1. 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?

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

3. 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!

4. 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.

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

6. 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

7. 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

8. 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?

9. 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

10. 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

11. 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.

12. 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

13. 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.

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

15. 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.

16. “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.

17. 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.

18. “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