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A recession is when your neighbour has to tighten his belt. A depression is when you have to tighten your belt. And a panic is when you have no belt to.

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Presentation on theme: "A recession is when your neighbour has to tighten his belt. A depression is when you have to tighten your belt. And a panic is when you have no belt to."— Presentation transcript:

1 A recession is when your neighbour has to tighten his belt. A depression is when you have to tighten your belt. And a panic is when you have no belt to tighten and your pants fall down. - Tommy Douglas

2 The Depression Begins: Black Tuesday October 29, 1929 the stock market crashed. This day becomes known as Black Tuesday. October 29, 1929 the stock market crashed. This day becomes known as Black Tuesday. This wasn’t the single cause of the Great Depression. This wasn’t the single cause of the Great Depression. The economy had been instable prior to the 1929 crash. The crash was simply the trigger. The economy had been instable prior to the 1929 crash. The crash was simply the trigger. The Great Depression was a world wide depression. The Great Depression was a world wide depression. The Great Depression was a world wide depression. The Great Depression was a world wide depression.

3 Black Tuesday: Why did it happen? So why did the Market crash? So why did the Market crash? The richest one percent of Americans owned over a third of all American assets The richest one percent of Americans owned over a third of all American assets Banks operated without guarantees to their customers, creating a climate of panic when times got tough. Banks operated without guarantees to their customers, creating a climate of panic when times got tough. Borrowers were often willing to pay 20% interest rates on loans, being dead certain that the risk would be worth the rewards. The lender was also certain that the market would rise Borrowers were often willing to pay 20% interest rates on loans, being dead certain that the risk would be worth the rewards. The lender was also certain that the market would rise

4 Headlines from 1929 New York Times Sunday, October 13, 1929 STOCK PRICES WILL STAY AT HIGH LEVEL FOR YEARS TO COME, SAYS OHIO ECONOMIST Wednesday, October 16, 1929, Page 8, Col. 4 FISHER SEES STOCKS PERMANENTLY HIGH: SAYS STOCK SLUMP IS ONLY TEMPORARY Saturday, October 26, 1929, Page 2, Col. 5 CAUTION ADVISED BY STOCK BROKERS: Letters to Clients Warn Against Hysterical Selling and Favor Some Buying ---------- TONE IS OPTIMISTIC: Narrow Trading is Predicted for a Time Till the Market Recuperates Tuesday, October 29, 1929 STOCK PRICES SLUMP $14,000,000,000 IN NATION-WIDE STAMPEDE TO UNLOAD; BANKERS TO SUPPORT MARKET TODAY Sixteen Leading Issues Down $2,893,520,108; Tel. & Tel. and Steel Among Heaviest Losses

5 Economic Effects in USA In 1925, the total value of the New York Stock Exchange was $27 billion. By September 1929, that figure skyrocketed to $87 billion. In 1925, the total value of the New York Stock Exchange was $27 billion. By September 1929, that figure skyrocketed to $87 billion. The $87 billion 1929 New York Stock Exchange was worth a mere $15 billion in 1932. The $87 billion 1929 New York Stock Exchange was worth a mere $15 billion in 1932. If a working-class family was unfortunate enough to have their savings held in trust by a failed bank — too bad for them, all their money was lost. If a working-class family was unfortunate enough to have their savings held in trust by a failed bank — too bad for them, all their money was lost.

6 Unemployment Unemployment rose from 1.5 million Americans in 1929 to a debilitating 12 million in 1932- some 25% of the population. Unemployment rose from 1.5 million Americans in 1929 to a debilitating 12 million in 1932- some 25% of the population. College professors in New York City drove taxicabs to make ends meet. College professors in New York City drove taxicabs to make ends meet. Citizens of Washington State lit forest fires in the hopes of earning a few bucks extinguishing them. Citizens of Washington State lit forest fires in the hopes of earning a few bucks extinguishing them.

7 Unemployment

8 Life in the Dust Bowl It is recognized that those Americans living in the the Great Plains suffered the greatest. It is recognized that those Americans living in the the Great Plains suffered the greatest. Beginning in 1931, a severe drought began which turned the states in the Midwest into a giant dust bowl. Beginning in 1931, a severe drought began which turned the states in the Midwest into a giant dust bowl. giant dust bowl. giant dust bowl. There was hardly any rain. Topsoil blew away, and grasshoppers flooded the prairie landscape. Dust storms were very common. There was hardly any rain. Topsoil blew away, and grasshoppers flooded the prairie landscape. Dust storms were very common.

9 The Great Migration The severe conditions in the Midwest sparked the largest migration in American history. The severe conditions in the Midwest sparked the largest migration in American history. By the end of the 1930's, over 2.5 million people had fled the Midwest for California. By the end of the 1930's, over 2.5 million people had fled the Midwest for California. They were called “Okies” and “Arkies.” They were called “Okies” and “Arkies.” Many works have been written about this migration- most notably “The Grapes of Wrath.” Many works have been written about this migration- most notably “The Grapes of Wrath.”

10 Taken by Dorthea Lange in 1936. The mother pictured is Okie, Florence Owens Thompson. What are her eyes telling you? What are her children thinking?

11 GOVERNMENT HERBERT HOOVER President from 1929-1933, and from 1935-1948. President from 1929-1933, and from 1935-1948. “We in America today are nearer to the final triumph over poverty than ever before in the history of this land..” Hoover, 1928 “We in America today are nearer to the final triumph over poverty than ever before in the history of this land..” Hoover, 1928 People who could not pay their mortgages or rent lost their homes. People who could not pay their mortgages or rent lost their homes. They dubbed their shantytowns “Hoovervilles.”. They dubbed their shantytowns “Hoovervilles.”. Newspapers used to keep warm, “Hoover blankets.” Newspapers used to keep warm, “Hoover blankets.”

12 WHAT DID HE DO? HERBERT HOOVER In 1929, ordered the Federal Reserve Board to release hundreds of millions in credit. In 1929, ordered the Federal Reserve Board to release hundreds of millions in credit. Pressured business leaders to maintain wages. Pressured business leaders to maintain wages. Committed federal funds to major construction projects, most notably the Hoover Dam. Committed federal funds to major construction projects, most notably the Hoover Dam. Started the Reconstruction Finance Corporation which provided billions of dollars to banks, farmers and industry Started the Reconstruction Finance Corporation which provided billions of dollars to banks, farmers and industry

13 BUT..... HERBERT HOOVER Nothing he did worked, and people grew tired of his promises. Nothing he did worked, and people grew tired of his promises. Businesses could not maintain wages, and laid off workers in large numbers. Businesses could not maintain wages, and laid off workers in large numbers. Consumers did not spend. Consumers did not spend. He did not offer help direcly to the poor and unemployed. He did not offer help direcly to the poor and unemployed. The Burning of Anacostia Flats was the one of the worst episodes of the depression. The Burning of Anacostia Flats was the one of the worst episodes of the depression.

14 AN ELECTION IS HELD Less than 4 months after the episode at Anacostia, an election was held. Less than 4 months after the episode at Anacostia, an election was held. The Democratic candidate, Franklin Roosevely soundly defeated Hoover. The Democratic candidate, Franklin Roosevely soundly defeated Hoover. Roosevelt won 57.4% of the popular vote; Hover 39.7% Roosevelt won 57.4% of the popular vote; Hover 39.7% Roosevelt promised "a new deal for the American people" that included a repeal of the prohibition amendment. Roosevelt promised "a new deal for the American people" that included a repeal of the prohibition amendment.

15 GOVERNMENT RESPONSE Roosevelt began an aggressive approach to fixing the depression. Roosevelt began an aggressive approach to fixing the depression. Firstly, he fixed the banks: Firstly, he fixed the banks: “The Emergency Banking Act”- banks could only open once they had passed a Tresaury Inspection “The Emergency Banking Act”- banks could only open once they had passed a Tresaury Inspection Glass-Stegall Act- created the Federal Deposit Insurance Corporation, guaranteeing deposits up to $5000 ($78000 today) Glass-Stegall Act- created the Federal Deposit Insurance Corporation, guaranteeing deposits up to $5000 ($78000 today)

16 THE FIRST NEW DEAL Roosevelt's First New Deal program was implemented over a period of several years. Roosevelt's First New Deal program was implemented over a period of several years. It focused on THREE R's It focused on THREE R's Relief Relief Recovery Recovery Reform Reform The programs created: The programs created: Civilian Construction Corp Civilian Construction Corp Agricultural Adjustment Administration Agricultural Adjustment Administration Tenessee Valley Authority Tenessee Valley Authority

17 THE SECOND NEW DEAL Works Progress Administration Works Progress Administration Wagner Act Wagner Act Social Security Act Social Security Act


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