1. Tuesday, April 7 Welcome back! Please submit your Prohibition work on the front table. Thank you! Bellringer: – To what extent (how much) do you think the government should regulate people’s moral behavior? Explain your position, and give examples to support it. Note: Moral behavior is what people should do or how they should behave.

2. The Roaring Twenties Prohibition Political corruption Social changes Entertainment and the arts Labor vs. industry

3. Think … What was the economy of the United States like in the 1920s? What was going well? What changes were occurring (new inventions, discoveries, developments, etc.), and how did those things change American life? Were there any signs of potential economic or financial trouble on the horizon?

4. Key questions How did the “Roaring 20s” come to an end? What caused the Great Depression? What caused the stock market crash?

5. The economy of the 1920s Using the textbook, complete the note guide on the economy of the 1920s. Be on the lookout for answers to the questions we just discussed!

6. The Great Depression Paying the price of the 1920s

7. What caused the Depression? There were many reasons to believe the U.S. economy was soft in the 1920s – Example: Farmers were in a depression throughout the decade Historians still argue over the exact causes of the Depression But there is widespread agreement about some things that contributed to it

8. Causes of the Great Depression Unequal distribution of wealth High tariffs and war debts Monetary policy Agricultural overproduction Industrial overproduction Consumer behavior Stock market crash; financial panic

9. Causes of the Great Depression The 1920s was known as a prosperous time, but not for everyone Consumer behavior was also a contributing factor People were buying things they couldn’t afford

10. The nation's wealth grew by billions throughout the 1920s But it was not distributed evenly UNEQUAL DISTRIBUTION OF WEALTH

11. The top 1 percent received a 75 percent increase in their disposable income The other 99 percent saw an average 9 percent increase in their disposable income (money leftover when the necessities are paid for). 80 percent of Americans had no savings at all Put these numbers in chart form! UNEQUAL DISTRIBUTION OF WEALTH

12. 99 percent of the population: Income grew 9 percent The top 1 percent of the population: Income rose 75 percent.

13. The economy grew by billions throughout the 1920s. Total realized income rose from $74.3 billion in 1923 to $89 billion in 1929

14. But that prosperity was NOT reflected in the wages of unskilled workers.

15. RURAL POVERTY IN THE 1920’S

16. HIGH TARIFFS AND WAR DEBTS At the end of World War I, European nations owed over $10 billion ($115 billion in 2002 dollars) to the U.S. But they had no way of paying the money back, because their economies had been devastated by the war When the U.S. insisted on payment, the Allies turned to Germany to demand that they pay their reparations, as outlined in the Treaty of Versailles But Germany couldn’t pay, either … so the U.S. loaned money to Germany to pay the Allies, who then used that money to pay … the United States

17. HIGH TARIFFS AND WAR DEBTS Europe could not purchase goods from the U.S., leading to a financial crisis This debt contributed to the Great Depression. The Fordney-Mc Cumber Act (1922) instituted high tariffs on industrial products Tariff: tax on imports Other nations soon retaliated with their own tariffs World trade declined, helping to bring on the Great Depression

18. Factories were producing products, but … Wages for workers were not rising enough for them to buy them Few workers could afford to buy the factory output The surplus (extra) products could not be sold overseas due to high tariffs and lack of money in Europe OVERPRODUCTION IN INDUSTRY

19. Agricultural overproduction During WWI, more crops were needed, so production increased After WWI, prices declined, to farmers had to grow more crops to hold steady What happens to prices when supply rises? Farmers went into debt and could not pay their bank loans off When they weren’t repaid, banks foreclosed on farms, leaving farmers and their families homeless

20. FARM OVERPRODUCTION Due to surpluses and overproduction, farm incomes dropped throughout the 1920s Surplus ears of corn

21. FARM OVERPRODUCTION Agriculture was in a depression from 1920 until World War II began in 1939 Surplus ears of corn $273 $750

22. FARM OVERPRODUCTION Why did this matter? Problems in the agricultural sector had a large impact … 30 percent of Americans still lived on farms Surplus corn

23. YEARWHEATCORNOATSPOTATOESPEANUTS 1919216.3150.776.7191.19.33 1920182.661.053.8133.25.26 1921103.052.732.2113.53.99 192296.675.237.468.64.68 192392.683.540.791.56.78 1924124.7105.347.871.55.68 1925143.769.938.8166.34.56 1926121.775.340.1136.34.97 1927119.084.947.1108.95.04 192899.884.340.757.24.90 1929103.479.841.9131.53.83 unstable prices U.S. Department of Agriculture’s yearbook from 1934 shows the unstable prices of foodstuff

24. 191019181932 Average gross receipts 217738371512 Average expenditures 77016551019 Balance14072182493 Farmers’ profits dropped … … leading to foreclosures

25. Foreclosure: When an owner cannot pay his mortgage, the bank repossesses the property to sell it

26. Agricultural product 1912-19131932-1933 Corn (per bushel)0.560.20 Wheat (per bushel) 0.880.41 Oats (per bushel)0.340.17 Butter (per lb)0.210.13 Butterfat (per lb)0.250.16 Wool (per lb)0.240.10 Hogs (per cwt)7.503.80 Milk (per cwt)1.790.90 American farm products price declines

27. Federal Reserve Monetary Policy The Federal Reserve System was created in 1913 established a central banking system for the U.S. to help stabilize the economy A major goal is to deal with bank panics Monetary policy manipulates the money supply to help strengthen the economy At the beginning of the Great Depression, the Fed did not address failing banks, and many scholars argue their idleness worsened the situation

28. Millions of average Americans began speculating in the stock market in the 1920s Speculating: Buying risky stocks out of a desire to get rich quick, rather than investing because of a sound investment.

29. Wanting it now! Heavily influenced by the start of modern advertising, millions of Americans began buying goods on credit. They adapted the idea of credit to the stock market, where they bought stocks “on margin.” As a result of the higher demand, stocks went up!

30. Installment buying Used credit and paying back in small amounts Introduced in the 1920s Pro: It allowed people to buy cars, radios and other new products of the decade Con: People accrued (piled up) more debt

31. Hoover based his winning platform on continued prosperity … “We in America today are nearer to the final triumph over poverty than ever before in the history of any land. The poorhouse is vanishing from among us.” ~1928 Hoover accepting the Republican nomination for president

32. 1928 presidential election: New York Gov. Al Smith (D) vs. Secretary of Commerce Herbert Hoover (R) Al Smith Many were suspicious of Smith, who was Catholic But Hoover was popular for feeding starving Europeans after WWI

33. Hoover and the farm crisis Candidate Hoover: "The most urgent economic problem... is agriculture. It must be solved.”

34. "I do not believe that the power and duty of the General Government ought to be extended to the relief of individual suffering.... The lesson should be constantly enforced that though the people support the Government the Government should not support the people." (1930) President Hoover’s belief in self-reliance would later affect his ideas about how to best solve the upcoming depression President and Mrs. Hoover

35. ‘The party is over’ The stock market crash – Stocks soared 300 points in five years – DJIA peak: Sept. 3, 1929 at 381.17 This is known as a “bull market” – There were warnings … “Stock prices have reached a permanent high plateau.” “A crash coming, and it may be a terrific one.” – But few people heeded them