The Great Depression

1. The Great Depression

3. Think…. In what ways has the current economic recession affected you or your family?

4. The Election of 1828 • Herbert Hoover – Republican • Promised “a chicken in every pot and two cars in every garage” • Alfred E. Smith – Democrat • Hoover wins in a landslide! • Inauguration speech: “I have no fears for our country. It is bright with hope!”

5. The 1920s economy • Time of prosperity • Standard of living increased • Consumer goods selling rapidly • Incomes increased • Times were good! • Right??

6. Problems with Economy • People are buying stuff on credit • Buy now, pay later! • Installment plans

7. Problems with Economy • Farmers having trouble • Grew more crops during World War I • After war, prices decreased, so farmers grew more to make money • Overproduction caused prices to go down • Farmers cannot pay loans • Banks foreclose on many farms

8. Problems with Economy • Stock Market: System of buying and selling shares of companies • 1920s: bull market - long period of rising prices • People get confident, want to make money – invest heavily in stocks

9. Problems with Economy • Many buy stock on margin – made a small cash down payment (10%) • With $1,000, someone could buy $10,000 worth of stock • Other $9,000 would come as a loan from stockbroker – would get interest and commission • Pretty safe as long as market was doing well • If prices fell, broker could issue a margin call – investor had to pay loan at once • Usually couldn’t repay loans

10. Problems with Economy • Stock speculation – buying stocks, expecting them to go up, then selling for a quick profit • Lots of buying of a certain stock drives prices up • Not really reflective of a stock’s true value

11. 1920s Prosperity • Prosperity in the 1920s had been based to a large extent on the sale of automobiles and houses. • Often bought on credit.

12. 1920s Prosperity • Some business that car manufacturing has a direct effect on? • Machine factory • Car lots • Steel factory • Tourism • Gas stations • Mechanics

13. Multiplier Effect • One persons spending becomes income to another person, who in turn can spend more and add to the income of others. • However, this works in the other direction as well.

14. Downturn in Economy • By the late 1920s, US business activity began to slow. • Mild recession: slowdown in business activity as the demand for durable goods falls. • Sales of homes and automobiles began to fall

15. Downturn of Economy • Downturn of 1929 was typical of a business cycle. • However, recession turned into a severe and long-lasting depression PEAK PEAK TROUGH Recovery Recession

16. “Prosperity is just around the corner…” - Hoover

17. Stock Market Crash • October 29, 1929– stocks plummet • Black Tuesday • People have to pay back money they borrowed to buy stocks. • Stocks were now selling for far less than they paid for them. • People desperately selling!

18. Stock Market Crash • By mid-November, stock prices had dropped by one-third. • Stock Market Crash was NOT the major cause of the depression. • It weakened the country – couldn’t recover because of underlying economic problems.

19. Banks Suffer • Many banks had lent money to stock speculators • Many banks had invested depositors’ money in stock market • When stock market crashes: • Banks lose money on investments • Speculators default on loans • Banks lend less money – consumers and businesses unable to borrow and spend • Many banks forced to close – money disappears • Bank run – depositors decide to withdraw all their money at one time

20. Banks Suffer

21. Banks Suffer

22. Get Started! 11/27 Answer the following questions in your own words on a sheet of paper. Turn it in to the tray when you are finished. 1. Describe two underlying problems with the economy in the 1920s. 2. Explain how falling demand for durable goods led to an economic depression.

23. Causes of the Great Depression Activity • With your group, read your character’s biography. • Answer the reading questions on a separate sheet of paper. (each member of the group!) • Fill out the character info sheet .(each member of the group!) • Wait until you are placed in your new groups.

24. Second Period • Cecil Bolton 1: Nick, Sloan, D’Vonte • Cecil Bolton 2: Madison, Warren, DeAndre • Rexford Tugwell 1: Ingram, Robert, Kenny • Rexford Tugwell 2: Roderick, Elizabeth, Caroline • Herbert Hoover 1: Noah, Will, Sara • Herbert Hoover 2: Peyton, Victoria, Roman • Russell Yates 1: Jasmine, Emily, Shadeed • Russell Yates 2: Tyler, Travis, Autumn

25. Get Started! 11/28 • Take out your work from yesterday – reading questions, Character Sheet on causes of Great Depression.

26. Second Period • Group 1: Nick, Ingram, Will, Emily • Group 2: Sloan, Robert, Sara, Jasmine • Group 3: D’Vonte, Kenny, Noah, Shadeed • Group 4: Madison, Caroline, Peyton, Travis • Group 5: Warren, Roderick, Roman, Autumn • Group 6: DeAndre, Elizabeth, Victoria, Tyler

27. Causes of Great Depression Activity • You now have four different characters in your group. • Each character should report to their group what they believe are the causes of the Great Depression. • Record each character’s reasons on your chart. • Follow the directions on the back of your chart – each group member should complete this.

28. 5th Period • Cecil Bolton: Sheniqua, Jonathan, Brandon, Connor • Rexford Tugwell: Emily, Que, Nathan, Elizabeth • Herbert Hoover: Madeline, Rachel, Josh, Norlan • Russell Yates: Katie, Samantha, Roshae, Peter

29. 5th Period • Group 1: Sheniqua, Emily, Madeline, Katie • Group 2; Jonathan, Que, Rachel, Samantha • Group 3: Brandon, Elizabeth, Josh, Roshae • Group 4: Connor, Nathan, Norlan, Peter

30. 6th Period • Rexford Tugwell: Jordan, Booker, Neco, Owen, Michelle • Cecil Bolton: Bianca, Michael, Madelynn, Zoe, Curtis • Herbert Hoover: Shedrick, Anna, Cade, Chad, Erin • Russell Yates: Catherine, Katie, Nelson, William, Bijan

31. 6th Period • Group 1: Jordan, Bianca, Shedrick, Catherine • Group 2: Booker, Michael, Anna, Katie • Group 3: Neco, Madelynn, Cade, Nelson • Group 4: Owen, Zoe, Chad, William • Group 5: Michelle, Curtis, Erin, Bijan

32. 7th Period • Cecil Bolton: Chris, EJ, Aaron, Eman • Rexford Tugwell: Turner, Leslie, Will, Joe, Priscilla • Herbert Hoover: Haley, Christian, Darnesha, Leo • Russell Yates; Parker, Tariq, Keanno, Pedro • Cecil Bolton: Nash, Racquel, Chance, Uriel

33. 7th Period • Group 1: Chris, Turner, Haley, Parker, Nash • Group 2: EJ, Leslie, Christian, Tariq, Racquel, Priscilla • Group 3: Aaron, Will, Darnesha, KeAnno, Chance • Group 4: Eman, Joe, Leo, Pedro, Uriel

34. Herbert Hoover • Extremely optimistic when stock market crashed. • March 1930: “the worst effects of the crash will have passed during the next 60 days.” • Conditions continued to worsen. • Wanted to downplay public’s fears. • What was Hoover’s goal in doing this?

35. Get Started! 11/29 • Turn in: • Causes of Depression paragraph that you completed for Homework. • Character Bio questions on your own sheet of paper. • Character Info Sheet – who they are, causes • Staple these all together!

36. Hoover’s Actions • Organized series of conferences bringing together heads of banks, railroads, labor and government officials. • Won a pledge from industry to keep factories open and stop cutting wages • Business leaders didn’t keep their word.

37. Hoover’s Actions • Public Works: government-financed building projects • Goal: replace jobs lost in private sector • Hoover Dam • Did create jobs, but not enough to make up for loss. • Refused to greatly increase government spending.

38. Hoover’s Actions • National Credit Corporation – created October 1931 • Created a pool of money to enable troubled banks to continue lending money. (Federal Reserve refused to do this) • Persuaded New York Bankers to contribute to NCC – didn’t contribute enough. • Reconstruction Finance Corporation • Make loans to banks, railroads, agricultural institutions using government money. • Overly cautious – failed to increase loans in sufficient amounts to meet needs • Economy continues to decline.

39. Hoover’s Actions • Hoover opposed relief by federal government – money that went directly to impoverished families. • Believed only state and local governments should do this – but they were running out of money • Emergency Relief and Construction Act • Hoover reluctant, but signs. • $1.5 billion for public works • $300 million in loans to states for direct relief • A little too late to make a difference.

40. Depression worsens… • By 1933, more than 9,000 banks had failed. • 1932: 30,000 companies went out of business. • By 1933, more than 12 million people were unemployed (25%) • Average family income drops.

41. Finding something to eat • Soup Kitchens – private charities set up to give poor people food • Bread Lines – receive free handout of food

42. Finding somewhere to live… • If you couldn’t pay rent or mortgage, you lost your house. • If you refused to leave, you would be evicted. • Homeless people put up shacks on unused or public land: shantytowns • People that blamed Hoover for Depression called them Hoovervilles. • Hoover blanket: newspaper to keep you warm • Hoover flag: empty pocket turned inside out – symbol of no money

46. The Dust Bowl • Mid-West United States • During 1920s, grasslands were plowed up for farmland. • In 1930s, drought causes soil to become dust. • Land becomes unsuitable for farming. • Buried crops and livestock. • Many farmers left and headed further West.