the great depression chapter 21. reasons for the great depression – do not copy credit debt loose...
TRANSCRIPT
Reasons for the Great Depression – DO NOT COPY
• Credit Debt• Loose Reg. of stock market/businesses• European War Debts• Conservative Policies• Overproduction• LED TO…..
– BANK FAILURES– BUSINESS FAILURES– UNEMPLOYMENT
Reason #1:CREDIT
• Americans bought products on installment plans
• 1929 – 6 X’s higher than 1915
• Int. rates low – promote business
• FED. RESERVE tightened credit to slow purchasing => DEFLATION
Reason #2:STOCK MARKET• bull market –upward trend in stock prices
(1920s)• 2% of US invested
– Stock Speculation –buying /selling to make a quick profit• inflated prices of stocks
– Businesses – inaccurate books– margin buying –purchasing stocks with
borrowed money• 10% on a stock/ borrow the rest
STOCK MARKET CONTD
– Black Thursday – Oct. 24, 1929 – Black Tuesday – Oct. 29 ($30 billion
lost)• GE: 1929 - $396;1932 - $34• US Steel: $261 $21
• - it became a bear market
Reason #3: European War Debts
• massive war debts
•Not importing US goods
• Smoot – Hawley Tariff –high tariffs on imported goods
Reason #4: Conservative Policies
• No reg. on businesses– Booming – look away
• Tax Cuts – Trickle Down Theory
• Reduced power of labor unions
• High Protective tariffs
#5 - Overproduction
• Farmers– Overproduction= Europe stops buying– Debts = losing homes– Suffering in the 1920s– 1st to experience Depression
• Industry– Mass production
Effect #1: BANK FAILURES
• borrowers defaulted on loans
• life savings lost if a bank closed
• BANK RUNS - withdrawal all their money
• -1930-1932 –5,000+ banks failed
Banks – Khan Academy
• Khan Academy - simple banking
Effect #2:Business Failures
• No $ to buy products
• No loans from banks
• layoff employees
• Gross national product – total value of all goods and services produced in year– 1929 - $103 billion– 1933 - $56 billion
BUSINESSES CONT
• - 1930 – 26,000 businesses went bankrupt
• 1931 – 28,285 more
• 1929 – unemployment was 3.2%
• 1932 – it was 23.6 %
Effect #3 - JoblessnessEffect #3 - Joblessness
• 1929 – 1.5 million were unemployed1929 – 1.5 million were unemployed
• 1933 – 15 million1933 – 15 million
• decreased wages or hoursdecreased wages or hours
• AA usually the 1AA usually the 1stst workers to be fired workers to be fired
Election of 1928
Herbert Hoover – Rep.
• Republicans – booming 20s
• Acceptance speech for Rep. ticket: “We in America today are nearer to the final triumph over poverty than ever before in the history of this land... We shall soon with the help of God be in sight of the day when poverty will be banished from this land."
Al Smith
• CATHOLIC• ANTI-PROHIBITION• NYC
Life in CitiesLife in Cities
• Salvation Army and Red Cross provided relief Salvation Army and Red Cross provided relief to needyto needy
• BreadlinesBreadlines – poor could get soup and bread – poor could get soup and bread • ShantytownsShantytowns - aka “Hoovervilles” - aka “Hoovervilles”
Bonus ArmyBonus Army
• 1932 – 10,000 WWI vets came to D.C.1932 – 10,000 WWI vets came to D.C.• Bonus BillBonus Bill
– Early payment of the pension bonusesEarly payment of the pension bonuses
• Congress rejected the bonus billCongress rejected the bonus bill• 2,000 vets defied order to leave DC2,000 vets defied order to leave DC• Army removed themArmy removed them
– Douglas MacArthurDouglas MacArthur– machine guns, tanks, and tear gasmachine guns, tanks, and tear gas
Election of 1932Election of 1932
• Republicans – HooverRepublicans – Hoover
• Democrats – Franklin D. RooseveltDemocrats – Franklin D. Roosevelt– wealthy, famous familywealthy, famous family– Wife was EleanorWife was Eleanor– VP candidate in 1920VP candidate in 1920– Polio – paralyzed from waist downPolio – paralyzed from waist down– Gov. of NY in 1928Gov. of NY in 1928