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The Great DepressionWed. 3/8 & Thurs. 3/9

Warm-Up Wed. 3/8 and Thurs. 3/9

● Pick up the papers from the front table● Begin reading the article about food during the Great

Depression● If you haven’t turned in the 1920s Preview Reading,

please do that!

Agenda - Wed. March 8th & Thurs. March 9th

● Discuss NYT Article & Great Depression

● Units 1 & 2 Poll Everywhere Review

● Black Tuesday Notes & beginning of Great Depression

● Photo Analysis/Discussion

In the US, the 1920s was a decade of prosperity

● Bold cultural ideas○ Prohibition○ New ways of dress

● New inventions available to broad audiences○ Radios, talking movies

● CONFIDENCE in the US economy○ People buying lots of things○ It was a consumer society

How did the US Economy Grow so much in 1920s?

● Lots of new inventions○ Automobiles○ Radios○ Telephones○ Telegraphs

● Lots of supply, not enough demand

● Solution?● Great Depression Rap

Financing! (or putting things on credit)● Putting items on “credit” →

consumers bought the item now and would pay it later

● 60% of Americans financed automobiles in 1920s

● 80% of Americans financed radios in 1920s

● Created an artificial demand (people were imagining they had money that they didn’t)

The Stock Market in the 1920s

● A stock is a percentage (a piece) of a company

● The value of stock is based on confidence in the total market for stocks, not the actual profits of that one company

● The overall value of stock increased 120% from 1925-1929

The Upward Spiral (or so it seemed)

Americans borrowed money not just to buy goods, but also to buy stocks

Economic Danger Signs of the 1920s

● Over-speculation on stocks with borrowed money○ This stock market boom was

based on borrowed money and optimism instead of real value

● Large gaps between the rich and poor

● Post-WWI international economic slump

Income Inequality

Black Tuesday

● As rumors spread about inflated stock value, Americans started selling

● Greatest stock market crash in US History on October 29, 1929

● People started talking about how the money they thought they had was not worth what they thought, so people started selling their stock

Wave of Panic-Selling hit!

● People came rushing to banks to sell their stocks back

● Problem with panic-selling: investors are selling in reaction to pure emotion and fear, rather than evaluating fundamentals

What happened to consumers?

● Consumers were afraid of economic failure, so they stopped spending money

● Businesses lost the profit they relied on

● Businesses closed

What happened to workers?

● As businesses lost money, salaries were lowered and many workers were laid off or fired

● Many businesses couldn’t hire the unemployed because they didn’t have the funds to pay salaries

Unemployment

24%-50% of Americans were unemployed at the peak of the Great Depression

We now have a 7.8-7.9% unemployment which is still pretty high (avg unemployment rate for some time used to be 2-3%)

Downward SpiralPeople have less money to spend, so they don’t spend it in businesses → businesses lose profit → businesses can’t afford to pay workers → businesses then lay off workers → more & more people keep losing money

What happened to homeowners?

● As homeowners lost their jobs, they couldn’t afford to pay their mortgages

● Banks foreclosed on loans● Homeowners became homeless

Bank Closings

● With so many mortgages foreclosures, banks could not return depositors’ money

● Banks then closed● Depositors lost

everything

On an international scale...

● During WWI and after the war, billions of dollars were loaned to European Allies

● Allies struggled after WWI and couldn’t repay the money● The US increased tariffs to gain some of the money back in

trade money (Hawley-Smoot Tariff) → this was a BAD IDEA!● European countries retaliated with tariffs as well

Activity - Photo Analysis

● Describe what you observe, question, and conclude in the following photographs

● We will briefly discuss these

A

B

C

How could you provide for your family?● Many moved west in search of work

Dust Bowl

● This was caused by bad farming practices in the 1920s○ Lack of crop rotation

and overplowing● Drought and wind

caused the land to be unfarmable

Effects of the Dust Bowl

● Farm foreclosures

● Food became scarce

● Dust got in everything

D

E

F

The Great Depression

● People were desperate● Americans blamed themselves● Suicide rates at an all-time high● It seemed there was no end in

sight

Is it time for a change?

Presidential Election of 1932 → Herbert Hoover vs. Franklin Delano Roosevelt

Some extra facts about the Depression (not in notes)● Hoover and FDR would devote 12 years to pave the way to recovery

These are in a graphic organizer on the back of your photo analysis worksheet

Also not in notes but you should know these!!

Wall Street Crash● Wall Street Crash in Oct. 1929 paved the way to the Great Depression, BUT it

is necessary to know that this crash had several causes.● Stock prices rose for the most part (fluctuated a few weeks before late

October)● Panic began: Thurs. Oct. 24, 1929 → selling of all the stocks on Wall Street…

so stock prices dropped ● Attempt to stabilize prices, but this failed. Tuesday, Oct. 29, 1929 investors

needed to sell but there were no buyers● Wall Street stocks kept to fall for 3 years and hit the bottom

Causes of Wall Street Crash1. Uneven distribution of income

a. Not everyone got rich; top 5% earned over 33% of all income… there was no middle class

2. Stock market speculation a. “Playing the market”: people speculated that stocks would increase and they would then sell

those stocks; did not care to share the profits in the companyb. “Buying on margin”: people borrowed the cost of the stock; so when stocks drop, investors

literally lost borrowed and invested money. All of it.3. Excessive use of credit

a. People assumed “boom” was permanent

4. Overproduction of consumer goodsa. With increased productivity in industries and increased use of credit, too many goods for

consumers to buy (people could only purchase goods to a point, wages did not increase tremendously)

b. Too much supply, not enough demand

Causes of Wall Street Crash5. Weak farm economy - prosperity did not reach farmers… dust bowl added to their difficulties

6. Government policies - government did not regulate businesses in 1920s; opposite of Progressive Era (there are now high tariffs which hurt farmers and trade)

7. Global economic policies - countries relied on each other because of international banking, manufacturing, and trade. Europe never recovered completely from WWI, and US failed to recognize Europe’s problems. US wanted Europe to repay loans in full amounts, but US high tariffs reduced sale of Euro goods in America. German economy is in shambles. The depression in US was a worldwide Great Depression.