Chapter 12

1. Chapter 12 The Great Depression

2. Capitalism • -Private ownership of business • -Anyone can own a business • -No government ownership of business • Capital • -What you sell to make money • -Whatever product your business makes/sells/provides to people • Law of Supply and Demand • -If you have a lot of something, prices are low • -If you have little of something, prices are high • Free Enterprise • -You may run your business any way you like as long as you don’t break the law • -Also called Free Market Economy

3. Economy from good to bad • -During 1920’s U.S. economy was at all time high • -Herbert Hoover wins election of 1928 • -Most Americans thought good times would continue • -Most felt that stock market was a symbol of how well the U.S. was doing economically • -In 1925, stocks were worth $27 Billion • -In 1929, $87 Billion • -Wages rose 40% in 1920’s • -Unemployment was under 4%

4. Welfare Capitalism • -Business owners found a way to meet workers demands without using the unions • -Helped to weaken unions • -They provided paid vacations, health plans, English classes, & other benefits requested by workers • -Tried to show people they didn’t need unions

5. Danger Signs • -Although some made money in stock market, mostly the rich got richer. • -Huge businesses dominated industry • -200 corporations controlled 49% of American economy • -Small # of families held most of the wealth [0.1%] • -Most Americans didn’t have savings accounts [80%] • -Another problem was the huge amount of personal debt • -More and more people using credit on goods they could not afford.

6. Stock Market Problems Begin • -Problems with the way the stock market used to run also caused economic problems • 1. Speculation • -Buying high risk stocks hoping to make a quick profit or a high profit • 2. Buying on Margin • -Buying a stock with little down and borrowing the rest from the broker

7. Changes in U.S. Society • -A major change came to the U.S. skyline • -Empire State Building is started in 1930 • -Cost $41 million • -Opens in 1931 as largest building in the world • -Today largest building is BurjKhalifa Tower in Dubai, UAE • -Begins American’s love of skyscrapers

8. Empire State Building

9. BurjKhalifa Tower

10. Hoover’s Problems Continue • -Hoover believed problems would fix themselves • -Tried to get business to keep wages high [voluntary] • -Passed the Hawley-Smoot Tariff • -Creates the highest tariff in history • -Makes economy worse • -Creates the Reconstruction Finance Corporation • -Group to help banks • -Does little

11. Section 2Domino Theory • -The U.S. economy begins to fail for many reasons. • -1st is the Domino Theory • -Factories begin to lay off workers • -These workers have less money to spend • -B/c people were spending less, stores were ordering less • -B/c stores were ordering less, factories produced less • -B/c factories produced less, they needed less workers • -Factories start to lay off more workers • -The newly laid off workers now have less money to spend and process begins again

12. Stock Market Crash -In 1929, stocks are at an all time high -Dow Jones Industrial Avg. was at all time high -Avg. of stock prices for major U.S. companies -381 for 1929 -Many people felt it was time to cash in and gain huge profits. -Dow Jones and stock prices began to fall rapidly -Oct. 24, 1929 was called Black Thursday -$3 billion lost in one day -Americans raced to get out of stock market -No regulations on selling or stoppage of sales -Oct. 29, 1929 was called Black Tuesday -16.4 million shares of stock were sold in one day -Dow Jones fell from 381 to 198.7 -$30 Billion lost -At first, only the 4 million investors in the stock market were affected by the crash

13. Great Depression • -Crash ultimately begins the Great Depression • -Severe economic fall from 1929-1941 • -Caused huge # of Americans to lose everything from jobs to homes. • -Many took their own lives. • -Most were left with nothing but clothes on their backs • -Depression begins to affect every aspect of American life • -Hundreds of factories close • -Thousands lose their jobs • -No welfare, unemployment, or Social Security • -By 1932, 12 million are unemployed • -1/4 of the workforce • -Those still lucky to have jobs had their wages cut

14. -U.S. Gross National Product was cut in half • -Total value of goods and services a country produces • -In 1929, GNP was $103 Billion • -In 1933, GNP was $56 Billion • -5500 banks were forced to close • -9 million savings accounts disappeared • -Begins to affect other countries and force them into their own depressions. • -Biggest were Germany, France, and England

15. The Effects • -People at every economic level were affected • -Hardest hit were those at the bottom of the economic scale • -Homelessness was at an all time high • -Most lived in small homeless areas called Hoovervilles • -Areas where homeless lived • -Named for President Hoover • -Most blamed him for the Depression • --Depression also affected minorities • -Racism and discrimination rose dramatically • -Many forced from their jobs and replaced by whites • -56% of blacks were unemployed • -Hispanics and Asian Americans were also forced out of their jobs • -Thousands were deported, even those born in the U.S.

16. Dust Bowl • Farmers took an even bigger hit when a severe drought hit the Midwest • -9 million acres of land became known as the Dust Bowl • -750,000 families were forced to sell their farms • -Others had them repossessed by bank • -Hardest hit were farms in Kansas and Oklahoma • -Many moved to California to begin again

18. Dust Bowl Range

19. Dust Bowl Farm in Kansas

20. Dust Storm in Oklahoma

21. Americans Helping Others • -As bad as the Depression was, Americans worked to help each other • -Protested rent increases • -Helped farmers re-buy their land • -Political groups also worked to help Americans • -Most Americans had faith that govt. would help them • -Others felt govt. needed changes • -Gave support to the Communist and Socialist parties

22. Bonus Army Incident • -Final straw was the Bonus Army Incident • -1932 • -WWI vets march on D.C. • -Wanted bonus for fighting in WWI that was due to be paid in 1945 • -Govt. said no, they had to wait until 1945 • -Led to violence • -Hoover sends in Army under Gen. Douglas MacArthur to remove protestors • -Many are injured seriously

23. Bonus Army Camps

26. 21st Amendment • -One political change was the 21st Amendment • -Repeals 18th • -Lasted 14 years • -Makes alcohol legal • -Passed in Feb. 1933 • -Only 8 states keep a ban on alcohol • Mississippi finally removes ban in 1966 • -Helped stimulate economy by rehiring workers

27. The Change of America • -Famous Americans’ lives also changed in 1930’s • Al Capone convicted of tax evasion [1931] • Babe Ruth retires [1935] • Henry Ford becomes hated by workers • Lindbergh’s baby is kidnapped and killed • Calvin Coolidge dies [1933]

28. 1932 Election • -Another major change came with the 1932 election • -2 candidates were • Herbert Hoover [Republican] • Franklin Delano Roosevelt [Democrat] • -FDR wins by 7 million votes • -Wanted to bring major changes to U.S. • -Created a plan called The New Deal • -Plan would change U.S. forever and bring U.S. out of Depression

29. Hoover vs. FDR