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The Great Depression

The Great Depression. The Great Depression. “Brother Can You Spare A Dime” By Bing Crosby Performed By Al Jolsen How did the working class Americans feel about the “hard times” they were facing in the 30’s?. Soup line in Chicago 1933. Brother Can you Spare a Dime Song.

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The Great Depression

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  1. The Great Depression

  2. The Great Depression • “Brother Can You Spare A Dime” • By Bing Crosby • Performed By Al Jolsen • How did the working class Americans feel about the “hard times” they were facing in the 30’s? Soup line in Chicago 1933 Brother Can you Spare a Dime Song

  3. The Great Depression • the gov. had let them down • they are forgotten now • they did everything their country had asked of them • cannot find a job • “What did I do wrong?”

  4. The Great Depression • Why American were optimistic during the 1920’s • highest standard of living • medical advances increased life expectance • males 59 / women 53 • stock market continued to go up • real wages had increased

  5. The Great Depression • women were going to college • unemployment falls below 4% • heroes of the day were business men • they are saying everything is fine • unusually high confidence in the business world • welfare capitalism • employers provided workers with raises and benefits

  6. The Great Depression Contributing Factors that lead to the Great Depression

  7. The Great Depression 1. Decline in Foreign Trade • high tariffs wanted people to buy American goods • built a tariff wall • Fordney-McCumber Tariff - 39% • Hawley-Smoot Tariff - 60% • Added an additional 75 farm products and 925 industrial items to the list • How would this lead to the Great Depression?

  8. Answer… • Hurt US sales over seas • Other countries cannot sell their goods in US • People in other countries cannot make money needed to buy American made goods being sold in their countries • American businesses loss money because they have lost an overseas market

  9. The Great Depression 2. Increase in Labor Saving Technology • more goods being produced with fewer labor • How would this lead to the Great Depression?

  10. Answer… • More and more people were being laid off from work • Machines were doing the jobs that were once done by people

  11. The Great Depression 3. Decline in Purchasing Power • wages and salaries couldn’t keep up with the rising prices • Real wages were rising more slowly than prices of goods • How would this lead to the Great Depression?

  12. Answer… • People were making less money • Had less money to spend • Were not buying goods • Businesses were not selling goods • Businesses would lay workers off

  13. The Great Depression 4. Uneven distribution of wealth • mainly the rich getting richer • Poverty line was <$2,000 • 60% of Am families were at or below that line in 1929 • 80% had no savings • How would this lead to the Great Depression?

  14. Answer… • Had no money to spend on luxury goods • Could only buy for their basic needs • If they had more money they probably would have spent most of it • Poor people spend a greater percent of their income than rich people • Greater spending would have meant a boost in the economy

  15. The Great Depression • Bank Failures • 1929 = 642 • 1930 =1352 • 1931 = 2294 • Estimated 1 billion dollars had been w/drawn and placed in shoe boxes • There was no insurance for depositors - How would this lead to the Great Depression?

  16. Answer… • When money was needed there was no money • Banks had failed and could not loan money to people • Depositors lose their money they had less to spend • Fewer banks meant fewer businesses loans • No banks were to be trusted even the healthy ones

  17. The Great Depression 6. Overproduction in Agricultural and Industry • farmers’ depression started in early 1920’s • overproduced during WWI to feed Europe • Farmers had borrowed money to buy more land and more machinery • not needed now that war was over and Europe was feeding itself • crop princes fell 50% • How would this lead to the Great Depression?

  18. Answer… • Many lost their homes and farms because they could not pay back their mortgages • Close to 50% of families in Am were farm families in the 1920

  19. The Great Depression • In Industry • late 20’s warehouse had piled up with un-bought consumer goods • overproduction caused some industries to slow • auto industry slumps in 1925 • housing fell in 1928 • How would this lead to the Great Depression?

  20. Answer… • Many businesses laid off workers • Expected the remaining workers to take on additional work

  21. The Great Depression 7. Installment buying and Buying on Credit • people buy items while paying from them (w/ interest) over many months • people flocked to buy many new products whether or not they could afford them • advertising made new goods irresistible • increase in personal debt • How would this lead to the Great Depression?

  22. Answer… • Done in moderation it can boost economy but a high level can hurt the economy • Producers do not get signs that supply is outrunning demand • Workers who have been laid off are unable to complete their installment purchases • This further hurts businesses

  23. The Great Depression 8. Buying on the Margin • paying a small % of a stock’s price as a down payment and borrowing the rest • 10% down borrowed 90% from broker who charged HIGH interest rate • as stocks went up - sell - pay back the broker • broker could demand payment at any time (call) • How would this lead to the Great Depression?

  24. Answer… • If people started to sell due to a panic the price of stocks would drop • This resulted in a loss for the broker and the bank who lent the broker money • The bank loan had been made with the depositors’ money • The depositors really lost

  25. The Great Depression • Stock Market Crash • Black Tuesday on Oct 24, 1929 • wave of selling as people who had brought on the margin were called • 13 million shares changed hands • banks and insurance companies bought in order to stabilize

  26. The Great Depression 9. Black Tuesday Oct 29, 1929 • people and corporationsalike tried to sell stocks • record # of stock sold - 16 million • panic continues for two weeks • total lost 30-40 million • How did this lead to the Great Depression?

  27. Answer… • If the stock market falls business investment declines because confidence is shaken • Banks are less likely to make loans • Spending by the rich declines because they either have less money and/or are unsure about future earnings • Spending by the poor declines because they have lost faith in the economy and/or they will have lost their job

  28. The Great Depression Had Begun

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