Readiness standards comprise 65% of the U. S. History Test Economics 16 B & C

Readiness Standard (6) The Student understands significant economic developments between World War I and World War II The Student is expected to: (B) Identify the causes of the Great Depression, including the impact of tariffs on world trade, stock market speculation, bank failures, & the monetary police of the Federal Reserve Board

HIGH EXPECTATIONS

What is a “Depression”? “The Great Depression which followed the [stock market] crash of 1929 was the most devastating economic blow ever suffered by the nation. It lasted for more than ten years, dominating every aspect of American life during the 1930s.... It left enduring psychological scars—never again would the Americans who lived through it be quite so optimistic about their economic future.... The Depression led to a profound shift in American political loyalties.”

Lexicon of the 1920s Speculate—purchase of land or stock by an investor at a low price, hoping that the price would rise giving the opportunity to make a quick profit On Margin—investor paid only part of purchase price of stock in cash Broker borrowed the remainder of the money from banks or corporations Margin Call—broker asks investors buying on margin to put up more money to cover their loans on stocks that were now worth less

Causes for the Great Depression of the 1930s Excessive speculation in the stock market U.S. factories produced more goods that American buyers could consume Americans could not afford products coming off the assembly lines—a maldistribution of wealth Faced with their own economic problems, European banks withdrew money from U. S. banks; a key Vienna bank failed, and the German economy collapsed

Readiness Standard (6) The Student understands significant economic developments between World War I and World War II The Student is expected to: (B) 3 Identify the impact of stock market speculation

Types of Investment Attracting Investors in the 1920s Land Stocks How Public Attitudes, Business, and Government Contributed to Conditions Leading to the Stock Market Crash of 1929

The Stock Market Collapse and the Great Depression “Black Thursday”—a wave of selling on the New York Stock Exchange. “The great crash in October [29,] 1929 put a sudden and tragic end to the speculative mania.” By 1932, stock prices had fallen to 80% below their 1929 highs. Unemployment stood at 12 million workers or 25% of the American work force. Gross National Product (GNP) fell to 67% of its 1929 level.

How Could this Happen? Public ignored warning signs of coming depression Some people gambled on the stock market Many banks made risky loans to speculators in the stock market The government took no steps to regulate stock market prices

Impact of the Depression Durable Goods—products designed to last several years before being replaced Business Inventory—quantity of unsold goods on hand How Economic Relations Between Supply and Demand Became Unbalanced in the 1920s Supply greatly exceeded demand in the late 1920s Workers didn’t make enough money to purchase the products made by industry

Readiness Standard (6) The Student understands significant economic developments between World War I and World War II The Student is expected to: (B) 4 Identify the impact of bank failures

Role of a Weak Banking System in Leading to Economic Collapse Banks that had loaned large sums to speculators tried to collect Speculators were unable to repay the banks Many banks collapsed, went bankrupt

Readiness Standard (6) The Student understands significant economic developments between World War I and World War II The Student is expected to: (C) 1 Analyze the effects of widespread unemployment

Impact of Massive Unemployment and Grinding Poverty on American Society It reduced the standard of living It sapped people’s sense of personal worth It made homelessness and hunger major social problems

Ironically, the Great Depression had less impact on the poor than the middle class. Poor folk already knew how to exist in the midst of poverty. But depressed economic condition with no letup in sight was a powerful psychological blow to a middle class with high expectations, to white collar professionals too proud to ask for charity. Even the well-to-do had to forfeit many of their traditional luxuries. During the decade, youths dropped out of college and vagrancy increased.

Readiness Standard (6) The Student understands significant economic developments between World War I and World War II The Student is expected to: (C) 2 Analyze the effects of deportation & repatriation of people of European & Mexican heritage & others

Great Depression Deportations Federal Bureau of Immigration (after 1933, the Immigration and Naturalization Service) and local authorities rounded up Mexican immigrants and naturalized Mexican American citizens and shipped them to Mexico to reduce relief roles. More than 400,000 repatriados, many of them citizens of the United States by birth, were sent across the U.S.-Mexico border from Arizona, California, and Texas Texas's Mexican-born population was reduced by a third. Los Angeles lost a third of its Mexican population.

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