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The Great Depression
Transcript of The Great Depression
Images from Shutterstock.com http://www.history.com/videos/1920s-inventions How the BOOM of the 1920's became the depression of the 1930's. THE GREAT DEPRESSION Why was the economy booming in the 1920's? Inventions! Buying on Margin Consumers were buying products on CREDIT. REFRIGERATOR COST: $100 PAYMENT BY CONSUMER: $10 down
$10 for 9 months ECONOMIC BOOM, because everyone could afford to buy these products. The Stock Market also allowed people to buy on credit. More BUYING= More SELLING More DEMAND= More SUPPLY More PRODUCTS needed= More JOBS created PROBLEMS People can't make payments they promised to make. OVERPRODUCTION under consumption My radio company GROWS, makes more MONEY each day! So my stock rises You see how promising my company is and want to buy a part of it.
If you buy a share today, it will be worth more when you sell it later! Then you can buy that car you've wanted! People were also paying for stocks on credit.
Meaning that they would buy a share worth $10, but only pay $1 and their stockbroker would pay the rest.
Once they sold the stock at a higher price they could pay the stockbroker back. This is a credit system known as
BUYING ON MARGIN You pay $1
Stockbroker pays $9
You now own a share worth $10
You will owe the stockbroker $9 when you sell your share YOU ASSUME The radio company will continue to do well Pretend the chocolates are radios Americans could not afford my radios when they were $5 Everyone can afford a radio! NOW if you buy on CREDIT you can pay... $1 at the register And $4 over a longer period of time... This is what caused the economic BOOM in the United States during the Roaring Twenties.
Another cause of the roaring economy of the 1920's was the positivity in the Stock Market. This is called BUYING ON MARGIN How the Stock Market Works What you thought would happen... So when you sold your stock it would be worth more than when you bought it IN OTHER WORDS...
You buy a small portion of a company (called a share)
You hope the company does well so you can sell it when the company is worth more, and make a profit. What actually happened...
Stocks went down.
The Stock Market Crash of 1929 Bought a share for $10
Owe Stockbroker $9
Wait till price of stocks go up to $40
Pay Stockbroker $9
Make a Profit of $30 Bought a share for $10
Owe Stockbroker $9
Stock market CRASHES
You stock is only worth $5
Sell stocks, before it gets worse
You still owe $9
You are now in debt $4 CAUSES OF THE GREAT DEPRESSION
1. Buying with Credit
Buying a percentage of the cost up front, and the rest in future payments
2. Buying on Margin (Stocks)
Borrowing money from a bank or broker to purchase stock
3. The Stock Market Crash of 1929 http://www.history.com/topics/1929-stock-market-crash/videos The Dust Bowl President Herbert Hoover Took office 8 months before the crash
Once the stock market crashed he tried to boost the economy by investing in public works like... He spent $915 million on public works to try to create jobs and economic improvement Smoot-Hawley Tariff
he created this tariff to tax imports from other countries
the result: other countries just taxed US imports
This tariff actually caused the worldwide depression to worsen. His attempts at reforms continued to fail.
By 1932 unemployment was at 25%
More than 5,000 banks had failed Hundreds of THOUSANDS
HOOVERVILLES Events Mentioned...
The Dust Bowl
The Bonus Army
Hoovervilles Some believe Hoover should have had the government have more control over the economy. For example, the next President Franklin D. Roosevelt will create many more programs that greatly control the economy.
In 2009, when the US was in financial trouble, President Obama created a stimulus plan for the country that would invest over $700 billion to create new jobs.
Do you think it is the government's responsibility to regulate the economy?
Would you want a president that was or was not involved with economics? CAUSES OF THE GREAT DEPRESSION
President Hoover's Policies Failed
Over 5,000 banks had to close after the crash HAD TOO MUCH PRODUCT and TOO FEW BUYERS Events of the Great Depression Hoovervilles
The Dust Bowl
The Bonus Army -Shack Towns made by people during the depression -a period of severe dust storms causing major ecological and agricultural damage to American Prairies -WWI veterans protested in Washington DC demanding their bonuses early.
-Protesters were driven out by armies and tanks
-Their shanty homes were burned MORE EVENTS OF THE GREAT DEPRESSION
Bank Runs (Mobs of people trying to take all their money out of the failing banks)
Unemployment was at 25% in 1932 Franklin D. Roosevelt 32nd President of the USA
Used extreme EXECUTIVE power to try to help the economy
He believed the nation would be saved through...
He would lead the nation out of the Great Depression, partially because of his programs, but mostly because he created...
A sense of hope for the American People
World War Two brought on the economic spending the country needed NEW The This was FDR's different plans for
3. Reform http://www.history.com/topics/new-deal/videos#the-new-deal - Make immediate changes to stop problems with banking system
-Created Jobs to reduce unemployment, and help improve the nation -Make legislative changes, so that a Great Depression doesn't happen again (Banks needed a lot of changing) PROGRAMS RELIEF Bank Holiday
Emergency Banking Act
Civilian Conservation Corps CCC
Federal Emergency Relief Act RECOVERY Agricultural Adjustment Act
Works Progress Administration
Home Owners Loan Corporation
PWA REFORM Soil Conservation Act
FDIC (bank regulations)
SEC (stock regulations)
Wagner Act IMMEDIATE HELP!! JOBS! JOBS! JOBS! CHANGE THE LAWS!! Fireside Chats The President spoke to the nation over the radio on all the programs he was creating 30 times during his first year in office First time President used Radio to create a bond with citizens This created a sense of
HOPE http://www.history.com/topics/fireside-chats/videos#fdr-a-voice-of-hope PROGRAM PRESENTATIONS