Tuesday, November 7, 2006
• Identify the causes of the Great Depression.
Click the mouse button or press the
Space Bar to display the answer.
•
•
•
•
•
•
The Postwar Economic Boom,
2.1A
2.1A The Postwar Economic
Boom
What do you see here?
What message does the billboard send?
Describe the area around the billboard.
Why is the area so run down?
Who do you think designed the billboard?
What do you think those who live in the
area think of it?
• Years following WWI known as “Roaring
20’s”
• Many Americans believed U.S. a place of
unlimited growth, opportunity, and
achievement.
• During 20’s Americans were earning more
money than ever before. Between 1922 and
1929 national income rose 43%
2.1A Postwar Economic Boom
2.1A Postwar Economic Boom
• By late 1929 cracks were beginning to show
in the U.S. economy.
• Unemployment was on the rise.
• Farmers were losing their land
• Stock prices were dropping.
• Number of Americans living in poverty was
on the rise.
• Stock market crash launched the longest
and most devastating depression in U.S.
history.
• The Crash did not cause the Depression,
rather it was one of many complex factors.
• Historians agree on 6 key factors;
1)Republican domestic and international
economic policies. 2) unchecked stock
speculation. 3) weak,unregulated banking
2.1A The Postwar Economic
Boom
• Americans had more $ to spend, especially
on automobiles, but also radios,
refrigerators and etc.
• Business profits rose by 80%
• By 1929 stock market was at an all time
high.
• The number of stocks traded doubled
between 1927 and 1929.
2.1A Postwar Economic Boom
• 4) overproduction of goods.
• 5) the decline of the farming industry.
• 6) unequal distribution of wealth
1
Republican Economic Policies
•
•
•
•
•
•
2.1 B Republican Economic Policies
• Despite Mellon’s projections wealth did not trickle down
to the American worker in any significant way.
• Corporations devoted profits to expanding facilities,
increasing production, and lining their own pockets.
• Owners kept workers’ wages low.
• Trickle-down economics simply increased the gap between
rich and poor.
• Coolidge’s administration refused to forgive war debts
from WW I.
• Rescheduled loan payments pushed Europe deeper in debt.
2.1 C Real Estate and Stock Speculation
•
•
•
•
•
•
What do you see here?
What building do you see?
Who are the people on the ground?
Who are the people on top of the building?
What are they doing?
What does this cartoon reflect about stockbrokers during
this period?
What do you see here?
How are the men dressed?
Describe their facial expressions.
What is the mood of the photo?
Do you think these men are wealthy or poor? Why?
These men are all conservative Republicans. Based on
what you know about conservatives how do you think they
dealt with business interests in the 1920’s?
2.1 B Republican Economic Policies
• “The business of America is business.” Calvin Coolidge
• Republicans implemented many pro-business policies.
• Andrew Mellon, secretary of Treasury, key proponent of
trickle down economics, believing that economic policies
that benefited big business and America’s wealthiest
citizens would eventually benefit all Americans.
• Prosperity would “trickle down” from upper classes to the
middle and lower classes.
• Mellon slashed taxes for big business and reduced personal
income tax for wealthy people.
2.1 B Republican Economic Policies
• Republicans impose high tariffs on imported goods.
• Without a substantial market for their goods, European
nations had no hope of repaying loans, nor could they
afford to buy American goods.
• Until the late 1920’s many Americans were too busy
investing in the stock market to care about Europe’s
economic problems.
Speculation
2.1 C
• Real Estate Speculation
• The practice of speculation- in which a person or
organization makes a risky investment in the hope of
making a quick, large profit- was widespread during the
1920’s.
• Early in the decade many investors speculated on real
estate. The migration to California of over one million
people prompted investors to buy massive tracts of land.
• The California real estate boom went but in the mid 1920’s
when the amount of land for sale far exceeded demand for
new housing.
Speculation 2.1 C
• In 1925 many investors turned from California to Florida.
• Many bought land sight unseen, which made scams and
fraudulent practices inevitable.
• Unsuspecting buyers owned alligator infested swampland.
• Others held “beachfront property” that was actually six
feet underwater at high tide.
• Eventually there were no more buyers and the boom was
followed by a crash.
2
Stock market speculation 2.1 c
Stock Market Speculation 2.1 C
• Real estate speculators turned their attention to the stock
market.
• Investors believed stock market would continue to go up
indefinitely and companies’ profits would continue to
increase.
• Speculators bought large amounts of stocks they thought
would go up. Then they turned around and sold the stock at
a higher price making a quick, easy profit.
• In this system the value of many companies’stock became
artificially inflated and did not reflect companies actual
worth.
• Rampant speculation drove stock prices higher and higher.
• Some analysts and investors predicted the market was
headed for a fall.
• Even President Hoover warned investors to curb their
speculation and began to sell some of his own stack.
The Crash 2.1 D
The Crash 2.1 D
• What do you see here?
• What is the building you see?
• Why do you think they might be crowded around the
bank?
• The bank is failing. How do you think the depositors
trying to get their $ are feeling?
• What might they be saying?
• How do you think bank failures affected the Nation?
• Analyst’s warnings that the bull market could not continue
forever made some investors nervous.
• In 1929 many investors began selling their stocks while
they could still get a high price.
• As investors began withdrawing from the market, prices
started to fall.
• As stock prices fell, companies slowed production, which
in turn led to additional price drops.
• By October,1929 prices were on a devastating downward
spiral.
The Crash 2.1 D
• October 24, 1929 investors flooded the NY Stock
Exchange with sell orders in an attempt to get rid of their
stocks.
• Prices plummeted and investors started losing large
amounts of $.
• Bankers, led by J.P. Morgan tried to stabilize the market
by purchasing investors’ stocks at a higher price than the
market was offering.
• Bankers pumped much-needed cash into market but
couldn’t prevent its continued descent.
The Crash
• Monday, Oct.28, investors again rushed the exchange and
sold their stocks at a loss of over $4 billion.
• October 29, “Black Tuesday”,orders to sell at any price
swamped the stock market. In just hours people lost
fortunes it had taken an entire decade to make.
• By the end of Black Tuesday investors had lost $16 billion.
• The Great Depression had officially begun.
• The stock market crash triggered a collapse of the U.S.
banking industry.
• When banks folded their customers had no way to get $
back.
2.1 E Overproduction
•
•
•
•
•
What are the men on the top doing?
Why might the be spilling milk on the ground?
How do you think they are feeling?
What are the men on the bottom doing?
These men are Henry Ford and his son Edsel. Why are
they celebrating?
• What kinds of economic problems might dampen the mood
at the Ford Plant?
• How might the economic collapse be explained by what
you see in these two images?
3
Overproduction
2.1 F Farming
• During the 1920’s U.S. industry enjoyed a postwar boom
that lasted until the end of the decade.
• Postwar technological changes completely changed the
way American people lived and worked.
• By 1929 many companies had more plants than they
actually needed, and the market was saturated with goods
that few Americans could afford to buy.
• New technology also helped farmers produce more goods
than ever before.
• Farmers were often stuck with surplus crops they couldn’t
sell or only at a low price/
• Farming has historically been the backbone of the
American economy.
• By 1929 farming was in deep decline.
• During 20’s farmers borrowed heavily to pay for new,
technologically advanced equipment.
• As farmers failed to sell surplus crops they became unable
to repay their bank loans, including mortgages.
• Banks often could not auction off foreclosed farms and
ended up taking a loss.
• Many banks collapse under pressure of farmers problems
and stock market crash.
2.1 f Farmers
Unequal Distribution of Wealth 2.1 G
• Farmers situation only grew worse as the Depression
deepened.
• Between 1929 and 1933 farmers income dropped by 50%
• Property values decreased by billions of dollars.
• A severe drought, known as the Dust Bowl, hit midwestern
and southwestern U.S.
• Over one million families lost their farms between 1930
and 1934.
• The unrelenting poverty of the American farmer
contributed to the nation’s overall economic decline and
dramatized the gap between haves and have-nots.
•
•
•
•
•
What do you see here?
How are the people in the center dressed?
Where do you think the wealthy people are going?
What might their home look like?
How might their life be different from that of the
doorman?
• How might extraordinary wealth on one hand and low
wages on the other have contributed to the economic
collapse of the late 1920’s and 1930’s?
Distribution of Wealth 2.1 G
• During the 1920’s most of country’s wealth remained in
the hands of a few people at top of economic pyramid.
• As decade wore on, gap between rich and poor grew wider,
and the distribution of wealth grew increasingly unequal.
• 1929 FTC reported that 1% of American population
possessed over 59% of country’s wealth.
• Experts also estimated that over 60% of U.S. families lived
on or below the minimum subsistence level of $2,000. Per
year.
• Like farmers, workers struggled to survive in 1920’s.
Many workers were replaced by machines. Low wages
made workers as impoverished as farmers.
4