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Chapter 14 powerpoint.

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1 Chapter 14 powerpoint

2 WHATDUNIT? The Great Depression Mystery
THE AMERICAN ECONOMY WENT FROM UNPRECENTED PROSPERITY IN THE 1920s TO UNPRECIDENTED MISERY IN THE 1930s WHY?

3 THE BUSINESS CYCLE: THE UP’s & DOWN’s OF THE ECONOMY

4 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. The Great Depression is a Turning Point in US History!

5 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!!

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

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

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

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

10 A DIFFICULT LEARNING EXPERIENCE FOR THE U.S.!!
THE GREAT DEPRESSION A DIFFICULT LEARNING EXPERIENCE FOR THE U.S.!!

11 CAUSES OF THE GREAT DEPRESSION
AGRICULTURAL OVERPRODUCTION POOR ENVIRONMENTAL POLICIES & PRACTICE EASY MONEY (CREDIT) INDUSTRIAL OVERPRODUCTION UNEVEN DISTRIBUTION OF WEALTH OVERSPECULATION +MARGIN BUYING

12 AGRICULTURAL OVERPRODUCTION
INCREASED TECHNOLOGY GOOD GROWING CONDITIONS SUPPLY GREATER THAN DEMAND Drop in price Farmers couldn’t pay debts

13 The Great Dust Bowl Over use & Over grazing No soil conservation
No crop rotation No soil conservation No wind breaks Loss of natural grasses and animals Climatic change – the drought of the 30’s

14 EASY MONEY (CREDIT) Increasing debt + stagnant wages +
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 Increasing debt + stagnant wages + Rising prices = decreased buying GHS Rules

15 INDUSTRIAL OVERPRODUCTION
WAGES NOT KEEPING UP WITH INFLATION SUPPLY GREATER THAN DEMAND Declining demand after WWI Key industries barley making profit

16 UNEVEN DISTIBUTION OF WEALTH
Many Poor and Very Few Rich! Workers earn so little they can’t 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 6AM-6PM shift! Almost ½ of America earned less than the min amount Needed for a a decent standard of living

17 Prices in the 1920’s & 1930’s Great Prices But? 6 Room House $3000
BB Gun $2 Chevy 2 Door $540 Blanket $1 Chrysler 4 door $1000 Potatoes 2 cents a pound Men’s Suit $11 Bedroom set $50 Baseball Glove $1.19 Butter 28 cents a pound Women’s Coat $6 Gas 20 cents/gallon Shoes $2 Vacuum cleaner $18 Hamburger cents a pound

18 Prices in the 1920’s & 1930’s Hamburger 1 pound for 1 hours work
6 Room House – 12,000 hrs. Gas - 45 minutes Chevy 2 Door – 2160 hrs. Vacuum cleaner - 72 hours Chrysler 4 door – 4000 hrs. Bedroom set hrs. BB Gun – 8 hours Blanket - 4 hours Baseball Glove – 5 hours Shoes - 8 hours Men’s Suit - 44 hours Potatoes 10 minutes work/pound Women’s Coat - 24 hours Butter 1 pound for 1 hours work

19 Salaries 1920’s and 1930’s Bus driver: no power steering or brakes?
First minimum wage under FDR? $1300 or $0.43/hr $0.25/hr Teacher? Highest paid production workers in the 1920’s – Ford Motor Company? $1227 $5.00/day or $0.48/hr. Waitress Farm Prices: Potatoes, Cotton, Pork? $520 or $0.20/hr $0.01/pound potatoes Farmhand $0.05/pound cotton $216 or $0.07/hr $0.05/pound pork

20 The refrigerator cots $700 but wages for the worker on the left were
$2.50 per day. Henry Ford paid an unprecedented $5/day for a 6AM-6PM days work! The first B-9 refrigerator built in Dayton, Ohio, October 10, 1921, is shown here as it came off the assembly line at the old Delco Light plant. Delco-Light, a subsidiary of General Motors, specialized in home light-generating systems. Corporate officials thought that the household refrigerator could compliment home lighting sales. They were to realize the Frigidaire potential later in the decade. Frigidaire was to grow into a division in its own right with products in one out of every four homes in the United States. This old unit sold for over $700.

21 OVERSPECULATION MARGIN BUYING ‘29 MARKET CRASH
“GET RICH QUICK SYNDROME” MARGIN BUYING LACK OF GOVT. REGULATION PANIC SELLING ‘29 MARKET CRASH

22 Black Friday October 1929!

23 The New York Stock Exchange Black Friday, October 24, 1929

24 Chapter 14 sec 1 in your WBs

25 “Cycle of Disaster” – many businesses went bankrupt
Businesses cut production Workers suffered from wage cuts and lay offs. Demand for goods fell. People had little or no money to spend.

26 CAUSES OF THE GREAT DEPRESSION
AGRICULTURAL OVERPRODUCTION POOR ENVIRONMENTAL POLICIES & PRACTICE EASY MONEY (CREDIT) INDUSTRIAL OVERPRODUCTION UNEVEN DISTRIBUTION OF WEALTH POOR MONETARY POLICY OVERSPECULATION +MARGIN BUYING POOR FISCAL POLICY HIGH TARIFFS

27 Time Payments Begin in the 20's!
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 Time Payments Begin in the 20's! GHS Rules

28 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

29 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.

30 How Bad Was the Great Depression?
Unemployment – wanting to work and not being able to find a job Underemployment – working but not getting to work full time 56% of African Americans and 40% of White Americans

31 Unemployment Statistics for 1932 The Depressions Cruelest Year
16,000,000 to 25,000,000 in 1932 25% of the workforce In 2003 that would mean: 32,500,000 unemployed! For our workforce today in the 2000’s 5.8% in 2003 7,200,000

32 Layoffs Willys – Jeep - 28,000 workers 1929 - 4,000 workers 1932 Ford

33 Underemployment 21% of the workers who kept their jobs saw hours cut
20% of workers who kept their jobs took pay cuts Some worked only for food or a place to sleep – No pay jobs!

34 Child Labor! Some businesses fired the adults and hired kids as replacement workers Child laborers were paid $0.06/hr.

35 Business Failures & Bank Runs
85,000 businesses failed! Bank Runs led to people losing their life savings 25% of the Banks in the US closed

36 Job Posting Snow shoveling jobs in Chicago
Rumor of a job opening led to near riots as 1000’s showed up hoping to work Snow shoveling jobs in Chicago led to fist fights for shovels as over 5,000 showed up for 10 jobs.

37 Depression Era Survival
Sleep in the Library or Museum during the day walk the street at night Ride the subway all night in New York Move to a Hooverville Lose your home or apartment: sleep in the park

38 Depression Era Survival
Wash in the bus depot or train station Make your own soap: Pork-fat + ashes + salt + sun Hole in your shoe? Put a roof shingle in the bottom

39 Depression Era Survival
Rent a hot bed for $0.05 Hot because it was rented out for 8 hours and it never cooled off Eat in a soup kitchen or stand in a breadline.

40 Depression Era Survival
Prison had 3 hots and a cot Even the chain gangs of the South had 3 meals and a place to stay Prison over starvation?

41 Depression Era Survival
Hobos and bums 250,000 children under age 18 Need a blanket use newspapers Need a house use cardboard Riding the Rails


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