1. Chapter 12
The Great Depression

2. Law of Supply and Demand
Capitalism
-Private ownership of business
-Anyone can own a business
-No government ownership of business
Capital
-What you sell to make money
-Whatever product your business makes/sells/provides to people
Law of Supply and Demand
-If you have a lot of something, prices are low
-If you have little of something, prices are high
Free Enterprise
-You may run your business any way you like as long as you don’t break the law
-Also called Free Market Economy

3. Economy from good to bad
-During 1920’s U.S. economy was at all time high
-Herbert Hoover wins election of 1928
-Most Americans thought good times would continue
-Most felt that stock market was a symbol of how well the U.S. was doing economically
-In 1925, stocks were worth $27 Billion
-In 1929, $87 Billion
-Wages rose 40% in 1920’s
-Unemployment was under 4%

4. Welfare Capitalism
-Business owners found a way to meet workers demands without using the unions
-Helped to weaken unions
-They provided paid vacations, health plans, English classes, & other benefits requested by workers
-Tried to show people they didn’t need unions

5. Danger Signs
-Although some made money in stock market, mostly the rich got richer.
-Huge businesses dominated industry
-200 corporations controlled 49% of American economy
-Small # of families held most of the wealth [0.1%]
-Most Americans didn’t have savings accounts [80%]
-Another problem was the huge amount of personal debt
-More and more people using credit on goods they could not afford.

6. Stock Market Problems Begin
-Problems with the way the stock market used to run also caused economic problems
1. Speculation
-Buying high risk stocks hoping to make a quick profit or a high profit
2. Buying on Margin
-Buying a stock with little down and borrowing the rest from the broker

7. Changes in U.S. Society -A major change came to the U.S. skyline
-Empire State Building is started in 1930
-Cost $41 million
-Opens in 1931 as largest building in the world
-Today largest building is Burj Khalifa Tower in Dubai, UAE
-Begins American’s love of skyscrapers

8. Empire State Building

9. Burj Khalifa Tower

10. Hoover’s Problems Continue
-Hoover believed problems would fix themselves
-Tried to get business to keep wages high [voluntary]
-Passed the Hawley-Smoot Tariff
-Creates the highest tariff in history
-Makes economy worse
-Creates the Reconstruction Finance Corporation
-Group to help banks
-Does little

11. Section 2 Domino Theory
-The U.S. economy begins to fail for many reasons.
-1st is the Domino Theory
-Factories begin to lay off workers
-These workers have less money to spend
-B/c people were spending less, stores were ordering less
-B/c stores were ordering less, factories produced less
-B/c factories produced less, they needed less workers
-Factories start to lay off more workers
-The newly laid off workers now have less money to spend and process begins again

12. Stock Market Crash -In 1929, stocks are at an all time high
-Dow Jones Industrial Avg. was at all time high
-Avg. of stock prices for major U.S. companies
-381 for 1929
-Many people felt it was time to cash in and gain huge profits.
-Dow Jones and stock prices began to fall rapidly
-Oct. 24, 1929 was called Black Thursday
-$3 billion lost in one day
-Americans raced to get out of stock market
-No regulations on selling or stoppage of sales
-Oct. 29, 1929 was called Black Tuesday
-16.4 million shares of stock were sold in one day
-Dow Jones fell from 381 to 198.7
-$30 Billion lost
-At first, only the 4 million investors in the stock market were affected by the crash

13. Great Depression -Crash ultimately begins the Great Depression
-Severe economic fall from
-Caused huge # of Americans to lose everything from jobs to homes.
-Many took their own lives.
-Most were left with nothing but clothes on their backs
-Depression begins to affect every aspect of American life
-Hundreds of factories close
-Thousands lose their jobs
-No welfare, unemployment, or Social Security
-By 1932, 12 million are unemployed
-1/4 of the workforce
-Those still lucky to have jobs had their wages cut

14. -U.S. Gross National Product was cut in half
-Total value of goods and services a country produces
-In 1929, GNP was $103 Billion
-In 1933, GNP was $56 Billion
-5500 banks were forced to close
-9 million savings accounts disappeared
-Begins to affect other countries and force them into their own depressions.
-Biggest were Germany, France, and England

15. The Effects -People at every economic level were affected
-Hardest hit were those at the bottom of the economic scale
-Homelessness was at an all time high
-Most lived in small homeless areas called Hoovervilles
-Areas where homeless lived
-Named for President Hoover
-Most blamed him for the Depression
--Depression also affected minorities
-Racism and discrimination rose dramatically
-Many forced from their jobs and replaced by whites
-56% of blacks were unemployed
-Hispanics and Asian Americans were also forced out of their jobs
-Thousands were deported, even those born in the U.S.

16. Dust Bowl
Farmers took an even bigger hit when a severe drought hit the Midwest
-9 million acres of land became known as the Dust Bowl
-750,000 families were forced to sell their farms
-Others had them repossessed by bank
-Hardest hit were farms in Kansas and Oklahoma
-Many moved to California to begin again

18. Dust Bowl Range

19. Dust Bowl Farm in Kansas

20. Dust Storm in Oklahoma

21. Americans Helping Others
-As bad as the Depression was, Americans worked to help each other
-Protested rent increases
-Helped farmers re-buy their land
-Political groups also worked to help Americans
-Most Americans had faith that govt. would help them
-Others felt govt. needed changes
-Gave support to the Communist and Socialist parties

22. Bonus Army Incident -Final straw was the Bonus Army Incident -1932
-WWI vets march on D.C.
-Wanted bonus for fighting in WWI that was due to be paid in 1945
-Govt. said no, they had to wait until 1945
-Led to violence
-Hoover sends in Army under Gen. Douglas MacArthur to remove protestors
-Many are injured seriously

23. Bonus Army Camps

26. 21st Amendment -One political change was the 21st Amendment
-Repeals 18th
-Lasted 14 years
-Makes alcohol legal
-Passed in Feb. 1933
-Only 8 states keep a ban on alcohol
Mississippi finally removes ban in 1966
-Helped stimulate economy by rehiring workers

27. The Change of America -Famous Americans’ lives also changed in 1930’s
Al Capone convicted of tax evasion [1931]
Babe Ruth retires [1935]
Henry Ford becomes hated by workers
Lindbergh’s baby is kidnapped and killed
Calvin Coolidge dies [1933]

28. 1932 Election -Another major change came with the 1932 election
-2 candidates were
Herbert Hoover [Republican]
Franklin Delano Roosevelt [Democrat]
-FDR wins by 7 million votes
-Wanted to bring major changes to U.S.
-Created a plan called The New Deal
-Plan would change U.S. forever and bring U.S. out of Depression

29. Hoover vs. FDR