1929-1939

Stock market
crash
Didnt realize
the effect it
would have
No money to
replenish what
was borrowed

Many found being broke

humiliating.

The Roaring 20s

The new concept of
credit
People were buying:
Automobiles
Appliances
Clothes

Fun times reigned

Dancing
Flappers
Drinking

Why was this bad?

Credit system
People didnt really have
the money they were
spending

WWI
The U.S. was a major
credit loaner to other
nations in need
Many of these nations
could not pay us back

EASY MONEY (CREDIT)

INTEREST RATES ON LOANS WERE TOO LOW =
TOO MUCH BORROWING INTEREST RATES ON
SAVINGS WERE TOO LOW = TOO MUCH
SPENDING (INFLATION) EXCESSIVE REAL
ESTATE CONSTRUCTION = OVERSUPPLY

GHS Rules

Buying on
Credit
Borrowing Money

Causes of
Depression

Write t
his d

own!!!

80% of radios &

60% of cars were
on credit

Wealth is Distributed Unevenly

Corporate profits rose 65% during the 20s.
The rich became much richer and the
workers became less poor.

1920s and 30s salaries

Bus driver: no power

steering or brakes
$1300 or $0.43/hr
Teacher
$1227
Waitress
$520 or $0.20/hr
Farmhand
$216 or $0.07/hr
First minimum wage under
FDR?
$0.25/hr

Highest paid production

workers in the 1920s
Ford Motor Company
$5.00/day or $0.48/hr.
Farm Prices: Potatoes,
Cotton, Pork?
$0.01/pound potatoes
$0.05/pound cotton
$0.05/pound pork

Uneven distribution of Wealth

Many Poor and Very Few Rich!
Workers earn so little they cant buy the
products they produce!
Wages were as little as 20 25 cents per
hour!
Even the best employer Ford Motor
Company paid only $5.00/Day for a 6AM6PM shift!

Uneven
Distribution of
Wealth
Rich got richer

Buying on
Credit
Borrowing Money

Causes of
Depression

Write t
his d

own!!!

80% of radios &

60% of cars were
on credit

The Stock Market

People bought stocks
on margins
If a stock is $100 you
can pay $10 now and
the rest later when the
stock rose

Stocks fall
Now the person has
less than $100 and no
money to pay back

And then.

With people panicking

about their money
investors tried to sell
their stocks
This leads to a huge decline
in stocks
Stocks were worthless now
People who bought on
margins now could not
pay
Investors were average
people that were now broke

Uneven
Distribution of
Wealth
Rich got richer

Buying on
Credit
Borrowing Money

Causes of
Depression
Stock
Speculation
Buying on Margin
Black Tuesday
Write t
his d

own!!!

 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

AGRICULTURAL
OVERPRODUCTION
INCREASED TECHNOLOGY
GOOD GROWING CONDITIONS
SUPPLY GREATER THAN DEMAND

The Great Dust Bowl

Over use & Over grazing
No crop rotation

No soil conservation
No wind breaks
Loss of natural grasses and animals
Climatic change the drought of the 30s

Agriculture
Agriculture
Overproduction
Overproduction

Uneven
Distribution of
Wealth
Rich got richer

Great Dust bowl

Buying on
Credit
Borrowing Money

Causes of
Depression
Stock
Speculation
Buying on Margin
Black Tuesday
Write t
his d

own!!!

OVERSPECULATION

GET RICH QUICK SYNDROME

MARGIN BUYING
LACK OF GOVT. REGULATION
PANIC SELLING

29 MARKET CRASH

The New York Stock Exchange

BlackFriday,October24,1929

Run on Banks
The crisis in confidence frightened
depositors who feared for their money.
Millions tried to withdraw their money
because they feared the banks losing it.
1929- 641 banks failed
1930- 1350 banks failed
1931- 1700 banks failed

Agriculture
Agriculture
Overproduction
Overproduction

Uneven
Distribution of
Wealth
Rich got richer

Great Dust bowl

Buying on
Credit
Borrowing Money

Banks Collapse
Collapse
Banks

Causes of
Depression
Stock
Speculation

Runs on banks

Buying on Margin
Black Tuesday
Write t
his d

own!!!

 Herbert Hoover was

president at the start
Philosophy: Well
make it!
What He Did: Nothing
The poor were looking
for help and no ideas
on how to correct or
help were coming

Laissez Faire Economic Policy

Prior to the Great
Depression the US.
Government ignored
the business cycles of
the US economy. The
Government until
FDR believed that the
American Economy
could fix itself.

Government Today is in charge

of the US Economy!
Presidents win or lose
elections based on
economic
performance!
Government control
over one third of our
$10 trillion economy!!

THE BUSINESS CYCLE

BOOM/PROSPERITY/PEAK
HIGH DEMAND
DESIRE FOR MORE PROFITS
= GREATER INVESTMENT = MORE PRODUCTION
= HIGHER EMPLOYMENT = MORE DEMAND =
HIGHER PRICES (INFLATION)

THE BUSINESS CYLCLE

CONTRACTION/SLOWDOWN
INFLATION/OVERPRODUCTION
LESS
PRODUCTION = LAY OFFS = LESS SPENDING =
LOWER CONFIDENCE = LESS INVESTMENT =
HIGHER UNEMPLOYMENT
UNTIL SURPLUSES ARE USED UP

BUSINESS CYCLE TROUGHS

RECESSION = TWO SUCCESSIVE 1/4s (3
MONTH PERIODS) OF DECLINING GDP ($ OF
GOVT, CONSUMER AND BUSINESS
SPENDING)
DEPRESSION = UNEMPLOYMENT GREATER THAN 12%

THE BUSINESS CYCLE

EXPANSION/RECOVERY
HIGHER DEMAND
SURPLUS REDUCTION =
MORE PRODUCTION = RECALL OF WORKERS =
MORE PURCHASING= INCREASED INVESTMENTS =
ECONOMIC GROWTH

POOR MONETARY POLICY

FED RESERVE INCREASED INTEREST RATES WHICH
MADE MONEY/BORROWING MORE EXPENSIVE &
SAVING MORE ATTRACTIVE INSTEAD OF
LOWERING INTEREST RATES TO GIVE THE
ECONOMY A JUMP START

POOR FISCAL POLICY

HOOVER ADMIN. & CONGRESS CUT SPENDING &
RAISED TAXES TO BALANCE THE BUDGET
INSTEAD OF INCREASING SPENDING & CUTTIN G
TAXES TO JUMP START THE ECONOMY
EX. TEMPORARILY DEFICIT SPENDING

THE CIRCULAR FLOW

$ COSTS

$ INCOMES
RESOURCE
MARKET
RESOURCES

INPUTS

BUSINESSES

HOUSEHOLDS

GOODS &
SERVICES

GOODS &
SERVICES
PRODUCT
MARKET

$ REVENUE

$ CONSUMPTION

THE CIRCULAR FLOW

$ COSTS

$ INCOMES
RESOURCE
MARKET
RESOURCES

BUSINESSES

INPUTS

GOVERNMENT

GOODS &
SERVICES

HOUSEHOLDS

GOODS &
SERVICES
PRODUCT
MARKET

$ REVENUE

$ CONSUMPTION

HIGH TARIFFS
WE TAXED FOREIGN IMPORTS TO PROTECT OUR
PRODUCTS UNDER HOOVER THE HAWLEY
SMOOT TARIFF IS PASSED THE HIGHEST
PROTECTIVE TARIFF IN US. HISTORY!!! FOREIGN
NATIONS TAXED IMPORTS FROM THE U.S. IN
RETALIATION
HIGHER PRICES FED UNDERCONSUMPTION
NATIONS STOPPED PAYING WWI DEBTS
TO
THE U.S.

Agriculture
Agriculture
Overproduction
Overproduction

Uneven
Distribution of
Wealth
Rich got richer

Great Dust bowl

Buying on
Credit
Borrowing Money

Banks Collapse
Collapse
Banks

Causes of
Depression
Stock
Speculation

Runs on banks

Tariffs
Write t
his d

own!!!

Hawley-Smoot Tariff

Buying on Margin
Black Tuesday

Christmas Day
Breadlines in
New York City,
1931

Police stand guard outside the entrance to New York's closed

World Exchange Bank, March 20, 1931

Unemployed men vying for jobs at the American Legion

Employment Bureau in Los Angeles during the Great
Depression.

Unemployed workers in front of a shack with Christmas tree,

East 12th Street, New York City. December 1937

Hard Times
Unemployment
By the early 1930s,
approximately 25% of the
nation was unemployed.

Man in hobo jungle killing

turtle to make soup,
Minneapolis, Minnesota.
Sept. 1939.

Families
in Crisis
Marriage
and birth
rates
dropped.
Fathers
and some
children
left home
to find
work.

Evicted family with

belongings on street,
December 14, 1929.

Homelessness
Homeless families build
shacks out of wooden
crates and scrap metal.
These shacks were
known as Hoovervilles.

Seattle, Washington

Central Park,
New York City

Hooverville,"
New York City,
December 8
1930
[Sign on shack
reads:
"House of
Unemployed"]

Hoover Takes Action

At first,
President
Hoover was
against
offering
direct
government
relief.
Instead, he
asked private
charities,
such as the
YMCA, to
help.

Many waited in unemployment

lines hoping for a job.

People in cities would wait in line for

bread to bring to their family.

Some families were forced to relocate

because they had no money.

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.

A drought in the South lead to

dust storms that destroyed crops.

The Dust Bowl

The South Was Buried

Crops turned to dust=No food to
be sent out
Homes buried
Fields blown away
South in state of emergency
Dust Bowl the #1 weather crisis
of the 20th century

Two Families During

the Depression

A Farm Foreclosure

Some families tried to make money by

selling useful crafts like baskets.

*FDR*

When he was
inaugurated
unemployment had
increased by 7
million.
Poor sections (like
Harlem) had 50% of
the pop. unemployed
Instated the New
Deal
Yea! Frankie!

 People everywhere were

effected by the depression
It wasnt till President
Roosevelt took over and tried
to put the economy back
together that people even saw
a glimmer of hope

Major Historical Happenings...

Jim Crow Laws
Scottsboro
Trials
Recovering
from the Great
Depression
Racial Injustice
Poor South

Jim Crow Laws

After the American Civil War most
states in the South passed anti-African
American legislation. These became
known as Jim Crow laws.
These laws included segregation in
Schools

-- Hospitals

Theaters

-- Water fountains

Restaurants
Hotels
Public transportation
Some states forbid inter-racial marriages

 These laws were instituted in 1896 and

were not abolished till the late 1950s
(even then still not completely).

 9 young AfricanAmerican men (1320) accused of

raping 2 white girls
in 1931
Immediately
sentenced to death
Trials went on for
nearly 15 years
before all the men
were dismissed

 Started on a train bound for

Memphis
Several white men boarded and
picked a fight with the black men
Whites were forced off train by the
12 black men. The white men
reported the the black men had
raped two white girls on the train to
authorities
They were immediately arrested and
tried in front of an all-white jury.

The trials caused a huge uproar

amongst the black community.

 Wrote To Kill a
Mockingbird in
1960
Based the story on
her life growing up
in Monroeville,
Alabama
TKAM was the
only novel she ever
wrote

 The character of Dill,

Scout and Jems
playmate in the novel
was based upon Lees
actual neighbor,
Truman Capote
Capote is famous for
amongst other things,
In Cold Blood and
Breakfast at Tiffanys.
It has been said that he
gave Lee Mockingbird
as a gift.

 In 1962 the novel

was turned into a
film starring
Gregory Peck.
It received a
humanitarian
award and several
Academy Award
nominations