Respond to the following… A teenage boy is caught stealing bread in the market place! Stealing is a crime, should he be punished? A man is caught stealing coal to heat his house. Stealing is a crime, should he be punished?

What comes to mind when you think of an economic depression? The Great Depression

The Economy can only go as low as it does high! The Great Depression The Roaring 1920’s - Prosperity Prosperity Recession Depression The Great Depression The Economy can only go as low as it does high!

The 1930s Depression - an economy with high unemployment, falling income, failing business, decline in production and sales. The Great Depression Misconception: - Stock market crash was the cause of the Great Depression.

How did the booming 1920’s turn into an economic disaster in the 1930’s?

Heavy Real estate losses in Florida Mass Consumption Leading Causes Heavy Real estate losses in Florida Mass Consumption Living above means Uneven Distribution of Wealth Uninsured banks Stock Market Crash

Farming Depression (1920-1935) Cheap land (Banks allowed buyers to put 25% down on an acre that cost $15.00) Over production on wheat (five million acres) The Dust Bowl

Unrestricted Use of Credit How can you explain that living on credit can lead to a depression? Uneven Distribution of Wealth The rich get richer, and the poor get poorer! Can every American partake in the flood of new goods in the 1920’s?

Business trends after WWI Trouble in Industry Business trends after WWI Railroads lose business to new forms of transportation, industries that were producing war goods are no longer in high demand

Farming during WWI  Prices and demand rose Trouble in Farming Farming during WWI  Prices and demand rose Farming after WWI Over production and falling prices How could the government help? Price – Support  surplus bought by government

Brokers borrowed money from the banks to cover the margin. Rapid Growth in the Stock Market To attract investors brokers sold stocks on margin -- the investor paid only part of the selling price in cash and borrowed the rest on margin from the stock broker. Brokers borrowed money from the banks to cover the margin.

Stock prices soared and the number of shares traded rose sharply March 1928 Stock prices soared and the number of shares traded rose sharply Stock prices were 400 percent higher Investors became cautious Fewer buyers drove prices down

Confidence in stock market failed Investors began selling stocks October 1929 “Black Tuesday” Confidence in stock market failed Investors began selling stocks Margin calls- Banks wanted their money from brokers, and brokers wanted their money from investors.

How did Hoover respond to the Great Depression, and why did people disapprove of his actions?

Hoover comes to office as the first president having to deal with the depression. Hoover was a good business man, a self made millionaire, a humanitarian, and served as President Coolidge’s Secretary of State. Hoover had a international reputation as the leader of a successful relief effort to aid starving Europeans and to help Europe recover economically.

“Prosperity is just around the corner.” – President Hoover In order to improve the Economic conditions, Hoover took the following actions… “Prosperity is just around the corner.” – President Hoover Altered his view that the government should not become directly involved in the economy. Trickle Down Theory - He promoted programs that aided businesses, on the theory that as businesses recovered, economic benefits would trickle down to the workers and consumers.

Allowed the organization of the Reconstruction Finance Corporation to lend money to railroads, mortgage and insurance corporations, and banks on the verge of bankruptcy. Obtained voluntary agreements from businesses not to lower wages or prices. However, as companies faced collapse, they could not honor these promises.

“Life is not a clean, upward thrust, and the American dream is not a straight ladder up. Kind of a corkscrew spiral and ups and downs. There’s no place in the world that has had such a profile to its history.” — Richard Manoff