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The Great Depression Begins

The Great Depression Begins. Chapter 14 US History Mr. Basich. Timeline: What’s Going On?. World 1932 – Gandhi leads a protest against British policies in India. 1933 – Adolf Hitler takes power in Germany. 1933 – Japan withdraws from the League of Nations. United States

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The Great Depression Begins

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  1. The Great Depression Begins Chapter 14 US History Mr. Basich

  2. Timeline: What’s Going On? • World • 1932 – Gandhi leads a protest against British policies in India. • 1933 – Adolf Hitler takes power in Germany. • 1933 – Japan withdraws from the League of Nations. • United States • 1929 – The Stock Market crashes. • 1930-33 – More than 40% of the nation’s banks fail. • 1931 – 8.02 million Americans are unemployed. • 1933 – The 21st Amendment ends Prohibition.

  3. Section 1: Objectives • By the end of this lesson, I will be able to: • 1. Summarize the critical problems threatening the American economy in the late 1920’s. • 2. Describe the causes of the stock market crash and the Great Depression. • 3. Explain how the Great Depression affected the economy in the United States and throughout the world.

  4. Section 1: The Nation’s Sick Economy Main Idea: As the prosperity of the 1920’s ended, severe economic problems gripped the nation. Why it Matters Now: The Great Depression has had lasting effects on how Americans view themselves and their government. Key Terms: Price Support Credit Dow Jones Industrial Average Speculation Key Terms / Names: Buying on Margin Black Tuesday Great Depression Hawley-Smoot Tariff Act

  5. The Nation’s Sick Economy: • Business was booming • But…everyone was buying on credit. • Houses were cheap, cars and appliances were cheap • But…No one could pay back their debts • Let’s look at the four main reasons that lead to the Great Depression

  6. #1: Farmer’s Struggle: • No industry suffered as much as agriculture • During World War I European demand for American crops soared • After the war demand plummeted • Farmers increased production sending prices further downward

  7. #2: Consumer Spending Down: • By the late 1920s, American consumers were buying less (they couldn’t afford it – they were maxed out) • Rising prices, stagnant wages and overbuying on credit were to blame • Most people did not have the money to buy the flood of goods factories produced

  8. #3: Living On Credit: • Many Americans were living beyond their means. • Many goods were bought on Credit– an arrangement in which consumers agreed to buy now and pay later for purchases. • Many businesses encouraged credit purchases (sound familiar?) • Consumer debt started to pile on.

  9. #4 -Gap Between Rich And Poor: • The gap between rich and poor widened • The wealthiest 1% saw their income rise 75% • The rest of the population saw an increase of only 9% Why did this happen?

  10. Herbert Hoover won the presidency in 1928. He thought the economy would “fix” itself.

  11. The Stock Market: • The Stock Market had become the most visible symbol of a prosperous American economy – many were investing • The Dow Jones Industrial Average was the barometer of the Stock Market’s worth • The Dow is a measure based on the price of 30 large companies

  12. Seeds Of Trouble: • By the late 1920s, problems with the economy emerged • Speculation:Too many Americans were engaged in speculation – buying stocks & bonds hoping for a quick profit • Margin:Americans were buying “on margin” – paying a small percentage of a stock’s price as a downpayment and borrowing the rest Why might this be a problem?

  13. 1929 Crash: • On October 24, the market took a plunge . . the worst was yet to come • On October 29, now known as Black Tuesday, the bottom fell out • 16.4 million shares were sold that day – prices plummeted • People who had bought on margin (credit) were stuck with huge debts Story Time!!

  14. The Great Depression: • The Stock Market crash signaled the beginning of the Great Depression • The Great Depression the period from 1929 – 1940 in which the economy plummeted and unemployment skyrocketed • Important: The crash alone did not cause the Great Depression, but it hastened its arrival

  15. Financial Collapse: • After the crash, many Americans panicked and withdrew their money from banks • Banks had invested in the Stock Market and lost money • In 1929- 600 banks fail • By 1933 – 11,000 of the 25,000 banks nationwide had collapsed

  16. Businesses go bankrupt - Unemployment Soars: • Banks and personal investors weren’t the only people affected by the crash • 90,000 businesses went bankrupt • Unemployment leaped from 3% in 1929 to 25% in 1933 • It’s now at about 9%

  17. Hawley-Smoot Tariff: #5 Cause of Great Depression • The U.S. was not the only country gripped by the Great Depression • Much of Europe suffered throughout the 1920s • Congress passed the toughest tariff in U.S. history called the Hawley- Smoot Tariff • It was meant to protect U.S. industry • In response, other countries enacted their own tariffs and soon world trade fell 40% World Trade Center:

  18. Did We Meet Our Objectives? • Can You: • 1. Summarize the critical problems threatening the American economy in the late 1920’s. • 2. Describe the causes of the stock market crash and the Great Depression. • 3. Explain how the Great Depression affected the economy in the United States and throughout the world.

  19. Section 2: Objectives • By the end of this lesson, I will be able to: • 1. Describe how people struggled to survive during the Great Depression. • 2. Explain how the Depression affected men, women, and children.

  20. Section 2: Hardship And Suffering During The Depression: Main Idea: During the Great Depression Americans did what they had to do to survive. Why it Matters Now: Since the Great Depression, many Americans have been more cautious about saving, investing, and borrowing. Key Terms: Hoovervilles Soup Kitchen Key Terms: Dust Bowl

  21. Hardships During Depression: • The Great Depression brought hardship, homelessness, and hunger to millions • Across the country, people lost their jobs, and their homes • Before long whole Hoovervilles - makeshift shacks out of scrap material • Also called shantytowns

  22. Soup Kitchens: • One of the common features of urban areas during the era were soup kitchens and bread lines • Soup kitchens and bread lines offered free or low-cost food for people • Even successful businessmen could be found trying to get free food. Unemployed men wait in line for food – this particular soup kitchen was sponsored by Al Capone

  23. The Dust Bowl: • Over farming during the war lead to poor soil quality (no nutrients) • In addition, a severe drought gripped the Great Plains in the early 1930s • Wind scattered the topsoil, exposing sand and grit, carrying it 100’s of miles • The Great Plains became called the Dust Bowl – plains region that became worthless for farming

  24. Effect Of Depression: • Negatives: • Suicide rate rose more than 30% between 1928-1932 • Alcoholism rose sharply in urban areas • Three times as many people were admitted to state mental hospitals as in normal times • Positives: • Many people showed great kindness to strangers • Additionally, many people developed habits of savings & thriftiness

  25. Did We Meet Our Objectives? • Can You: • 1. Describe how people struggled to survive during the Great Depression. • 2. Explain how the Depression affected men, women, and children.

  26. Section 3: Objectives • By the end of this lesson, I will be able to: • 1. Explain Hoover’s initial response to the Depression. • 2. Summarize the actions Hoover took to help the economy and the hardship suffered by Americans. • 3. Describe the Bonus Army and Hoover’s actions towards it.

  27. Section 3: Hoover Struggles With The Depression: Main Idea: President Hoover’s conservative response to the Great Depression drew criticism from many Americans. Why it Matters Now: Worsening conditions in the country caused the government to become more involved in the health and wealth of the people. Key Terms / Names: Herbert Hoover Boulder Dam

  28. Hoover’s Philosophy on the Great Depression: • Herbert Hoover was not quick to react to the depression • He believed in “rugged individualism” – the idea that people succeed through their own efforts • People should take care of themselves, not depend on governmental hand-outs • He said people should “pull themselves up by their bootstraps”What do you think about this?

  29. Hoover’s Steps to Recovery: • Hoover successfully organized and authorized the construction of the Boulder Dam (Now called the Hoover Dam) • This created jobs…but when it was done, there were no jobs • He also talked with companies and encouraged them to keep wages the same and not go on strike

  30. Hoover Takes Action: Too Little, Too Late: • Hoover tried to help farmers and banks and also provided loans for people to pay for their homes • He started to realize that it was going to take some time for recovery. • The people were growing impatient

  31. Did We Meet Our Objectives? • Can You: • 1. Explain Hoover’s initial response to the Depression. • 2. Summarize the actions Hoover took to help the economy and the hardship suffered by Americans.

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