A CONSUMER ECONOMY

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A CONSUMER ECONOMY

• Increase in spending led to large profits so
• Wages increased
• Encourages more spending

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Buying on Credit

• INSTALLMENT PLAN
• Partial payments over a set period of time
• Interest charges ranged from 11 to 40

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How did the Economy look???

• GREAT!!!
• Climbing stock market
• Increase consumer confidence
• Labor stability

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PROBLEMS NOT FORSEEN
Corporation vs Small Businesses

• Rich got Richer

Rich families (over 100,000) .1 Poor fams
(lt2500) 71
CREDIT SPENDING ? INCREASE IN PERSONAL DEBT
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Unequal distribution of corporate power

• Mergers led to reduced competition.
• 200 companies owned 50 of nations wealth
• When one company went bankrupt huge impact on
  economy and society
• 86,000 businesses failed
• wages were decreased by an average of 60
• unemployment rate from 9 to 25
• about 15 million jobless

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• STOCK SPECULATION - people would buy and sell
  stocks quickly to make a quick buck
• b/c of all this buying selling, stock value
  increased
• (Ex G.E stock 130 ? 396/share)

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BUYING ON MARGIN

• Who did they need to attract?
• HOW?
• Investors only had to pay for 10 of the stock's
  actual value at time of purchase
• If a stock is 100 you can pay 10 now and the
  rest later when the stock rose
• balance was paid at a later date

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Buying on margin
The good
The bad

• Stocks go up
• Borrowers sell at high price
• Pay off
• Loan
• Interest
• make extra

• High interest rates
• Demand payment anytime
• If stocks fall then dont have money to pay back

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Confidence

• BUILDS UP!
• PRODUCTIVITY GOES UP!
• PROSPERITY AND WEALTH INCREASE
• BUTthis doesnt last

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FALSE CONFIDENCE

• Productivity Problems?
• Too much
• Overstocked warehouses
• Held more goods then consumers were buying.
• Led to Increase in Unemployment

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Troubles for farmers and workers

• FARMERS Lower farm prices ? Farmers unable to
  pay off debts for land and machinery
• FACTORY WORKERS Bad conditions, wages still not
  good enough

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THE CRASH

• BLACK TUESDAY, Oct. 29th, 1929 - NYC Stock market
  crashed, causing a depression that would last
  until 1942

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STOCK MARKET CRASH

• Loss of confidence
• Uneven wealth
• Rising debt
• Stock speculation
• Overproduction
• Hardships of farmers and factory workers

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• all tried to sell stock at once and bottom fell
  out of market panic selling (many
  bankruptcies as banks called in loans)
• 16.4mill sold vs. the avg 4-8mill

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How the crash impacted ALL Americans

• 1. Risky Loans Hurt Banks
• ? Banks earned profit on interest they earned
  from loans
• ? Gave loans to high risk businesses who
  could not pay them back

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How the crash impacted ALL Americans

• 2. Consumers Borrowing
• ? Took loans out of bank and could not pay
  them back
• 3. Bank Runs
• ? PPL feared banks would run out of led
  to Banks Closing

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How the crash impacted ALL Americans

• 4. Bank Failures
• ? Unpaid loans and banks runs ? Banks
  Closing.
• - Over 5500 failed in a few yrs
• 5. Savings Wiped Out
• ? By 1933 9million savings accounts vanished

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How the crash impacted ALL Americans

• 6. Cuts in Production
• ? Businesses cant borrow to produce
  goods.
• ? No to produce or buy
• 7. Rise in Unemployment
• ? As businesses cut production
• - Lay offs increase
• - Unemployment increases

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How the crash impacted ALL Americans

• 8. Further cuts in production
• ? As unemployment increases, income
  decreases, consumers spend less, and production
  decreased more.

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Social Impacts of The Great Depression
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What about the people?

• Farmers were already feeling the effects
• Prices of crops went down
• Many farms foreclosed
• People could not afford luxuries
• Factories shut down
• Businesses went out
• Banks could not pay out money
• People could not pay their taxes
• Schools shut down due to lack of funds
• Many families became homeless and had to live in
  shanties

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Many waited in unemployment lines hoping for a
job.
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People in cities would wait in line for bread to
bring to their family.
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Some families were forced to relocate because
they had no money.
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Hooverville

• Some families were forced to live in shanty towns
• A grouping of shacks and tents in vacant lots
• They were referred to as Hooverville because of
  President Hoovers lack of help during the
  depression.

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Hooverville
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Out of the Dust
The South and the Dust Bowl
1931-1940
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A drought in the Central and Southern Great
Plains led to dust storms that destroyed crops.
The Dust Bowl
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Central and SouthernGreat Plains
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The South Was Buried

• Crops turned to dustNo food to be sent out
• Homes buried
• 60 lost their farms
• Many moved
• South in state of emergency
• Dust Bowl the 1 weather crisis of the 20th
  century

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Two Families During the Depression
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A Farm Foreclosure
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Some families tried to make money by selling
useful crafts like baskets.
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President Hoovers Response
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VOLUNTEER?

• didn't believe gov't should play an active role
  in the economy
• persuaded bankers/business to follow his policy
  of VOLUNTARY NON - COERCIVE COOPERATION
• Promise to keep wage rates
• End of 1931 most got pay cuts

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PLAN BACKFIRES

• Democrats in Congress passed a high tariff
  (Hawley-Smoot Tariff) to protect U.S. industry
• hoped to stimulate purchasing of U.S. goods
• this turned out to be a fatal error...
• Congress did not understand that the world had
  become a GLOBAL ECONOMY
• in retaliation other countries passed high
  tariffs and no foreign markets purchased American
  goods, so U.S. productivity decreased again

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Hoover was increasingly unpopular, but he
continued to try...

• he persuaded Congress to establish the
  RECONSTRUCTION FINANCE CORPORATION
• had power to make emergency loans to banks
• but it was too little too late
• Hoover wouldn't involve himself in any programs
  where the government directly provides aid to
  individuals
• He didn't want to erode Americans sense of
  "RUGGED INDIVIDUALISM"

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Who is he really helping

• Hoover was increasingly unpopular, but he
  continued to try... ? he persuaded Congress to
  establish the RECONSTRUCTION FINANCE CORPORATION
• had power to make emergency loans to banks
• but it was too little too late
• and Hoover wouldn't involve himself in any
  programs of direct gov'tal aid to individuals
  -didn't want to erode Americans sense of "RUGGED
  INDIVIDUALISM"

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• 1932 ELECTION
• 1 out of 4 was unemployed
• nat'l income was 50 of what it had been in 1929
• Repubs. nominated Hoover ? no hope
• winner by a landslide FRANKLIN DELANO ROOSEVELT
  (Dem - N.Y. governor)

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1932 Election Hoover vs. FDR

• This campaign is more than a contest between two
  men. It is more than a contest between two
  parties. It is a contest between two
  philosophies of government.
• What is this saying about Hoover FDR?
• Their political ideologies?
• How was the federal governments role going to
  change?

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FDR vs. Hoover

• FDR Keynesian or "pump priming" economics
• - Based on beliefs of economist John Maynard
  Keynes
• - Money should be invested in people, the working
  class
• - Then, spending would increase with new money
  in circulation, then businesses would expand to
  meet the new demand and hire new workers
• Hoover supply side or "trickle down" economics
• - Money was to be invested at top, in business
• - Then, businesses would expand, hire new workers
  and in turn, spur on spending and further
  economic growth

http//www.socialstudieshelp.com/USRA_New_Deal.htm
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The Arts in the 1930s
Painting
Grant Wood
American Gothic
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The Arts in the 1930s
Literature
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The Arts in the 1930s
Literature
Of Mice and Men
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The Arts in the 1930s
Literature/Cinema
Margaret Mitchell
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Getting out of the Depression
polio
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Frances Perkins Sec. of Labor
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Eleanor Roosevelt
A woman is like a tea bag- you never know how
strong she is until she gets in hot water.
Great minds discuss ideas Average minds discuss
events Small minds discuss people.
It is not fair to ask of others what you are
unwilling to do yourself.
I could not at any age be content to take my
place in a corner by the fireside and simply look
on.
No one can make you feel inferior without your
consent.
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Fireside Chats
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From his inauguration in March through June 1933
FDR pushed Programs through Congress to provide
relief, create jobs and stimulate the economy
The First
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• Relief
• Immediate action to halt economys deterioration
• 2. Recovery
• "Pump - Priming" Temporary programs to restart
  flow of consumer demand
• 3. Reform
• Permanent programs to avoid another depression
  insure citizens against economic disasters
•  

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RELIEF

• Bank Holiday
• Closed all banks for inspection
• Reopened safe banks (some with loans)
• Federal Emergency Relief Act (FERA)
• Direct loans to people to prevent foreclosures
• Civilian Conservation Corps (CCC)
• Jobs building roads, plants trees, soil erosion
• Civilian Works Administration (CWA)
• Jobs building bridges, causeways, hospitals

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Recovery

• Tennessee Valley Authority (TVA)
• Jobs building factories dams (elec. to farms)
• Works Progress Administration (WPA)
• Work for artists build roads, libraries, schl.
• National Recovery Act (NIRA)
• Priced products, set min. wage, work condit.
• Agricultural Adjustment Act (AAA)
• Paid to reduce crops, unseeded acres, plow under
  crops/kill animals

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Reform

• Security Exchange Commission (SEC)
• Watch stock market no fraud / insider trading
• Federal Deposit Insurance Corporation (FDIC)
• Insured all bank accounts to 5,000
• National Labor Relations Act / Board (NLRA/B)
• Wagner Act fair business (no monopolies)
• Social Security (SS)
• Todays workers pay for todays retirees

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Senator Huey Long

• Share the Wealth
• - Socialist
• - Guaranteed 5,000 to all
• - Take millionaires and divide
• - Everyone gets car, house, radio
• - Every man a king
• - Shot and killed in 1935

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Father Charles Coughlin

• - More economic political talks on radio than
  religious
• - Supported FDR in 1932
• - Economic reform
• anti-comm. anti-capit.
• - Supported fascism
• - Anti-semitic (nickname)
• - Isolationist
• - Silenced

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Unconstitutional
State Govt to Regulate Intrastate Business Hurt
small business
Congress Cant Regulate agr
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Court Packing
Changing the Supreme Court. WHY???
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FDRs Legacy

• PROS
• - Unemploy. decreased
• - Increased income
• - Preserved resources
• - Cushion for elderly/sick
• - Supported unions
• - Ensured bank safety

• CONS
• - National debt increased
• - Doubled fed. Bureaucracy
• - Didnt increase small business activity

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FDRs Legacy

• Set a precedent that
• the federal government is
• responsible for the
• economic welfare
• of the people

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F. D. Roosevelt

• You have nothing to fear, except fear itself

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IN AT LEAST A ONE PARAGRAPH RESPONSE

• Evaluate the effectiveness of FDRs NEW DEAL
  legislation. Look at impact both short and long
  term. What should have been done differently? Are
  there any lessons that Barack Obama should
  specifically learn from FDR, in your opinion? How
  has this recession impacted or how will impact
  you in the long run?