The 1920s: Crash & Depression

Transcription

1 The 1920s: Crash & Depression

2 Legacy of the 1920 s The Business of America is Business. Calvin Coolidge How does this statement explain the decade of the 1920 s?

3 The Business of America The Business Cycle - The recurring and fluctuating levels of economic activity that an economy experiences over a long period of time.

4 Peak Peak Contraction Expansion Expansion Recession & Depression Trough

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6 Causes of the Great Depression Over-Production on Farms Agricultural: Surplus of agricultural goods Prices fell 40% by 1921 Farmers unable to pay mortgages Loss of land Farms are abandoned

7 Causes of the Great Depression Over-Production in Factories Industrial: Factories mass production Wages don't rise enough to pay for goods Surplus of goods = worker layoffs

8 Causes of the Great Depression Unequal Distribution of Wealth The top 1% received a 75% increase in their disposable income while the other 99% saw an average 9% increase in their disposable income. 80% of Americans had no savings at all.

9 Causes of the Great Depression Monetary Policy & The FED Early 1920 s:interest Rates set low - encouraged borrowing & spending on investments (Buying Stocks on Margin) Late 1920 s - Interest Rates Raised discouraged borrowing & spending Lack of bank supervision allowed banks to engage in suspect practices, leading to bank crisis at the end of the decade

10 Causes of the Great Depression High Tariffs & War Debt European nations unable to pay US back for World War I Fordney-McCumber Tariff Act 1922 Hawley-Smoot Tariff Act 1930

11 The Crash Black Thursday - The name given to Thursday, October 24, 1929, when the New York Stock Exchange plummeted, leading to the Great Depression of the 1930s. Black Tuesday - October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million shares were traded in a panic sell-off.

12 The Crash The Dow Jones Industrial Average

13 Causes of the Crash Speculation (Hopes of Getting Rich Quick) Buying Stocks on Margin (Borrowing to Pay for Stocks) Suspect Business Practices / loans

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15 Effects of the Crash Bank Runs Bank Failures Individual savings wiped out Business Failures Cuts in production of goods & Services Mass unemployment

16 Affects of the Crash

17 Effects of the Great Crash, 1929 Great Crash Investors Businesses Businesses and and Workers Workers World World Payments Investors Overall U.S. lose Investors millions. Banks production Overall U.S. lose millions. Banks plummets. production Businesses plummets. Consumer and Businesses workers Allies cannot U.S. Businesses spending Consumer drops. cannot and workers repay pay Allies debts cannot to investors U.S. lose Businesses profits. spending drops. bank cannot loans. repay United pay debts States. to have investors little or lose profits. bank loans. United States. no have money little to or Businesses cut Savings Banks invest. no money to Workers investment Businesses and cut accounts Savings run out of are laid production. Banks run invest. Workers investment and are accounts wiped money off. Some fail. out of Europeans out. and fail. U.S. are laid production are wiped money cannot afford investments off. Some fail. out. and fail. Europeans Bank American U.S. cannot afford in Germany runs goods. investments American decline. occur. Bank in Germany goods. runs German war decline. occur. payments to Allies German fall off. war payments to Allies fall off.

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19 Hoovervilles

20 Dust Bowl

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22 Migrant Mother by Dorothea Lange

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24 Franklin Roosevelt Believed that government had a responsibility to help people in need. Called for a reappraisal of values and more controls on big business. Helped many Americans reassess the importance of making it on their own without any help. Support came from urban workers, coal miners, and immigrants in need of federal relief. won 57 % of the popular vote and almost 89 % of the electoral vote. The Election of 1932 Herbert Hoover Believed that federal government should not try to fix people s problems. Argued that federal aid and government policies to help the poor would alter the foundation of our national life. He argued for voluntary aid to help the poor and argued against giving the national government more power. Hoover gave very few campaign speeches and was jeered by crowds.

25 Election of 1932