Problems w/ the Banking Industry “Bank Runs” https://www.youtube.com/watch?v=iPkJH6BT7dM

Bank Failures ** 600 bank failures a year between 1921 - 1929

Banking Crisis (2) Mid-1920’s Low interest rates by Federal Reserve (1) Early 1920’s Expanding operations, taking out loans (4) 1930-31, 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

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

Gross Domestic Product ** In billions of dollars, a figure expressing how much the economy produced. 1928 97.4 1929 103.6 1930 91.2 1931 76.5 1932 58.7 1933 56.4

** 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%

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

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

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

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

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, 1914 4.2 marks January, 1919 8.9 January, 1920 64.8 July, 1921 76.7 January, 1922 493.2 January, 1923 17,972.0 August, 1923 4,620,455.0 September, 1923 98,860,000.0 November, 1923 4,200,000,000,000.0 marks

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

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

German Unemployment

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

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.