1. THE GREAT DEPRESSION BEGINS (1929 - 1932)
CHAPTER 18
THE GREAT DEPRESSION BEGINS
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2. THE GREAT DEPRESSION
A time period of incredible economic hardship that devastated the United States during the 1930s

3. 18.1 – THE CAUSES OF THE GREAT DEPRESSION see your graphic organizer for this section

4. WHAT IS THE STOCK MARKET?
The arena in which publicly owned companies are issued and traded through the buying and selling of stocks (a share of the company)

5. WHAT IS A BULL MARKET?
A market in which prices are rising, generally over a longer period of time

6. WHAT IS A BEAR MARKET?
A market in which prices are falling, generally over a longer period of time

7. WHAT IS BUYING ON MARGIN?
Making a down payment for a stock, not paying full price up front (ex. For 10% down, you could “buy” $10,000 worth of stock with only $1,000). The other $9,000 is loaned to you buy the stockbroker.

8. When the stockbroker demands the loan be paid back……..uh-oh
WHAT IS A MARGIN CALL?
When the stockbroker demands the loan be paid back……..uh-oh

9. Risk of buying on margin
You want to buy $100 worth of stock but only have $20
You buy on margin, put up the $20 and borrow the other $80 from a broker
The stock soars to $200. You sell, repay the $80 loan and now have $120 in your pocket. You spent $20 to start, so you made $100(not bad!)
The stock plummets to $20. You sell but have $0 left because you paid $20 to buy and sold for $20, leaving you nothing. BUT, you still have to repay the loan of $80, where do you get the money to repay?????

10. WHAT IS SPECULATION?
Taking risks/making bets that the market will continue to rise and buying/selling stocks accordingly. Basically, betting on the future.

11. HOLD OR SELL?
You and your spouse have decided to spend part of your savings on stock. Stocks are all the rage and you see everybody else making so much more money on stocks than on lower interest rates in your savings account, so why not buy stock? You don’t have quite enough cash to buy as much as you want, so you decide to take out a loan. You already bought a car and a fridge with credit (basically a loan), and nothing bad happened, so what’s the real risk? After much discussion you decided to purchase $10,000 worth of Ford Motor Company, but you only put $1,000 down. Fred, your stockbroker, is loaning you the other $9,000. Now you have to decide, as you monitor the stock, to hold it or sell it. Good luck!

12. DAY 1
Your stock is at $10,000

13. Your stock is at $10,200 Hold or sell? What is your profit/loss?
DAY 6
Your stock is at $10,200 Hold or sell? What is your profit/loss?

14. Your stock is at $10,300 Hold or sell? What is your profit/loss?
DAY 11
Your stock is at $10,300 Hold or sell? What is your profit/loss?

15. Your stock is at $11,000 Hold or sell? What is your profit/loss?
DAY 16
Your stock is at $11,000 Hold or sell? What is your profit/loss?

16. Your stock is at $10,800 Hold or sell? What is your profit/loss?
DAY 21
Your stock is at $10,800 Hold or sell? What is your profit/loss?

17. Your stock is at $10,550 Hold or sell? What is your profit/loss?
DAY 26
Your stock is at $10,550 Hold or sell? What is your profit/loss?

18. Your stock is at $10,450 Hold or sell? What is your profit/loss?
DAY 31
Your stock is at $10,450 Hold or sell? What is your profit/loss?

19. Your stock is at $10,600 Hold or sell? What is your profit/loss?
DAY 36
Your stock is at $10,600 Hold or sell? What is your profit/loss?

20. Your stock is at $6,000 Hold or sell? What is your profit/loss?
DAY 45
Your stock is at $6,000 Hold or sell? What is your profit/loss?

21. Your stock is at $1,000 Hold or sell? What is your profit/loss?
DAY 51
Your stock is at $1,000 Hold or sell? What is your profit/loss?

22. WHAT IS A BANK RUN?
When depositors are worried their bank is running out of money so they RUN to the back to withdraw their money. When everybody does this at once the bank can’t handle it and people can lose a lOT of money.

23. THE CRASH OF 1929
The value of stocks plummeted and people lost a ton of money. Black Thursday (October 24) - SM plummeted, a panic ensued. Black Tuesday (October 29) – the SM lost between $10-$15 billion in value.

24. 18.2 – LIFE DURING THE DEPRESSION
GD led to massive loss of jobs and property
Worsened during Hoover’s administration
(ex – 30,000 companies go out of business)
People turn to bread lines, soup kitchens, YMCAs…
People lost homes and shantytowns popped up (why did they call them Hoovervilles?)
People wandered from place to place looking for work, food, shelter….(hobos)

25. 18.2 – THE DUST BOWL (read pp. 638-639)
Dust Bowl refers to the “fruitless” land/fields
Wind storms could be deadly, leading to blackening skies, suffocation, destruction of existing crops…
Led to “interesting” actions such as rabbit drives
Many who lost their farms headed to California for work
Okies
DB was a result of several things:
Homesteading
Drop in crop prices
Draught hitting the Great Plains

30. 18.2 – ENTERTAINMENT
People turned to entertainment as an escape from the worries/stresses of the GD
Movies, radio plays, comic books, superhero (Superman and Batman in the late ’30s)

31. HOLLYWOOD Millions attended movies Comedies provided escape
Stars such as Jimmy Stewart, Shirley Temple and Groucho Marx
King Kong (1933)
Wizard of Oz (1939)
Gone with the Wind (1939)
Walt Disney emerges in late ‘20s
Mickey Mouse (1928)
Snow White (1937) – first feature length animated film

32. RADIO Radio provided daily entertainment
sort of like TV today?
Creates common culture, shared experiences…
Comedians such as Jack Benny and George Burns
Superheroes included the Lone Ranger and the Green Hornet
Emergence of soap operas (Guiding Light)
why were they called soap operas?
George Burns

33. LITERATURE & ART Artists/authors portrayed the life surrounding them
John Steinbeck
Grapes of Wrath focuses on Okies and Dust Bowl
William Faulkner
The Sound and the Fury (used stream of consciousness…what is that?)
Images were becoming more influential, photographers captured daily life and struggles
Life – introduced in 1936 by Henry Luce
Painters such as Grant Wood depicted traditional American values
American Gothic

34. 18.3 – HOOVER RESPONDS TO THE DEPRESSION
HH was optimistic things would get better soon after the Crash
Believed gov’t had a role but did not favor “direct” aid to individuals
Faith in “rugged individualism”
Fear of socialist policies in Europe after WWI
Feared deficit spending (what is this?)
Herbert Hoover

35. 18.3 – HOOVER RESPONDS TO THE DEPRESSION
Held conferences w/ leaders of business, banks, RRs, labor…
Increased funding for public works projects
Did not create enough jobs
See graphic organizer for specific policies
Although Hoover failed to pull the country out of the depression he was actually a very “active” president; did a lot to expand the role of the Federal gov’t, especially for that time but critics say he did not do enough