1930s, The Great Depression, and the New Deal Part 1

Learning Goal Outline the cause and effects of The Great Depression on the US in the 1930’s.

Great Depression Writing Prompt You are a citizen of New York City in 1929 and have been doing very well in your job as a department store manager. Your personality has helped you earn a lot of commission by pushing shoppers to use credit to buy goods they normally couldn’t. You have been earning very good paychecks, but you want your money to go farther. You yourself use credit to take out loans on a new apartment on the upper side of town, to buy your family a nice car, and you are able to feed you, your spouse, and 3 children very well. You are able to afford these monthly payments as long as people are $PENDING. Life is great! So great in fact, you use your leftover money after making your payments and decide to invest the rest in stocks; it isn’t much, but it is all you have left and try to make more money. Why not? Everything is going great, right? On October 29, 1929 the stock market crashes and everyone is in a panic. People are selling their stocks like crazy! Banks close, businesses close, and people have no idea what to do. One thing they can’t do though, is pay their payments for the items they bought from your store and the store closes quickly. You and millions of others are unemployed. Two weeks later after all of your money is lost, you have to move out of your great apartment that is on the 5th floor. Before you leave you are looking out of your living room window. After a minute of looking out of the window you turn to your family and say…

Republican Presidents of the 1920’s

1. Election of 1928 A. “…chief business… is business.” i. Republicans take full credit for the prosperity of the 1920’s. ii. Promises to continue prosperity, yet signs of a weak economy are VERY PRESENT. - Herbert Hoover wins BIG.

Election of 1928

2. Causes of the Crash A. Long BULL-MARKET (period of growth) of great prosperity pushed many to invest in the stock-market. i. Many BOUGHT on MARGIN; only 10% down. *** Worked great as long as stock prices went ^ ii. Many SPECULATED with stocks… - Buy cheap now, sell for profit quickly when prices go up later. *** Basically, it’s gambling on the future. iii. Rich getting richer, poor getting poorer; % wise.

Bear Market Decline or Stagnant Bull Market Growth Bear Market Decline or Stagnant

B. Consumers used INSTALLMENT PLANS/CREDIT B. Consumers used INSTALLMENT PLANS/CREDIT. ***Spending money you don’t have. C. Manufactures were OVER PRODUCING goods. *** How many refrigerators and radios does one need?! i. Producing more than they could sell. ii. Already started cutting production & firing workers… D. HIGH TARIFFS force countries to cut trading w/ US. i. Can’t sell our goods abroad; 1930, trade down 50%.

A. A chain reaction is triggered… 3. The Crash of “1929” A. A chain reaction is triggered… i. Stock prices begin to fall DRASTICALLY; panic begins and people SEEEELLLLLLLLLLLLLLLLLLLLL.

A. A chain reaction is triggered… 3. The Crash of “1929” A. A chain reaction is triggered… i. Stock prices begin to fall DRASTICALLY; panic begins and people SELLLLLLLLLLLLLLLLL. B. October 29, 1929 (BLACK TUESDAY) i. MARKET CRASHES ii. Bank-Runs cause many banks to collapse; millions of accounts are wiped out.

C. Each month and year into the 30s, the Depression would get worse; was a cyclical problem. i. What, if anything, would make it stop??? *** Draw cyclical problem on board.

It Repeats Repeats Itself! Crash of 1929 Crash of 1987 Why do we learn History… It Repeats Repeats Itself! 2008 Stock Market Crash

Great Depression Simulation How much Chedda in your $aving$ account? How much Chedda have you made in investment$? Write your Dream Job HERE Do your RENT or OWN your home?

Great Depression Simulation How much Chedda have you made in investment$? How much Chedda in your $aving$ account? Write your Dream Job HERE Do your RENT or OWN your home?

4. Life During the Depression A. Avg. family income drops from $2,300 to $1,600 in 3 years. B. In 1932 alone, over 40,000 businesses have failed. C. By 1933: i. 9,000 bank failures. ii. Avg. stock price falls from $24 in 1929 to under $7. iii.12 million are out of work; 25% unemployment rate.

5. President Hoover’s Response A. *** For 5a, write a short response to the following with supporting information from material that we have used in class… How effective was President Hoover in fighting the Great Depression and what EXACTLY makes you say that?

Closing Question… If the Stock Market Crash of 1929 didn’t look as bad as the other crashes in the future, then why is it known as the Great Depression? What factors allowed it to be much worse over time than the others?