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The Great Depression: PART I

The Great Depression: PART I. Stock Market. From Boom to Bust. The “Roaring 20’s” Developments in production led to a surplus of goods Assembly line Steam driven machines Mass production methods This level of development could not last forever. 20’s. The Business Cycle. 40’s and 50’s.

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The Great Depression: PART I

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  1. The Great Depression: PART I Stock Market

  2. From Boom to Bust • The “Roaring 20’s” • Developments in production led to a surplus of goods • Assembly line • Steam driven machines • Mass production methods • This level of development could not last forever

  3. 20’s The Business Cycle 40’s and 50’s 30’s 80’s, 90’s and 2000 Today?

  4. Herbert Hoover 31st President • Believed like most economists at the time that an economy was a self-regulating body • Government should keep its hands out of the economy • When the Depression hit, Hoover did little at first to help the economy • Said “prosperity was around the corner”

  5. Causes of the Great Depression • Margin Buying • When a broker bought stock he put up only 10% of capital and a bank covered the rest in the form of a loan • Investors speculating • Many investors bought stock that they did not study or know how strong the company was at the time • Owners choose to keep profits • Instead of paying the workers more, this means workers could not buy products the companies produced • Increased credit usage • With depressed wages and rising prices, consumers had to buy on credit. When they could not pay, banks “ate” the cost. • People losing faith in the economy, especially banks

  6. Total Effect on our Economy • Black Tuesday alone caused about $ 26, 000,000,000 of losses in one day • Compare this to about $ 500, 000, 000, 000 on Black Monday in 1987 • Unemployment shot up to 25% in 1932

  7. First the Stock Market, then the Banks • Because of margin buying, brokers lost only 10% of their money and banks lost the remaining 90%. • This caused a “run” on banks, when banks could no longer afford to give people their money. This caused a shortage of paper money. • Once people realized this, Americans flocked to banks, demanding their money causing banks to close.

  8. The Great Depression: PART II • South Carolina and the Great Depression

  9. The Great Depression • In sum, the average American lost faith in the value of the American Dollar and the economy as a whole • The world, tied to the American economy, lost great value because of the Depression. • It took until 1941 to “break even” • US economy regained all losses by 1941 due to World War II

  10. The Great Depression in SC • South Carolina was not a developed state • Mainly agrarian with cotton as the primary crop • During the Great Depression, cotton was hit hard by the Boll Weevil and low prices • World War I increased demand and prices for Cotton, when WWI ended and Europe farmers recovered, cotton supply increased causing the price of cotton to fall

  11. South Carolina’s Economy Crashes • Incomes in SC during 1929-1933 were only 39% of what they were 3 years previously (1926). • Per capita income fell precipitously • At the height of the depression, 15 banks in one month went bankrupt

  12. Seaboard Railroad

  13. SC Industries • The textile industry, because of the low price of cotton operated at a loss • Many textile factories closed • Because the textile industry employed so many south Carolinians, unemployment in SC was higher than in the rest of the country • The Seaboard Railroad line went bankrupt because Americans did not have the money to ride the trains

  14. The People of SC During the Depression • Many were employed as farmers and textile workers • Because of low prices and wages, many had to “make do” with what they had • Buying new clothes, sheets, etc was out of the question • Many migrated to work in the factories in the north that paid better wages (not much, but better)

  15. “Happy Days Are Here Again” • Franklin Delano Roosevelt was elected in November 1932 as president • #1 Goal: restore American faith in the economy • Introduced “Alphabet Agencies”: programs developed to restore the American economy • The series of laws and reforms FDR introduced would be called The New Deal • FDR spent more money than the federal government possessed called deficit spending

  16. AAA (Agriculture Adjustment Administration) NIRA (National Industrial Recovery Act) Minimum Wage Laws Antitrust laws NRA (National recovery Administration) CCC (Civilian Conservation Corps) PWA (Public Works Administration) CWA (Civil Works Administration) Emergency Banking Act National Labor Relations Act Social Security Act NYA (National Youth Administration) FDIC (Federal Deposit Insurance Corporation) TVA (Tennessee Valley Authority) REA (Rural Electrification Authority) NLRB (National Labor Relations Board) WPA (Works Progress Authority) FERA (Federal Emergency Relief Administration) Fair Labor Standards Act Santee-Cooper Electricity Project New Deal Alphabet Agencies

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