What goes up must come down!

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What goes up must come down!

• Essential QuestionHow did economic choices made
  in the 1920s lead to the stock market crash and
  the Great Depression?

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Overview

• The economic boom of the 1920s collapses in 1929
  as the United States enters a deep economic
  depression. Millions of Americans lose their
  jobs, and president Hoover is unable to end the
  downslide.

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Main Idea

• As the prosperity of the 1920s ended, severe
  economic problems gripped the nation.
• Why it matters now?
• The Great Depression has had lasting effects on
  how Americans view themselves and their
  government

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Critical Thinking

• How did the economic trends of the 1920s help
  cause the Great Depression? Pg. 670-672
• Industries in trouble
• Farmers struggle
• Consumers have less money
• Living on credit
• Uneven distribution of income

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Crisis in the Farm District

• Farmers struggled as a result of the end of WWI.
• Prices fell with the decreased demand after the
  war.
• Farmers began producing more trying to sell more.
  Made problems worse.
• Banks began to foreclose on land.

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Old Decaying Industries

• Railroads, textiles, steel making little profits
  after the war.
• Trucks, buses and private cars hurt the R.R.
  industries.
• New forms of energy hurt lumber and coal.
• Improved technology made America too productive.

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Living on Credit

• By the late 1920s consumers buying less due to
  rising prices, stagnant wages, unbalanced
  distribution of income and consumer debt due to
  credit.
• Many Americans lived beyond their means.
  (wasteful spending)

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Uneven Distribution of Income

• Rich got richer while the poor got poorer
• Unequal distribution of wealth meant that
  Americans could not participate fully in the
  economic advances of the 1920s

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Tariffs and War Debts

• Hawley-Smoot Tariff Act- highest protective
  tariff in history designed to protect American
  farmers and manufactures. Reduced competition,
  hurt exports, therefore creating loss of jobs.
  Countries retaliated by raising their tariffs as
  well.
• Reduced global trading

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Dreams of Riches in the Stock Market p. 673

• The stock market was the most visible symbol of
  American prosperity in the 1920s.
• Define Dow Jones Industrial Average, bull
  market, speculation, buying on margin
• Describe the financial climate of the stock
  market during the 1920s.

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The Stock Market Crashes

• The snowball effect
• In 1929 stocks prices began to dip. This shook
  peoples confidence and so they started to sell
  their shares.
• This created a chain reaction that would cause
  prices to plummet which encouraged more people to
  sell.
• Black Tuesdaythe day of financial collapse in
  the stock market. (October 29, 1929) Investors
  lost billions and those involved were stuck with
  huge debt and lost savings.

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Main Idea

• The stock market crash of 1929 signaled the Great
  Depression-period of time in which the economy
  plummeted and unemployment skyrocketed.
• Skillbuilderp 676

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Unemployment vs. Income and Spending

• What conclusions can you draw by comparing the
  two graphs.

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Failure in the Economy (Banking)

• People panicked and withdrew money from banks.
  run on the bank
• Banks could not give all money back because they
  invested in the stock market
• By 1933 11,000 of the nations 25,000 banks
  closed. Millions of people lost their savings

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Failure in the Economy (business)

• The nations total output of goods and services
  was cut in half. Meaning loss of jobs and
  investment
• 90,000 business went bankrupt.
• Unemployment rose from 3 to 25 by 1933 (13
  million workers)
• Hawley-Smoot Tariff further hurt international
  trade further hurting business.

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Causes of the Great Depression

1. Tariffs and war debt policies that cut down the
   foreign market
2. A crisis in the farm sector
3. The availability of easy credit
4. Unequal distribution of income
5. Old Decaying Industries

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Assignment

• How do you think the Great Depression changed
  peoples lives? Write a diary entry from the
  point of view of the man in this cartoon.
• Draw an original cartoon to illustrate the
  impact of financial collapse following the stock
  market crash. Use the characters in this cartoon
  or invent your own.

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Main Idea

• During the Great Depression, Americans did what
  they had to do to survive.
• Why it matters now?
• Since the Great Depression, many Americans have
  been more cautious about saving, investing, and
  borrowing.

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Hardship and Suffering (Cities)

• Great Depression brought hardship, homelessness,
  and hunger
• People lost jobs and homes and were forced to the
  streets or shantytowns
• Soup kitchens and bread lines provided food for
  unemployed and jobless

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Hardship and Suffering (Rural)

• Thousands of farmers lost their land
• 1929-1932 400,000 farms were lost
• The drought and over planting created the Dust
  Bowl which destroyed the American Great Plains
  region forcing many Americans to migrate West
  abandoning the land.
• Okies were migrates from Dust bowl states

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Hardships and Suffering (Family)

• Making ends meet was a daily struggle, families
  broke apart.
• Men struggled with frustration from becoming
  workers to wonderers. Some men abandoned their
  families.
• Women battled to keep the family together through
  budgeting, shopping together, etc.
• Women were the backbone of the American family
  during the Great Depression.

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Hardships and Suffering (Children)

• Poor diets and lack of health care lead to
  serious health problems.
• Schools were either forced to shorten the school
  year or shutdown the school.
• Boys and girls abandoned families and were forced
  to ride the rails in a free-for-all type
  atmosphere

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Hardship and Suffering (Social)

• 1928-1932 suicide rates rose more than 30
• Mental hospitals grew
• Economic problems forced people to make
  sacrifices and readjust priorities
• Stigma of poverty and having to skimp and save
  never disappeared.
• People depended on one another more.
• All of the effects of the Great Depression shaped
  your Grandparents and has had some affect on your
  upbringing.

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Main Idea

• President Hoovers conservative response to the
  Great Depression drew criticism from many
  Americans.
• Why it matters now
• Worsening conditions in the country cause the
  government to become more involved in the health
  and wealth of the people.

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Hoover and the Depression

• Hoover believed in rugged individualism meaning
  people should succeed through their own efforts.
  
• Should not depend on government to bail them out.
  (welfare)
• Handouts would weaken peoples self-respect and
  create a welfare state. (Sense of entitlement)
• Hoover believed that the economy would fix itself
  and rebound in time. (It did not)

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Hoover and the Depression

• Boulder Dam- public works project that provided
  work relief, provide electricity, and irrigation
  to CA, CO, UT, WY, NM.
• Read 686Democrats Wind in 1930 Congressional
  Elections
• Hoover began providing direct relief to people.
• Federal Home Loan Bank Act- lowered mortgage
  rates refinanced farmer loans
• Reconstruction Finance Corporation- 2 Million
  for banks, life insurance comp., railroads,
  business

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Hoover and the Depression

• Why was Hoover destined to lose the Presidential
  Election of 1932 after the Bonus Army incident?
• P. 688 689

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FDR and the New Deal

• Franklin D. Roosevelt won the election of 1932.
• Prior to taking office, Roosevelt organized the
  Brain Trust- who were a group of advisers who
  formulated a set of policies that would later
  become known as the New Deal.
• From March 9 to June 16, 1933 the first hundred
  days of FDRs presidency he passed 15 major
  legislations.
• First action conducted by FDR was to declare a
  bank holiday
• First and Second New Deal (p. 706)

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FDR and the Depression

• The New Deal forced FDR to practice deficit
  spending which meant spending more money than the
  government received in taxes.
• Supreme Court declared many New Deal legislations
  unconstitutional because they gave the Executive
  Branch and the federal government to much power
  over states and people.

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Impact of the New Deal

• Expanded the governments role in the economy.
• Created the FDIC and the SEC.
• Social Security
• Tennessee Valley Authority built a number of dams
  that improved an depressed area of the country.
• Most importantly it restored hope.

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New Deal Legacy

• Labor- standard wages and rights, eliminated
  child labor
• Farmers- price support, improved farming methods
• Banking/Finance- reformed the stock market,
  insurance on bank accounts
• Social Welfare- expand government role to provide
  for people
• Environment- increase protection of land

• Wagner Act, Fair Labor Standards, National Labor
  Relations Board
• Soil Conservation Service
• Securities Exchange Commission, FDIC
• Social Security
• CCC, Soil Conservation Service, Tennessee Valley
  Authority

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