1929-1939 Stock market crash Didn’t realize the effect it would have No money to replenish what was borrowed Many found being broke humiliating.
The Roaring 20’s The new concept of “credit” People were buying: –Automobiles –Appliances –Clothes Fun times reigned –Dancing –Flappers –Drinking
Why was this bad? Credit system –People didn’t 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
Write this down!!! Causes of Depression Buying on Credit Borrowing Money 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 1920’s – 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 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!
Write this down!!! Causes of Depression Buying on Credit Borrowing Money 80% of radios & 60% of cars were on credit Uneven Distribution of Wealth Rich got richer
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
Write this down!!! Causes of Depression Buying on Credit Borrowing Money Uneven Distribution of Wealth Rich got richer Stock Speculation Buying on Margin Black Tuesday
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 30’s
Write this down!!! Causes of Depression Buying on Credit Borrowing Money Uneven Distribution of Wealth Rich got richer Stock Speculation Buying on Margin Black Tuesday Agriculture Overproduction Agriculture Overproduction Great Dust bowl
The New York Stock Exchange Black Friday, October 24, 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
Write this down!!! Causes of Depression Buying on Credit Borrowing Money Uneven Distribution of Wealth Rich got richer Stock Speculation Buying on Margin Black Tuesday Agriculture Overproduction Agriculture Overproduction Great Dust bowl Banks Collapse “Runs” on banks
Herbert Hoover was president at the start Philosophy: We’ll 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 $10 trillion economy!!
THE BUSINESS CYCLE BOOM/PROSPERITY/PEAK HIGH DEMANDDESIRE FOR MORE PROFITS = GREATER INVESTMENT = MORE PRODUCTION = HIGHER EMPLOYMENT = MORE DEMAND = HIGHER PRICES (INFLATION)
THE BUSINESS CYLCLE CONTRACTION/SLOWDOWN INFLATION/OVERPRODUCTION LESS PRODUCTION = LAY OFFS = LESS SPENDING = LOWER CONFIDENCE = LESS INVESTMENT = HIGHER UNEMPLOYMENT UNTIL SURPLUSES ARE USED UP
BUSINESS CYCLE TROUGHS RECESSION = TWO SUCCESSIVE 1/4’s (3 MONTH PERIODS) OF DECLINING GDP ($ 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
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.
Write this down!!! Causes of Depression Buying on Credit Borrowing Money Uneven Distribution of Wealth Rich got richer Stock Speculation Buying on Margin Black Tuesday Agriculture Overproduction Agriculture Overproduction Great Dust bowl Banks Collapse “Runs” on banks Tariffs Hawley-Smoot Tariff
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 Hoover’s lack of help during the depression.
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.American Civil War 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 1950’s (even then still not completely).
9 young African- American men (13- 20) 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 Jem’s playmate in the novel was based upon Lee’s actual neighbor, Truman Capote Capote is famous for amongst other things, In Cold Blood and Breakfast at Tiffany’s. 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