1. Americans Face Hard Times
Chapter 21 Section 2
Standard: 8.2- Recognize the negative patterns of an economic cycle.
Standard: 8.4- Identify the changes in social and cultural life caused by the Great Depression.
How did the Great Depression develop?
With the crash of the stock market, the booms times of the 1920s came to an end. The crash and its aftermath revealed serious flaws in the American economy. These flaws helped transform a stock market crisis into the Great Depression, the most sever economic downturn in the history of the U.S.
Show the CRASH (8:00 min)

2. Morning Work September 16, 2016
1st Period
Agenda
WRITE QUESTIONS
What was buying on margin?
What was a margin call?
Morning Work
Activity: Banking Failures
America the Story of Us (Great Depression)
Lecture: Americans Face Hard Times
America the Story of Us (Dust Bowl)
Presentations

3. Morning Work September 16, 2016
2nd/3rd Period
Agenda
WRITE QUESTIONS
What is buying on margin?
What is a margin call?
Morning Work
Activity: Banking Failures
America the Story of Us (Great Depression)
Lecture: Americans Face Hard Times
America the Story of Us (Dust Bowl)

4. During GD the prices of goods/services decreased by 30%
The country experienced deflation, which is a decline in average price level
During GD the prices of goods/services decreased by 30%
With lower prices- businesses earned less revenue
Less revenue- businesses could not afford to pay people as much and/or employ as many people
GD- unemployment rate= 25%
As prices decreased- business revenues decreased- wages decreased- unemployment increased
People earning less or unemployed/ were not earning $- bought fewer goods
Businesses earned even less revenue.
Wages decreasing/unemployment increasing borrowers not able to repay loans= bankruptcies- more bank failures

5. What were the negative impacts of the stock market crash?
What are some of the theories that have been advanced over the years regarding the cause of the GD?
Stock market crash, protectionist trade policies, failure of capitalism, excess of the 20s, falling $ stock.
What were the negative impacts of the stock market crash?
Destroyed wealth, sparked doubt about health of the economy
What problems did the Smoot-Hawley Tariff of 1930 cause?
Increased the cost of imported goods/led to retaliation by major trading partners of the US

6. What does being on the gold standard mean?
The US government would exchange $ for gold
Banks were required by law to hold a portion of their reserves as gold coin. A decrease in gold reserves would tend to contract the $ stock.
Large w/drawls of gold (cash) from banks could reduce bank reserves so much that the banks were forced to reduce their outstanding bank loans (req. full payment or foreclosure). This would further reduce deposits/shrink the $ stock
What explanation regarding the cause of the GD has stood the test of time?
Collapse of the US banking system/the contraction of the $ supply
What was the main reason that explains why the $ stock fell during the GD?
Banking panics were the main reason the $ stock fell during GD
If depositors lose confidence due to a failure of a large bank, people will rush to w/draw their $

7. Banks take in deposits. Bank reserves are the amount of deposits not loaned out by banks. A bank’s reserves can be calculated by subtracting a bank’s total loans from its total deposits.
The US has a fractional reserve banking system. This means that banks take in deposits and lend most of the money that they take in. The banks keep only a fraction of deposits and lend most of the $ that they take in. The banks keep only a fraction of deposits on reserve.
Because only a small fraction of the banks’ customers’ are kept on reserve, not everyone can get all their money out of the bank in cash on the same day.
Bank failures occur when banks are unable to meet depositors’ demands for their $.
When many depositors run into a bank at the same time to get their $ out, it is called a bank run.

8. When a bank run begins at one bank and spreads to other banks, causing people to lose confidence in banks, it is called a bank panic. Bank panics cause more bank failures, and the cycle continues.
As people remove money from the banking system, the money supply (stock) shrinks.
The shrinking money supply means that people and businesses are able to borrow less from banks.
People buy fewer goods and services
Businesses sell fewer goods and services because people have less to spend.
Prices decline

9. Business revenues decline
Businesses are able to buy fewer supplies and equipment. Businesses are unable to employ as many workers, they must pay their workers less or a combination of both.
Workers who are paid less or lose their jobs may buy fewer goods and services and may be unable to repay bank loans.
More banks fail; so, the economy’s supply of money and credit shrinks. This causes a decline in business revenues, which leads to more unemployment and/or decreases in wages.

10. People remove $ from banks
Money supply shrinks
People/businesses are able to borrow less from banks
People buy fewer goods/services
Businesses sell fewer goods/services b/c people have less to spend
Business revenues decline
Businesses are able to buy fewer supplies/equipment
Businesses are unable to employ as many workers, pay workers less
People buy fewer goods/services and unable to repay bank loans
More banks fail

11. Bank Failures
The stock market collapse strained the resources of banks
In 1929 banks had little cash on hand
Banks were vulnerable to “runs.”
After the stock market crash, economic flaws helped the nation sink into the Great Depression, the worst economic downturn in history.
The stock market collapse strained the resources of banks and many failed, thus creating greater anxiety.
For ordinary Americans, the collapse of banks was an especially unnerving new development. Most people didn’t have money invested in stocks, but many had entrusted their savings in banks.
Today most American don’t have to worry that they will loose their savings if their bank goes out of business, Insurance from the federal government protects most people’s deposits in the event of bank failure. In addition, laws today require that a bank keep a greater percentage of its assets in cash to be paid to depositors on request.
IN 1929 there was no such insurance and with little cash on hand, banks were vulnerable to “run”
In 1929 banks had little cash on hand and were vulnerable to “runs,” or a string of nervous depositors withdrawing money.
A run could quickly drain a bank of all its cash and force its closure.
In the months after October 1929, bank runs struck nationwide and hundreds of banks failed, including the enormous Bank of the United States.
In late 1930 the rate of failures turned from freighting to disastrous. In December alone almost 350 banks closed. Included was the enormous Bank of the U.S., which once had boasted about 400,000 depositors.
Bank closures wiped out billions in savings by 1933.
Today, insurance from the federal government protects most people’s deposits, and laws today require banks to keep a large percentage of their assets in cash to be paid to depositors upon request.

12. Bank Failures

13. What is a bank failure?
What is a bank run?
What is a bank panic?
How did bank panics contribute to the collapse of the nation's banking system and a reduction in the $ stock?

14. Farm Failures Decrease in demand for food By 1933 farm prices sunk 50%
Lower prices = lower income
Farmers couldn’t pay back their loans
bankruptcy and foreclosure
The hard times farmers faced got worse during the Great Depression, when widespread joblessness and poverty cut down on the demand for food as many Americans simply went hungry.
By 1933, with farmers unable to sell food they produced, farm prices had sunk to 50 percent of their already low 1929 levels.
It was typical for farmers to borrow money from banks to pay for land and equipment.
Lower prices meant lower income for farmers, and many borrowed money from banks to pay for land and equipment. As incomes dropped, farmers couldn’t pay back their loans, and in the first five years of the 1930s, hundreds of thousands of farms went bankrupt or suffered foreclosure
Foreclosure occurs when a lender takes over ownership of a property from an owner who has failed to make loan payments.

15. Unemployment By 1933 the GNP dropped over 40% Unemployment = 25%
In Harlem the unemployment rate reached 50% in 1932.
The year following the crash of October 1929 saw a sharp drop in economic activity and a steep rise in unemployment.
Such negative trends are not uncommon in times of economic downturn, but the extent and duration of these trends made the Great Depression different.
By 1933 the gross national product dropped over 40 percent from its pre-crash levels.
Unemployment reached a staggering 25 percent, and among some groups the numbers were even higher:
In the African American neighborhood of Harlem, for example, unemployment reached 50 percent in 1932
Today’s unemployment rate: 9.7% and we are in a recession. That is high!

16. Economic Impact

17. The Human Impact of the Great Depression
Poverty
People begged door to door or relied on soup kitchens
Some lived in shantytowns, or Hoovervilles.
Hoboes
Mostly men but included teens and children.
Boarded trains illegally
The Great Depression was an economic catastrophe. Yet statists tell only part of the whole story.
The true measure of the Great Depression’s disaster lies in how it affected the American people
Hoovervilles
Thousand applied for a handful of jobs, and job loss resulted in poverty for most Americans.
For millions of Americans during the Great Depression, the loss of a job meant a quick slide into poverty.
To survive, people begged door to door, relied on soup kitchens and bread lines. Some went hungry.
In the early 1930s, no federal government programs provided food or money to the poor. Local charities and some municipal and state governments provided relief, but these programs were unable to meet the need. In 1932 only 1 in 4 families needing unemployment relief received it.
With no job or income, many Americans lost their homes. Property owners evicted tenants who couldn’t pay rent, and banks foreclosed on homeowners. In many communities, sprawling neighborhoods of shacks sprang up on the outskirts of town or in public parks to house the newly homeless.
Some who lost their homes lived in shantytowns, or Hoovervilles, named after President Hoover who many blamed for the Great Depression.
On the streets of America’s great cities, some unemployed workers took to selling apples. Charging a nickel an apple, a seller might earn a $1.15 on a good day. In the fall of 1930 more than 6,000 unemployed workers sold apples on the streets of NY City alone.
Other took to the road in search for work.
Hoboes were mostly men, but included teens and women.
They hopped trains to travel from town to town, often taking their lives into their own hands.
Boarding trains was hard and illegal, and railroads hired guards or “bulls” to chase hoboes away.
Finding food was a constant challenge, because people had little to spare and rarely shared with hoboes.
Approaching homes to beg or steal, hoboes were sometimes met with violence.
Hoboes developed a system of sign language to warn of possible dangers or opportunities

18. Hoovervilles

19. Hoovervilles

20. Hoboes

21. Selling Apples

22. No Federal Aid

23. The Emotional Impact of the Great Depression
Great Depression’s worst blow: minds and spirits of Americans.
Unemployed felt they failed as people.
Led to high suicide rates
The Great Depression’s worst blow might have been to the minds and spirits of the American people.
Though many shared the same fate, the unemployed often felt that they failed as people.
Accepting handouts deeply troubled many proud Americans. Their shame and despair was reflected in the high suicide rates of the time.
Anger was another common emotion, because many felt the nation had failed the hardworking citizens who had helped build it

24. Devastation in the Dust Bowl
Around 1931 much of the Great Plains region entered a long, severe drought.
When windstorms came, they stripped the rich topsoil and blew it hundreds of miles.
Dust mounds choked crops and buried farm equipment.
In the midst of the economic disaster, nature delivered another cruel blow. In 1931 rain stopped falling across much of the Great Plains region.
This drought, or period of below average rainfall, lasted for several years, and millions of people had fled the area by the time it lifted.
Drought is a part of a weather cycle, naturally occurring on the Great Plains every few decades.
Agricultural practices in the 1930s left the area vulnerable to droughts.
Land once covered with protective grasses was now bare, with no vegetation to hold the soil in place.
When wind storms came, they stripped the rich topsoil and blew it hundreds of miles. The dust sometimes flew as far as the Atlantic Coast.
Dust mounds choked crops and buried farm equipment, and dust blew into windows and under doors.
The storms came year after year, and the hardest hit areas of Oklahoma, Kansas, Colorado, New Mexico, and Texas eventually became known as the Dust Bowl

25. Dust Bowl

26. Fleeing the Plains Storms eventually became known as the Dust Bowl
By the end of the 1930s, 2.5 million people had left the Great Plains
Migrants were called Okies
The droughts and dust storms left many in the Dust Bowl with no way to make a living, and some simply picked up and moved
By the end of the 1930s, 2.5 million people had left the Great Plains states.
Many headed along Route 66 to California, then settled in camps and sought work on farms.
The migrants were called Okies, after the state of Oklahoma, but migrants came from many states.
Many migrants met hardship and discrimination.
For much of the decade, the Depression defied most government efforts to defeat it, and Americans had to fend for themselves

27. Exit Slip
What explanation regarding the cause of the GD has stood the test of time?
What is a bank run?
What effect did the Great Depression have on Americans?

28. Morning Work March 2, 2012 WRITE QUESTIONS Morning Work
What was a Hooverville?
What was the unemployment rate by 1933?
Morning Work
3rd Period
Midterm
Lecture: Americans Face Hard Times
1st/2nd Period:
America the Story of Us
Dust Bowl
Great Depression: How Bad Was It?
Lecture: Hoover as President
Hoover Dam

29. Morning Work September 23, 2015
WRITE QUESTIONS
What was a Hooverville?
What was the unemployment rate by 1933?
Morning Work
Lecture: Americans Face Hard Times
America the Story of Us ( Dust Bowl)

30. Shrinking $ supply means that people/businesses are able to borrow less from banks
People buy fewer goods/services
Businesses sell fewer goods/services because people have less to spend
Prices decline
Businesses are unable to employ as many workers, they must pay workers less or a combination of both.
Workers buy fewer goods/services and maybe unable to repay back loans
More banks fail; so, the economy’s supply of $/credit shrinks.
Causes a decline in business revenues, which leads to unemployment