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From Boom to Bust

From Boom to Bust. Part I: Life in 1920s America. The Impact of the Automobile. Automobile becomes the backbone of U.S. economy  changes America’s landscape Liberated isolated rural families  urban sprawl

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From Boom to Bust

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  1. From Boom to Bust Part I: Life in 1920s America

  2. The Impact of the Automobile • Automobile becomes the backbone of U.S. economy  changes America’s landscape • Liberated isolated rural families  urban sprawl • paved roads, gas stations, motels, shopping centers, public garages, automatic traffic signals • 1920s  1 automobile for every 5 Americans

  3. Increased Standard of Living • Annual income  from $522 to $705  extra spending $$ • Electric irons, refrigerators, cooking ranges, and toasters • Life is easier more free time!

  4. Superficial Prosperity A Wise Economist Asks a Question • Most Americans thought prosperity would go on forever • Critical Problems: • Producing more than we need • Buying goods on credit “buy now, pay later”

  5. Time for a Personal Inventory • List all of the items you or your parents pay for using CASH • Examples: • I paid $2.21 in CASH at Dunkin’ Donuts for a medium iced coffee. • I bought a Wreck sandwich and a cookie at Potbelly’s for $7.51. • Perform some rough math to estimate how much CASH this totals. • Now, make a list of all the items you or your parents pay for using CREDIT (“buy now, pay later”). • Examples: • I spent $72 at Old Navy buying sandals and summer clothes using my Visa credit card. • I took out a loan from a bank in the amount of $2,500 to pay for university tuition towards my Masters of Education degree. • Perform some rough math to estimate how much CREDIT this totals • Jot down whatever you know about the way one pays off CREDIT.

  6. More Personal Inventory • Which column is larger (in dollar amount)? CASH or CREDIT • What is the benefit of paying CASH for goods & services? • What are the drawbacks of paying CASH for goods & services?

  7. More Personal Inventory • What is the benefit of buying on CREDIT for goods & services? • What are the drawbacks of buying on CREDIT for goods & services? • How can using CREDIT fuel a superficial sense of prosperity?

  8. How do credit cards work? • Let’s say you apply for a Visa card through Bank of America and are approved with a charging limit of $5,000 • All credit cards have an interest rate. This is a % fee you will be charged if you do not pay off your balance in full when the bill comes every month. These rates are 7%-35% depending on your credit history. • Translation: If you charge $1,000 in February and don’t pay it off in March when the bill comes, you may have to pay an additional $70-$350.

  9. American Credit Card Debt The average credit card debt per U.S. household with credit card debt is now a whopping $16,000. A $16,000 debt at a rate of 20% interest will take 10 years and 6 months to repay and will cost more than $35,000. Why? Example: A person can only afford to pay $300/month The interest carries from month to month. Moral: Don’t buy what you cannot afford! http://www.youtube.com/watch?v=ct3OsJacTSs

  10. A New Urban Scene • 1922-1929 every year, 2 million people moved from the farm to the city • New York City = 5.6 million • Chicago = 3 million • Philadelphia = 2 million • Cities were competitive & ever-changing • Liberal social values drinking (despite prohibition/18th Amend.), gambling, casual dating, etc. • Societal rebellion flappers

  11. Closing Reflection What are the consequences of spending more money that you have? Do you think the government has any responsibility to regulate this spending or should it be left up to individual Americans? Be specific by giving examples to support your claims.

  12. “Nothing but Blue Skies” Blue skies smilin' at meNothin' but blue skies do I seeBluebirds singin' a songNothin' but bluebirds all day longNever saw the sun shinin' so brightNever saw things goin' so rightNoticing the days hurrying byWhen you're in love, my how they flyBlue days, all of them goneNothin' but blue skies from now onBlue skies smilin' at meNothin' but blue skies do I seeNever saw the sun shinin' so brightNever saw things goin' so rightNoticing the days hurrying byWhen you're in love, my how they flyBlue days, all of them goneNothin' but blue skies from now on Written in 1926, this song captured the feelings of the 1920s – an age of optimism and

  13. From Boom to Bust Part II: From Optimism to Disillusionment

  14. What Would You Do????? The year is 1929. The U.S. economy has collapsed. Farms, businesses, and banks nationwide are failing, causing massive unemployment and poverty. You are out of work with little prospect of finding a job. What would you do to feed your family?

  15. The Nation’s Sick Economy • Troubles on the Horizon • Railroads, textiles, steel, coal, automobile industries in trouble • Agricultural suffers the most  over-production leads to decreased profits  defaulted bank loans • Production  faster than wages  buying  • Living on Credit • 70% of families earned less than $2,500/year

  16. What triggered the collapse of prosperity? • What caused the collapse of • http://www.youtube.com/watch?v=DXFAf-V9Qpk

  17. The Crash • Stock market peaked and fell throughout 1929 • Panicked investors unloaded their shares • Black Tuesday  stock prices plummeted • People had bought stocks on credit and were now stuck with huge debts

  18. Black Tuesday “The grocer, the window cleaner, and the seamstress had lost their savings. In every town there were families which had suddenly dropped from showy affluence into debt…With the Big Bull Market gone and prosperity going, Americans were soon to find themselves living in an altered world called for new adjustments, new ideas, new habits of thought, and a new order of values.”

  19. Hardship and Suffering • What hardship and suffering did Americans face following the stock market crash on Black Tuesday? • http://www.youtube.com/watch?v=luWcTm2oRrY&feature=related

  20. Depression Devastates Lives • Cities: Shantytowns, Soup Kitchens & Bread Lines

  21. Unemployed workers in front of a shack with Christmas tree, East 12th Street, New York City. December 1937. Photographer: Russell Lee.

  22. Depression Devastates Lives • Rural Areas: Tenant Farming, the Dust Bowl The photograph that has become known as "Migrant Mother" is one of a series of photographs that Dorothea Lange made in 1936 in Nipomo, California. Lange was concluding a month's trip photographing migratory farm labor around the state.

  23. Migrant Mother • Identify two adjectives that describe this photograph. • What social information can you determine about life during the Depression? • What economic information can you determine about life during the Depression?

  24. People living in miserable poverty, Elm Grove, Oklahoma. August 1936. Photographer: Dorothea Lange

  25. California, March 1937. “Toward Los Angeles.” “Well– give me the fare and I will, buddy.  We ain’twalkin’ for our health…”

  26. February 1939. Calipatria, Imperial Valley. Car on siding across tracks from pea packing plant. Twenty-five year old itinerant, originally from Oregon. “On the road eight years, all over the country, every state in the union, back and forth, pick up a job here and there, traveling all the time.”

  27. “Hoboes” receive no “direct relief” from the government • Man in hobo jungle killing turtle to make soup, Minneapolis, Minnesota. Sept. 1939. Photographer: John Vachon

  28. President Hoover Attacked • Bonus Army marched on D.C. to support Patman Bill, which would pay a bonus to WWI vets • Hoover ordered out 1,000 people who refuse to leave after bill is voted down by the Senate • Hoover’s image is forever ruined

  29. Present-Day Connection: Bushvilles

  30. Closing Reflection What responsibility do you think the government has to help people who lose their jobs, homes, and life savings? If you think the government should be helping people, who should pay for all of this? Be specific by giving examples to support your claims.

  31. Stormy Weather Don't know why, there's no sun up in the sky Stormy weather, since my man and I ain'ttogether Keeps raining all the time Life is bare, gloom and misery everywhere Stormy weather, just can't get my poor old self together I'm weary all the time, the time, so weary all of the time When he went away, the blues walked in and met me If he stays away, old rocking chair will get me All I do is pray, the lord above will let me walk in the sun once more Can't go on, everything I had is gone Stormy weather, since my man and I ain'ttogether Keeps raining all the time Keeps raining all of the time I walk around heavy-hearted and sad Night comes around and I'm still feeling bad Rain pourin' down, blinding every hope I had This pitter andd n patter and beating, spattering driving  me mad Love, love, love, love, the misery will be the end of me When he went away, the blues walked in and met me If he stays away, old rocking chair will get me All I do is pray, the lord above will let me Walk in the sun once more Can't go on, everything I had is gone Stormy weather, since my man and I ain'ttogether Keeps raining all the time, the time Keeps raining all the time

  32. Roosevelt Brings Change • The Story of Us: The Great Depression • http://www.history.com/shows/america-the-story-of-us/videos/the-great-depression#the-great-depression

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