The Great Depression Chapter 14

1. The Great DepressionChapter 14

2. Causes of the Great Depression Hoover Presidency http://www.bing.com/videos/search?q=herbert+hoover&FORM=HDRSC3#view=detail&mid=105E6CE4DEB5FD38B6E4105E6CE4DEB5FD38B6E4 Policies-Republican (What does that mean?) Laissez-faire economics- government hands-off (No government involvement) Against- welfare, unemployment, social security Goal- people should help themselves The economy will fix itself Pacifism-forgives all war debt Vetoed bills to aid the people Isolationism-Less trade Belief in the individual Hoover does very little to help the people! http://legacy.c-span.org/PresidentialSurvey/Overall-Ranking.aspx

3. Causes of the Great Depression Overproduction/ under consumption Definition: producing too much of a product (over production) causing demand to go down and prices to go up Consumers- stop buying products due to increase in prices(under consumption) Supply and Demand and Price

4. Causes of the Great Depression Availability of Easy Credit What is credit? Buy now/pay later (installment plan) Interest rate-money that you pay to use the credit http://www.creditcards.com/credit-card-news/credit-card-industry-facts-personal-debt-statistics-1276.php Buying Stocks on Margin taking out a loan to purchase stocks big gamble market is unpredictable stock prices fall-unable to pay back loans bank failures

5. Causes of the Great Depression Stock Market Crash What is the stock market? Definition: an organized market where brokers meet to buy and sell stocks and shares Stock is a piece of ownership in a company Corporation: businesses that have investors (Wal-Mart, Google, Facebook) NYSE, NASDAQ, AMEX Goal is to make money (How?) Buy at a low price and sell at a higher price http://www.howthemarketworks.com/

6. Problems in the Market Speculation risky business practices buying stock with hopes price increases buy large quantities of stocks borrowing the money (can’t repay)

7. Stock Market https://nyse.nyx.com/ http://www.nasdaq.com/

8. Market Crash Black Thurs-Tues (Oct 24-29, 1929) Collapse of the stock market 16 million shares sold Prices drop drastically Value of stocks collapses Investors lose millions of dollars $30 Billion ($400 Billion today) Default on loans

9. What Happens? Example Purchase 500 shares of GM Stock (Loan) Jan 1929 $15 per share-Value $7500 Sept 1929 $30 per share-Value $15,000 Profit-$7500 Decide to keep it (greed) Oct 29th 1929 $2 per share-Value $1000 Loss of $6500 How do I repay the loan? This happens to thousands of people!

11. Causes of the Great Depression Bank Failure Chain of loss: People>Banks>Brokerage Houses>Stock Brokers>Investors Investors could not pay> Stock Brokers could not pay> Brokerage Houses> could not pay> Banks could not pay> People lost $ Vicious circle: In the market crash, all of these lost all money Bank Run http://www.bing.com/videos/search?q=bank+run+it's+a+wonderful+life&qpvt=bank+run+it%27s+a+wonderful+life&FORM=VDRE#view=detail&mid=B8431124F1097A37A5B2B8431124F1097A37A5B2

12. Causes of the Great Depression Old industrial base U.S. technology got old, out dated (fell behind the rest of the world) U.S. couldn’t compete with world (increase in unemployment) War debt Countries owed money to U.S. (France, Italy, Great Britain- Allies) They never paid the money back(hundreds of millions of dollars) Increase in U.S. debt: lack of money in the economy

13. Causes of the Great Depression Failure of Agriculture/Dust Bowl Creation of surplus in food due to technology advancements Issue-surplus-price goes down/shortage-price goes up Farmers make less money when there is a food surplus Response of Farmers Farmers created food shortages (destroyed crops/livestock) Causes price to increase so profit would increase The people could not afford it Irony of the Great Depression There was too much food, but starvation occurred HOW?

14. Effects of Great Depression Hoovervilles Makeshift communities Named after President Hoover No power, water, or plumbing Increase in crime Daily survival became number one goal More begging/stealing Average Family income went down 1929 $2300 per year 1932 $1600 per year Hoovervilles- http://www.youtube.com/watch?v=sfylLnHjcu0 Cinderella Man- http://www.youtube.com/watch?v=8MH94bho590

15. Dust Bowlhttp://www.youtube.com/watch?v=x2CiDaUYr90

16. Effects of the Depression Economic Changes Unemployment rises 1930-8.9% 1931-16% 1933-25% 1940-15% Oct 2013-7.3% (2012) 12.6 million unemployed No unemployment benefits No welfare programs 2013-Should people help? Would You? Wages fell 42%

18. Effects of Great Depression Bonus Army Veterans of WWI were promised bonus money for re- enlisting Government did not pay Protested the U.S. government in Washington President Hoover sends military to break up demonstrations (alienating everyone)

19. Election of 1932 Candidates Hoover-Republican “It’s not our fault” Franklin D. Roosevelt-Democrat “New Deal” Issues Economy Prohibition Government Aid

20. Roosevelt Presidency Election results FDR: 472 electoral votes (7 million votes more) Hoover: 59 electoral votes http://www.270towin.com/

22. Modern Day Depression Signs it could happen again Increase in unemployment rate Large companies experience little growth Loan defaults-don’t pay money back Increase in prices Stocks prices fall Property values fall People use saving on expenses Loss of faith in government http://www.bing.com/videos/search?q=a+second+great+depression&FORM=HDRSC3#view=detail&mid=E92937C5F266A891BF69E92937C5F266A891BF69