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7-4.3 Great Depression Vocabulary. Depression Recession Hyperinflation Black Tuesday On Margin Margin Call Installment Plan New Deal Protectionist Policies Investor. 7-4.3 The Great Depression Notes. 1. Effects of WWI.
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7-4.3 Great Depression Vocabulary • Depression • Recession • Hyperinflation • Black Tuesday • On Margin • Margin Call • Installment Plan • New Deal • Protectionist Policies • Investor
1. Effects of WWI • The Great Depression began in the 1930s, and took place all over the world. • Because of damage from WWI Europe was facing serious economic problems. • Many countries had to rebuild most of their infrastructure after the war.
2. Wartime Transition • Many soldiers were coming home from the war and looking for work. • The jobs that were available manufacturing during the war went away when the war ended, so those people were out of work, as were the soldiers. This led to very high unemployment. • Germany struggled more than most, because it lost so much important land in the Treaty of Versailles.
3. Taken Advantage • Many countries took advantage of Germany’s loss in the war. • In addition to Germany having to pay back reparations to the winners, the French seized the Rhur Valley, a major German industrial center, in 1923. • This left Germany with no other option than to print money, which led to hyperinflation as their money had no economic support. (Think supply and demand) German Children playing with worthless bundles of money.
3. From Boom to Bust • Despite problems elsewhere, during the 1920s the U.S. was experiencing an artificial “boom” Manufacturers were still producing things at war-time levels. • Many people bought things, including stocks on credit, (or margin, in the stock market) but when time came to repay that credit, they could no longer pay. • In late 1929 demand fell, prices fell and stockholders sold their stocks, causing prices to drop so low that people called this event a stock market crash. • The worst day was October 29th, “Black Tuesday”, stocks lost between $10 to $15 BILLION in value.
4. The Panic! • People ran to their banks to withdraw their money, but banks had loaned to much. • Companies laid off employees, which led to higher unemployment, and less people buying the goods that were available. • People who had put their homes as collateral for loans found themselves and their families on the streets as the banks sought to get their money back.
Over production and low demand leads to employee layoffs. Low wages reduce consumer buying power High taxes restrict foreign demand for American goods Unemployment further reduces buying power. People stopped buying extra things like cars, sales drop…this leads to: Low demand for textile, oil, steel, rubber…this leads to: Lower wages and unemployment which leads to… (back to the top) 5. The Great Depression Causes and Effects
6. Problems Overseas • America had made itself a creditor of nations during WWI. • When America started to suffer financially, they forced the countries that borrowed money from the U.S to give it back. • Without these loans, economies of other countries began to suffer. • The response to these actions by some governments was the election of totalitarian leaders (7-4.4), isolationism or, in the case of democracy, laws to ‘soften the blow’ of the hardship.
Government Failures • The American government seemed unable to solve the problems of the people. • The economic crisis was made worse by the fact that one out of four Americans was without a job. • “Hoovervilles,” named for President Herbert Hoover, grew up to house the homeless and soup kitchens fed the hungry.
Hoover was blamed, but it was not entirely his fault. He promised that prosperity was just around the corner, but things only got worse. America needed a new answer to these problems.
America vs. Forces of Nature • Years of overuse of farmland led to erosion of topsoil • Years of drought caused crop failures • Floods came because the parched land could not absorb the waters • The Boll Weevil destroyed cotton crops
Ravaged by hunger and poverty many thousands of people set out for California – “the land of milk and honey.” Along the way the suffering grew worse – many just stopped moving on…
Stranded and starving, the migrants settled for whatever work or housing they could find along the way. Life on the road was not so great, and California seemed an impossible dream to the suffering people…
Without transportation, many families walked hundreds of miles in search of work. This family walked 900 miles from Arkansas to the Rio Grande.
This young South Carolina farm girl worked from “can see to can’t see” along with her family, fighting an uneven battle against poverty, hunger, drought, and the dreaded Boll Weevil.
The unconquerable human spirit of the American people made it possible for them to survive the depths of the Depression. No one knew what they might have to face in the future, but they were in it together, until better days….
6. Franklin Delano Roosevelt • The United States overwhelmingly elected Franklin Delano Roosevelt in the 1932 election. • Roosevelt began the New Deal which was designed to put people back to work in many different ways.
7. The New Deal • The new deal enhanced the role of the government in the lives of the people • For the first time, government relief was given directly to citizens. • Britain responded differently, making policies designed to protect their industry from outside influence. (Protectionist Policies)
Desperate Times… • In Germany, a new power was on the rise. • People, fearing the worst for their future elected a charismatic man who promised to fix their problems and bring their country into economic prosperity. • This leader used the economic conditions to his advantage and soon grew to be the most powerful man in Germany…
