1. Problems w/ the Banking Industry
“Bank Runs”

2. Bank Failures
** 600 bank failures a year between

3. Banking Crisis (2) Mid-1920’s Low interest rates by Federal Reserve
(1) Early 1920’s Expanding operations, taking out loans
(4) ,
Bank Runs
(5) Early 1930’s, Fed. Makes Mistakes, does nothing
(2) Mid-1920’s Low interest rates by Federal Reserve
(3) Late-1920’s Stock market speculation, as commercial banks invest depositors $$$
Credit Freeze
Banking Crisis

4. Causes of the Great Depression
(1) Uneven distribution of
wealth (drop in consumer spending)
Leads to
(2) Falling Demand
(3) Overproduction
- Leads to
(6) High tariffs (Hawley-Smoot Tariff)
(4) Low interest rates
Leads to
(5) Stock market speculation
Deflation
Unemployment

5. Gross Domestic Product
** In billions of dollars, a figure expressing how much the economy produced.

6. ** Unemployment during the Great Depression?
1920 – 5.2%
1928 – 4.2%
1930 – 8.7%
1932 – 23.6%
1933 – 25%
1934 – 21.7%
1936 – 17%
1938 – 19%
1940 – 14.6%
1942 – 4.7%
1944 – 1.2%
1946 – 3.9%

7. Hoover vs. Hitler’s Response to the Depression
Traditional ideas …
What do you notice in the chart?

8. Economic Problems in Europe and Political Responses
Economic Problems in Europe and Political Responses ** Various forms of Keynesian Economics … ** Cutting taxes, increased govt. spending …

9. Keynesian Economics
Recessions can be caused a drop in aggregate demand.
Definition: governments should engage in “short-term deficit spending, generating economic growth.”

10. Causes that Supported Failure of “Weimar Republic (1918-1933)” and Rise of Hitler
Economic Instability and hyperinflation

11. Economic Instability
The Weimar Republic has a difficult time paying the war loan, so it prints more money, too much money.
The German “Mark” and the Dollar, 1914 – 1923
Date Exchange rate, $1 = ___ Marks
July, marks
January,
January,
July,
January,
January, ,972.0
August, ,620,455.0
September, ,860,000.0
November, ,200,000,000,000.0 marks

12. How does Hitler become Dictator of Germany?
January of 1933, Hitler is named Chancellor
Feb. 27, 1933, burning of the Reichstag, legislative building
Enabling Act of 1933, Hitler becomes dictator
“From each according to his ability,
to each according to his need”
Karl Marx, Communist Manifesto

13. Germany Responds Economically to the Depression…
1933 – Germany begins the “Autobahn”
1934 – Hitler initiates build-up of military

14. German Unemployment

15. Hoover Responds to the Great Depression
Conventional economic thought …
Hoover Dam (1931 – ‘36) benefits …
Water supply
Hydro-electric power
Flood control
Reconstruction Finance Corporation (1932) …
$2 Billion to banks, companies, railroads, etc.
Emergency Relief Act (1932) …
$$$ to states for public works projects

16. Hoover Responds to the Great Depression
By 1932, unemployment is at 24% …
Bonus Army (1932) …
40,000 war veterans want their promised bonus
U.S. Army evicts veterans from Washington D.C.