3/6/2009

Construction income doubled Modern plumbing, heating, stoves Balloon mortgages: pay interest rate, defer repayment of cost of house

3/6/2009

Auto production tripled Price of model T dropped by half to $294 Auto industry boosted & created other industries – Gas stations, repair shops – Roadside diners, motels – Fast food: White Castle

3/6/ % of homes wired by 1929 Modern appliances Radio: 1920—first music station Buying radios on installment ½ of all homes have radio by 1930

3/6/2009 By 1929 Taxes for incomes over 1 million dropped 67% Largest 200 corporations held 20% of national wealth & 50% of corporate wealth 1/3 of families earn less that $2,000 (minimum income for decent standard of living) 1/5 th less than $1,000

3/6/2009

Post WWI, food prices decline Increase in debts cause farmers into bankruptcy or to sell out Farm consolidation>increased capital expenditures for innovations 6 million moved from farms to cities

3/6/ : stocks double in value March 1928-Sept GE stock rose from $ per share Speculators bought on the margin: pay up front only 10% of purchase price, borrowed to pay the rest of cost

3/6/2009

Campaign Slogan: A chicken for every pot and a car in every garage. Defeated Dem. Al Smith (Catholic) Hoover known as humanitarian for work in food relief for war torn Europe March 1929: Inauguration 6 months later…

3/6/2009 Wed., Oct. 23 speculation bubble burst Prices began to plummet Tues., Oct. 29 panic caused prices of stocks to drop 10-20% By Nov. stock value was half of Sept. value Great Depression would last next 12 years

3/6/2009 What caused the Great Depression?

3/6/2009 Spending by the wealthy was not enough to keep economy going Decline in consumer spending = production – Shoes 3.4% – Manufactured food 17.8% – Cement 63.1% – Automobiles 65% – Locomotives 86.4%

3/6/2009 Post WWI European debt & reparations American Gov’t refused to forgive or reduce European debts Excessive loans to European nations halted Excessively high protective tariff – Fordney-McCumber Tariff, 1922 – Hawley-Smoot Tariff, 1930

3/6/ % reduction GDP Economy to dependent on construction & automobile industry

3/6/2009 Inability of borrowers (esp. farmers) to repay loans Larger Banks speculated in stock market Banks began to foreclose on loans ,000 banks closed their doors Panic caused runs on all banks Bank deposits were not insured Most Americans lost their life savings

3/6/2009

High tariffs Gold Standard>controlled money in circulation Federal Reserve Board raised interest rates in 1931

Are we headed into another Great Depression? What are the similarities and differences between today and the Great Depression? 3/6/2009

Similarities Both preceded by economic boom. Both involve an unequal distribution of wealth. Banks were engaging in high risk lending/investment. Both preceded increased risky behavior in consumer finance. Both preceded by real estate bubbles and bull markets. Both global financial crises. Mortgage Foreclosures 3/5/2013

Differences Drop Industrial Production51.7%14.9% Peak Unemployment35%10.2% Decline of GDP26.7%3.7% Drop in Stock89.2%53.8% # Bank Failures Loss of Bank Savings81%0% 3/5/2013

Most important Difference 1929 No Government Safety Net 2008 Government Safety Net FDIC Unemployment Insurance Social Security Food Stamps Medicare & Medicaid 3/5/2013

Complete The Photo and Music Analysis Forms 3/6/2009

Breadline at McCauley Water Street Mission under Brooklyn Bridge, New York /6/2009

How is the Wall Street Crash of 1929 connected to the social conditions depicted in the photograph? 3/6/2009