The Economy Hits Bottom Section 10.1

Review What was Henry Ford’s production innovation/ Frederick Taylor’s idea? What was its impact of other industries? How would you describe the economic policies of the 1920s presidents? Why is the decade of the 1920s called the Roaring 20s?

Fast forward to 1933

What happened to America?

Objectives At the end of this lesson you should be able to: Define the Great Crash of 1929 and list at least three (3) causes Define the Great Depression and list (4) causes List and describe Hoover’s response to the Depression Define the Bonus March and its impact on the election of 1932

Stock Market Crash Presentation

What was the Great Crash? Black Tuesday- October 29, 1929 Stocks lost 13% of their value Considered beginning of the Great Depression

The Crash

Why did the Crash Occur? Overproduction –Companies who wanted to expand sold stocks (shares of ownership) at the NY Stock Exchange –Expanded factories/farmlands overproduced goods Speculation- investing savings into high yield/high risk stocks in hope for short term profit –Buying on Margin-low interest loans that allowed speculators to buy stocks with little money (5%)

Panic –Brokers ‘called in their loans’ sold stocks of speculators who could not pay up –further saturated the market with stocks leading to further decline –Investors panicked and tried to sell –Run on banks caused hundred to go under Why did the Crash Occur?

How did people react to the Crash?

What caused the Great Depression? Great Depression –period of severely reduced economic activity from October of 1929 to 1939 Overproduction –farm and manufacturing products Uneven wealth distribution –Workers not paid enough Tight credit policy –FED raised interest rate Decline in foreign trade –US banks lacked $ to loan to Europeans –They therefore bought less American goods –High Tariffs led to under consumption of goods

What caused the Great Depression?

Let’s Review Name for the 10 year period of severe economic decline: Pros and cons of Ford’s assembly line and Frederick Taylor’s scientific management: What is buying on margin? What is Black Tuesday? Explain the causes of the Depression –Overproduction: –Credit crunch: –Uneven distribution of wealth: –High tariff:

How did Hoover respond? Volunteerism- –urged businesses/labor leaders to voluntarily freeze wages –Suggested that they form associations to eliminate harmful competition Agricultural Marketing Act –Urged farmers to form associations and sell crops together –Farm Board not allowed to lend $ to individual farmers who needed immediate cash Hawley Smoot Tariff (1930) –Raised taxes on imports to record levels –Foreign nations retaliated with their own tariffs “We have now passed the worst and shall rapidly recover.” Hoover

What was the result of Hoover’s response? Depression got worse 32 thousand businesses failed in 1932 Average family income –2, 300 in 1929 –$1, 600 in 1935 Unemployment –25% by 1932 Bread/soup lines commonplace Relief/charity efforts incapable of meeting demand –Toledo, Ohio = $.02 per meal per day

What was the Reconstruction Finance Corporation? Reconstruction Finance Corporation –Largest Hoover gov program of economic aid –loaned $2 billion to faltering banks, RR, insurance companies Hoped to generate confidence and ‘trickle down’ to other businesses –“Millionaires’ Dole” Authorized to loan $300 million to state govern for unemployment relief –But only if they were bankrupt

Bonus Army Presentation

What was the Bonus Army? WWI vets promised a bonus payable in 1945 Bonus Army –group of unemployed veterans descended to Washington to request the bonus 13 years early Highly disciplined 17 thousand including wives, children Bill defeated in Senate Walter W. Waters –“Let us show them that we can take it on the chin.” Vets sang America About 2 thousand remained Douglas MacArthur and Dwight D. Eisenhower dispersed the remaining vets –100 injured, baby died –Doomed Hoover in election

Describe the Election of FDR- “Well Felix, this will elect me.” Hoover viewed as cold, unfeeling, bully Jeered, harassed during campaign FDR won landside victory

Conclusion What is the Great Crash/causes? List 3 things Hoover did to alleviate the Depression? What is the Bonus March and how did it affect Hoover? If you were the president what would you have done to resolve this economic crisis?