The Great Depression Chapter 14

The Great DepressionChapter 14

Causes of the Great DepressionHoover Presidency http://www.bing.com/videos/search?q=herbert+hoover&FORM=HDRSC3#view=detail&mid=105E6CE4DEB5FD38B6E4105E6CE4DEB5FD38B6E4

Policies-Republican (What does that mean?) Laissez-faire economics- government hands-off (No

government involvement) Against- welfare, unemployment, social securityGoal- people should help themselves

The economy will fix itselfPacifism-forgives all war debtVetoed bills to aid the peopleIsolationism-Less tradeBelief in the individual

Hoover does very little to help the people! http://legacy.c-span.org/PresidentialSurvey/Overall-Ranking.aspx

Causes of the Great Depression

Overproduction/ under consumption Definition: producing too much of a product

(over production) causing demand to go down and prices to go up Consumers- stop buying products due to increase in prices (under consumption)

Supply and Demand and Price

Causes of the Great DepressionAvailability of Easy Credit

What is credit? Buy now/pay later (installment plan)Interest rate-money that you pay to use the credithttp://www.creditcards.com/credit-card-news/credit-card-industry-facts-personal-debt-statistics-1276.php

Buying Stocks on Margintaking out a loan to purchase stocksbig gamblemarket is unpredictablestock prices fall-unable to pay back loansbank failures

Causes of the Great Depression Stock Market Crash What is the stock market?

Definition: an organized market where brokers meet to buy and sell stocks and shares Stock is a piece of ownership in a company

Corporation: businesses that have investors(Wal-Mart, Google, Facebook) NYSE, NASDAQ, AMEX

Goal is to make money (How?)Buy at a low price and sell at a higher price http://www.howthemarketworks.com/

Problems in the Market

Speculationrisky business practicesbuying stock with hopes price increasesbuy large quantities of stocksborrowing the money (can’t repay)

Stock Market

https://nyse.nyx.com/http://www.nasdaq.com/

Market Crash

Black Thurs-Tues (Oct 24-29, 1929)Collapse of the stock market16 million shares soldPrices drop drasticallyValue of stocks collapsesInvestors lose millions of dollars$30 Billion ($400 Billion today)Default on loans

What Happens?

ExamplePurchase 500 shares of GM Stock (Loan)Jan 1929 $15 per share-Value $7500Sept 1929 $30 per share-Value $15,000Profit-$7500 Decide to keep it (greed)Oct 29th 1929 $2 per share-Value $1000Loss of $6500 How do I repay the loan?This happens to thousands of people!

Causes of the Great DepressionBank Failure

Chain of loss: People>Banks>Brokerage Houses>Stock Brokers>InvestorsInvestors could not pay> Stock Brokers could not pay> Brokerage Houses> could not pay> Banks could not pay> People lost $Vicious circle: In the market crash, all of these lost all money Bank Runhttp://www.bing.com/videos/search?q=bank+run+it's+a+wonderful+life&qpvt=bank+run+it%27s+a+wonderful+life&FORM=VDRE#view=detail&mid=B8431124F1097A37A5B2B8431124F1097A37A5B2

Causes of the Great Depression

Old industrial base U.S. technology got old, out dated (fell behind the rest of the world)U.S. couldn’t compete with world (increase in unemployment)

War debtCountries owed money to U.S. (France, Italy, Great Britain- Allies)They never paid the money back (hundreds of millions of dollars)Increase in U.S. debt: lack of money in the economy

Causes of the Great DepressionFailure of Agriculture/Dust Bowl Creation of surplus in food due to technology advancements

Issue-surplus-price goes down/shortage-price goes up Farmers make less money when there is a food surplus

Response of FarmersFarmers created food shortages (destroyed crops/livestock)Causes price to increase so profit would increaseThe people could not afford it

Irony of the Great DepressionThere was too much food, but starvation occurred HOW?

Effects of Great DepressionHoovervilles

Makeshift communitiesNamed after President HooverNo power, water, or plumbingIncrease in crime

Daily survival became number one goalMore begging/stealing

Average Family income went down1929 $2300 per year1932 $1600 per yearHoovervilles- http://www.youtube.com/watch?v=sfylLnHjcu0Cinderella Man- http://www.youtube.com/watch?v=8MH94bho590

Dust Bowlhttp://www.youtube.com/watch?v=x2CiDaUYr90

Effects of the Depression Economic Changes Unemployment rises

1930-8.9%1931-16%1933-25%1940-15%Oct 2013-7.3%

(2012) 12.6 million unemployed

No unemployment benefitsNo welfare programs2013-Should people help?Would You?Wages fell 42%

Effects of Great Depression

Bonus Army Veterans of WWI were promised bonus money for re- enlisting Government did not pay Protested the U.S. government in Washington President Hoover sends military to break up

demonstrations (alienating everyone)

Election of 1932

Candidates Hoover-Republican “It’s not our fault” Franklin D. Roosevelt-Democrat “New Deal”

IssuesEconomy

ProhibitionGovernment Aid

Roosevelt Presidency

Election resultsFDR: 472 electoral votes(7 million votes more)Hoover: 59 electoral votes http://www.270towin.com/

Modern Day Depression

Signs it could happen againIncrease in unemployment rateLarge companies experience little growthLoan defaults-don’t pay money backIncrease in pricesStocks prices fallProperty values fallPeople use saving on expensesLoss of faith in government

http://www.bing.com/videos/search?q=a+second+great+depression&FORM=HDRSC3#view=detail&mid=E92937C5F266A891BF69E92937C5F266A891BF69