really have the money they were spending
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Impact of the Roaring 20’s • The new concept of “credit” • People were buying: • Automobiles • Appliances • Clothes • Fun times reigned • Dancing • Flappers • Drinking
Why was this bad? • Credit system • People didn’t really have the money they were spending • Interest rates on loans were low = people borrowed more money • Excessive real estate construction = oversupply • WWI • The U.S. was a major credit loaner to other nations in need • Many of these nations could not pay us back
The Stock Market Crash • People bought stocks on margins • If a stock is $100 you can pay $10 now and the rest later when the stock rose • Stocks fall • Now the person has less than $100 and no money to pay back
And then… • With people panicking about their money investors tried to sell their stocks • This leads to a huge decline in stocks • Stocks were worthless now • People who bought on “margins” now could not pay • Investors were average people who were now broke
Agricultural Overproduction • Increased technology • Good growing conditions • Supply greater • than demand • Overproduction • from World War I
The Dust Bowl • Over use & over grazing • No crop rotation • No soil conservation • No wind breaks • Loss of grass and animals • Climatic change – the drought of the 30’s Crops turned to dust= No food to be sent out Homes buried Fields blown away South / Midwest in state of emergency
Dust Bowl - the #1 weather crisis of the 20th century Farmers and sharecroppers headed west; called migrants or “Okies”
Industrial Overproduction • Wages not keeping up with inflation • Supply greater than demand • European Depression
Poor Distribution of Wealth Many Poor and Very Few Rich! Workers earned so little they couldn’t buy the products they produced! Wages were as little as 20 – 25 cents per hour! Even the best employer Ford Motor Company paid only $5.00/Day ($0.48 / hr.) for a 6AM-6PM shift!
Cost / hours needed to work… • Hamburger 20-30 cents a pound • Gas 20 cents/gallon • Women’s Coat $6 • Shoes $2 • Men’s Suit $11 • Baseball Glove $1.19 • Chrysler 4 door $1000 • 6 Room House $3000 • Hamburger 1 pound for 1 hours work • Gas - 45 minutes • Women’s Coat - 24 hours • Shoes - 8 hours • Men’s Suit - 44 hours • Baseball Glove – 5 hours • Chrysler 4 door – 4000 hrs. • 6 Room House – 12,000 hrs.
Impact on the American People • Farmers were already feeling the effects • Prices of crops went down • Many farms foreclosed • People could not afford luxuries • Factories shut down • 85,000 businesses failed • Banks could not pay out money • 25% of banks closed • Literally closed their doors to people • People could not pay their taxes • Schools shut down due to lack of funds
Forced to relocate! Tramps, hobos, riders of freight trains Farmers and sharecroppers headed west; called migrants or “Okies”
Hoovervilles No direct relief – cash payments or food provided by the government to the poor
“Hooverville” • Some families were forced to live in shantytowns -- A grouping of shacks and tents in vacant lots • Shantytowns were referred to as “Hoovervilles” because of President Hoover’s “lack of help” during the Depression
Unemployment Statistics for 1932 – The Cruelest Year 25% of the workforce unemployed by 1932 An additional 15% of the workforce was “underemployed” 21% of the workers who kept their jobs saw hours cut 20% of workers who kept their jobs took pay cuts Some worked only for food or a place to sleep – No pay jobs
Franklin Delano Roosevelt Elected in 1932 – his plan… The New Deal