The Great Depression

1. The Great Depression American Gothic by Grant Wood, 1930

2. Basic Economic Principles Adam Smith, Dead Scottish Economist

3. Supply • The amount of a product or service that is available for consumers. • High supply results in falling prices. • Low supply results in rising prices. • Too much of something results in worthlessness.

4. Demand • The desire or need consumers have for a product or service • High demand results in rising prices. • Low demand results in lower prices.

5. The Relationship • Supply and demand are related. • If supply increases, demand decreases. • If supply decreases, demand increases. • If demand increases, supply decreases. • If demand decreases, supply increases.

6. When supply and demand are equal, prices of goods stabilize. Supply Demand

7. Business Cycle • The economy moves in cycles. • Boom - It expands when business grows and money is easily available. • Bust - It contracts when business declines, people lose jobs, and money is harder to earn. • Most economic cycles are relatively small.

8. Business Cycle

9. A slow economic period characterized by high unemployment, homelessness, business failure, and poverty Depression

11. Dow Jones Industrial Average • An average of the prices of stocks of major industries available on the market • It indicates the health of the economy • From Jan 1928 to Sept 1929 – the Dow had climbed from 191 to 381

13. The Economy Falters . . .

14. Contributing Factors • Agricultural overproduction • Industrial overproduction • High tariffs • War debts • Unequal distribution of wealth • Over speculation in the stock market • Financial panic

15. Farmers' Troubles During World War I • Europeans were desperate for food shipments from the U.S. (Demandincreased) • The U.S. govt. passed price supports, promising farmers high prices for produce. • Farmers began overproducing. Continued

16. Farmers' Troubles At the end of World War I • U.S. govt. removed price supports. • Europeans grew more self-sufficient. • Demand for our farm products fell. • Farm prices fell drastically. • Also farmers were in debt for new technology, such as tractors.

17. Farmer Boy, Am I in debt! Tractor

18. Decline in Overseas Trade • Exports dropped 50% during the 1920s because of less demand after WWI • We raised tariffs, so nations in Europe raised theirs – a “tariff war”

19. Unpaid War Debts European nations refused to pay their WWI debts, claiming they had already paid “in blood”

20. (unequal distribution of wealth) Economic Disparity • Disparity – unfairness, inequality • The rich grew richer, while the poor grew poorer. • Few “middle class”

21. Overuse of Credit • Most Americans were in debt for the first time in U.S. history, especially farmers.

22. Stock Market Dangers • Over speculation • Buying stocks on margin

23. Buying Stocks “on the Margin” • You pay only a fraction of the price of the stock. If the stock increases in value, you keep the profit. If the stock decreases in value, you have to pay the broker, or sell the stock at a loss. Very risky, especially since there were no regulations on this practice.

24. Black Thursday • Thursday, October 24, 1929 • Dow Jones Average had fallen 21 points the closing hour the day before • Investors began to sell their shares of stock before the prices fell more

25. Black Tuesday • Tuesday, October 29, 1929 • Investors panicked • 16.4 million shares were sold on the stock market (2 to 4 times the usual number of shares sold daily)

26. The Great Crash • Stock prices continued to fall • Investors continued to dump their shares of stock at a loss • By November, the Dow had fallen to 198.7 (down from 381 in Sept.) • Total stock market losses were $30 billion

27. Record High 381 points Record Low 199 points

28. The Crash Makes World Headlines

29. Video: Boom and Bust in America“Dark Days of October” (3:45)

30. Ripple Effects of the Crash

34. Video: Boom and Bust in America“Images of Depression” (1:53)

35. Life During the Great Depression

36. Hoovervilles • Nickname for the shanty towns built by the homeless during the Depression • Shows the blame the people placed on President Hoover for not fixing the crisis

40. The Dustbowl • Over-farming and drought in the Great Plains (Ok, Texas, Kansas) • The topsoil began to blow away • Dust storms dropped tons of soil hundreds of miles away • Lasted 7 years (1931 – 1938) • 60% of dustbowl families lost their farms – Many moved to California

45. Video: Boom and Bust in America“Hitting the Road” (3:08)

46. John Steinbeck • Wrote The Grapes of Wrath • Describes the plight of farmers and workers who lost everything during the Depression • Brings national attention to the problems facing the less fortunate

47. John Steinbeck

48. The Grapes of Wrath

49. Dorthea Lange • Photographed hundreds of migrant workers coming to California from the Great Plains and sharecroppers in the South • Portrayed the desperation and bravery of Depression families

50. From Lange’s “Migrant Mother” Series