Chapter 12The Great Depression

Capitalism -Private ownership of business -Anyone can own a business -No government ownership of business

Capital -What you sell to make money -Whatever product your business makes/sells/provides to

people Law of Supply and Demand

-If you have a lot of something, prices are low -If you have little of something, prices are high

Free Enterprise -You may run your business any way you like as long as

you don’t break the law -Also called Free Market Economy

Economy from good to badEconomy from good to bad

-During 1920’s U.S. economy was at all time -During 1920’s U.S. economy was at all time highhigh-Herbert Hoover wins election of 1928-Herbert Hoover wins election of 1928-Most Americans thought good times would -Most Americans thought good times would continuecontinue-Most felt that stock market was a symbol of how -Most felt that stock market was a symbol of how well the U.S. was doing economicallywell the U.S. was doing economically-In 1925, stocks were worth $27 Billion-In 1925, stocks were worth $27 Billion-In 1929, $87 Billion-In 1929, $87 Billion-Wages rose 40% in 1920’s-Wages rose 40% in 1920’s-Unemployment was under 4%-Unemployment was under 4%

Welfare CapitalismWelfare Capitalism

-Business owners found a way to -Business owners found a way to meet workers demands without using meet workers demands without using the unionsthe unions

-Helped to weaken unions-Helped to weaken unions -They provided paid vacations, health -They provided paid vacations, health

plans, English classes, & other plans, English classes, & other benefits requested by workersbenefits requested by workers

-Tried to show people they didn’t -Tried to show people they didn’t need unionsneed unions

Danger Signs

-Although some made money in stock market, mostly the rich got richer.

-Huge businesses dominated industry -200 corporations controlled 49% of American

economy -Small # of families held most of the wealth [0.1%] -Most Americans didn’t have savings accounts

[80%] -Another problem was the huge amount of personal

debt -More and more people using credit on goods they

could not afford.

Stock Market Problems BeginStock Market Problems Begin

-Problems with the way the stock market -Problems with the way the stock market used to run also caused economic used to run also caused economic problemsproblems1.1. SpeculationSpeculation -Buying high risk stocks hoping to make a -Buying high risk stocks hoping to make a

quick profit or a high profitquick profit or a high profit

2.2. Buying on MarginBuying on Margin -Buying a stock with little down and borrowing -Buying a stock with little down and borrowing

the rest from the brokerthe rest from the broker

Changes in U.S. SocietyChanges in U.S. Society

-A major change came to the U.S. skyline-A major change came to the U.S. skyline -Empire State Building is started in 1930-Empire State Building is started in 1930 -Cost $41 million-Cost $41 million -Opens in 1931 as largest building in the -Opens in 1931 as largest building in the

worldworld -Today largest building is Burj Khalifa -Today largest building is Burj Khalifa

Tower in Dubai, UAETower in Dubai, UAE -Begins American’s love of skyscrapers -Begins American’s love of skyscrapers

Empire State Building

Burj Khalifa TowerBurj Khalifa Tower

Hoover’s Problems Continue

-Hoover believed problems would fix themselves -Tried to get business to keep wages high [voluntary] -Passed the Hawley-Smoot Tariff -Creates the highest tariff in

history -Makes economy worse -Creates the Reconstruction Finance Corporation -Group to help banks -Does little

Section 2Domino Theory

-The U.S. economy begins to fail for many reasons. -1st is the Domino Theory -Factories begin to lay off workers -These workers have less money to spend -B/c people were spending less, stores were ordering less -B/c stores were ordering less, factories produced less -B/c factories produced less, they needed less workers -Factories start to lay off more workers -The newly laid off workers now have less money to

spend and process begins again

Stock Market Crash-In 1929, stocks are at an all time high-Dow Jones Industrial Avg. was at all time high-Avg. of stock prices for major U.S. companies-381 for 1929-Many people felt it was time to cash in and gain huge profits.-Dow Jones and stock prices began to fall rapidly-Oct. 24, 1929 was called Black Thursday-$3 billion lost in one day-Americans raced to get out of stock market-No regulations on selling or stoppage of sales-Oct. 29, 1929 was called Black Tuesday-16.4 million shares of stock were sold in one day-Dow Jones fell from 381 to 198.7-$30 Billion lost-At first, only the 4 million investors in the stock market were affected

by the crash

Great DepressionGreat Depression -Crash ultimately begins the -Crash ultimately begins the Great DepressionGreat Depression

-Severe economic fall from 1929-1941-Severe economic fall from 1929-1941 -Caused huge # of Americans to lose -Caused huge # of Americans to lose

everything from jobs to homes.everything from jobs to homes. -Many took their own lives.-Many took their own lives. -Most were left with nothing but clothes on -Most were left with nothing but clothes on

their backstheir backs -Depression begins to affect every aspect of -Depression begins to affect every aspect of

American lifeAmerican life -Hundreds of factories close-Hundreds of factories close -Thousands lose their jobs-Thousands lose their jobs -No welfare, unemployment, or Social Security-No welfare, unemployment, or Social Security -By 1932, 12 million are unemployed-By 1932, 12 million are unemployed -1/4 of the workforce-1/4 of the workforce -Those still lucky to have jobs had their wages -Those still lucky to have jobs had their wages

cutcut

--U.S. Gross National ProductU.S. Gross National Product was cut in was cut in halfhalf

-Total value of goods and services a -Total value of goods and services a country producescountry produces

-In 1929, GNP was $103 Billion-In 1929, GNP was $103 Billion -In 1933, GNP was $56 Billion-In 1933, GNP was $56 Billion -5500 banks were forced to close-5500 banks were forced to close -9 million savings accounts disappeared-9 million savings accounts disappeared -Begins to affect other countries and force -Begins to affect other countries and force

them into their own depressions.them into their own depressions. -Biggest were Germany, France, and -Biggest were Germany, France, and

EnglandEngland

The EffectsThe Effects► -People at every economic level were affected-People at every economic level were affected► -Hardest hit were those at the bottom of the -Hardest hit were those at the bottom of the

economic scaleeconomic scale► -Homelessness was at an all time high-Homelessness was at an all time high► -Most lived in small homeless areas called -Most lived in small homeless areas called

HoovervillesHoovervilles -Areas where homeless lived-Areas where homeless lived

► -Named for President Hoover-Named for President Hoover► -Most blamed him for the Depression-Most blamed him for the Depression► --Depression also affected minorities--Depression also affected minorities► -Racism and discrimination rose dramatically-Racism and discrimination rose dramatically► -Many forced from their jobs and replaced by whites-Many forced from their jobs and replaced by whites► -56% of blacks were unemployed-56% of blacks were unemployed► -Hispanics and Asian Americans were also forced out -Hispanics and Asian Americans were also forced out

of their jobsof their jobs► -Thousands were deported, even those born in the -Thousands were deported, even those born in the

U.S.U.S.

Dust BowlDust Bowl

Farmers took an even bigger hit when a Farmers took an even bigger hit when a severe drought hit the Midwestsevere drought hit the Midwest

-9 million acres of land became known as -9 million acres of land became known as the the Dust BowlDust Bowl

-750,000 families were forced to sell their -750,000 families were forced to sell their farmsfarms

-Others had them repossessed by bank-Others had them repossessed by bank -Hardest hit were farms in Kansas and -Hardest hit were farms in Kansas and

OklahomaOklahoma -Many moved to California to begin again-Many moved to California to begin again

Dust Bowl RangeDust Bowl Range

Dust Bowl Farm in KansasDust Bowl Farm in Kansas

Dust Storm in OklahomaDust Storm in Oklahoma

Americans Helping Others

-As bad as the Depression was, Americans worked to help each other

-Protested rent increases -Helped farmers re-buy their land -Political groups also worked to help Americans -Most Americans had faith that govt. would help them -Others felt govt. needed changes -Gave support to the Communist and Socialist parties

Bonus Army Incident

• -Final straw was the Bonus Army Incident• -1932 • -WWI vets march on D.C.• -Wanted bonus for fighting in WWI that was

due to be paid in 1945• -Govt. said no, they had to wait until 1945• -Led to violence• -Hoover sends in Army under Gen. Douglas

MacArthur to remove protestors• -Many are injured seriously

Bonus Army Camps

2121stst Amendment Amendment

-One political change was the -One political change was the 21st 21st AmendmentAmendment

-Repeals 18th-Repeals 18th -Lasted 14 years-Lasted 14 years -Makes alcohol legal-Makes alcohol legal -Passed in Feb. 1933-Passed in Feb. 1933 -Only 8 states keep a ban on alcohol-Only 8 states keep a ban on alcohol Mississippi finally removes ban in 1966Mississippi finally removes ban in 1966 -Helped stimulate economy by rehiring -Helped stimulate economy by rehiring

workersworkers

The Change of AmericaThe Change of America• -Famous Americans’ lives also changed in

1930’s• Al Capone convicted of tax evasion [1931]• Babe Ruth retires [1935]• Henry Ford becomes hated by workers• Lindbergh’s baby is kidnapped and killed• Calvin Coolidge dies [1933]

1932 Election1932 Election

► -Another major change came with the 1932 -Another major change came with the 1932 electionelection

► -2 candidates were-2 candidates were► Herbert Hoover [Republican]Herbert Hoover [Republican]► Franklin Delano Roosevelt [Democrat]Franklin Delano Roosevelt [Democrat]► -FDR wins by 7 million votes-FDR wins by 7 million votes► -Wanted to bring major changes to U.S.-Wanted to bring major changes to U.S.► -Created a plan called The New Deal-Created a plan called The New Deal► -Plan would change U.S. forever and bring -Plan would change U.S. forever and bring

U.S. out of DepressionU.S. out of Depression

Hoover vs. FDR