The Great depression

These quotations were from the late 1920s what do you infer from them
about the American economy at that time?

**“ We in America today are nearer to the final triumph over poverty than
ever before in the history of any land. The poorhouse is vanishing from
among us.” Herbert Hoover
**The Ford Factory produced the cheapest article and paid the highest wage
in the world.

**“A car in every garage and a chicken in every pot”

Was the slogan of the Republics in the 1928 election campaign.
**The president of USA during the Depression was Herbert Hoover.

The Roaring 20’s

** This period from 1920-1929 at that time they adopt the new concept of
“credit”
** In this system People were buying:
- Automobiles
- Appliances
- Clothes
**Fun times reigned

The Flaws of the American Economy in the 1920s….Led to the great

depression

Definition of Depression
**Is an extended period of negative economic activity.
**It is often described as a more severe form of a recession.
Marked by low production and sales and a
high rate of business failures and unemployment

**The Great Depression 1929-1939

- The Great Depression started in USA then spread to whole world.

CAUSES OF THE GREAT DEPRESSION

Major flaws of the American Economy that led to the Great Depression
1- Overproduction
2- New Credit system
3- Uneven distribution of wealth
4- U.S. was a major credit loaner (War debts)
5- Weak Banking System
6- Hyperinflation
7- Stock Market Crash
1- Overproduction (Industry & Agriculture)
Modern machinery and scientific methods increased production and had
drastically cut costs.

**In Industry
- American factories were turning out nearly half of the world’s industrial
goods.
- Warehouses burst with unsold goods.
-Other countries were not able to buy those goods because of war debts.

**In Agriculture
**Scientific farming methods and new farm machinery had dramatically
increased crop yields.
- During World War I European demand for American crops
soared
- But After the war demand fell.

FARMERS STRUGGLE…. Why?

- Farmers still increased production
- As a result….. a surplus of agricultural products drove prices and
profits down.
- Unable to sell their products, many farmers could not pay off the bank
loans. Their unpaid debts weakened banks and forced some to close.

2- Credit System:
**Personal credit , the novel installment or hire purchase system grew,
more and more people were able to buy more and more products.
- workers owned cars, middle classes owned washing machines
- From 1925 turned to real estate investment. Especially Florida.
Plots of land being bought and sold over and over again.

**Why was this bad?

1- People didn’t really have the money they were spending
2- Land and houses prices were inflated.

3- The unequal distribution of wealth.

**The rising productivity led to enormous profit. However this new wealth
was not evenly distributed. Along this wealth there was great poverty,
especially felt in the agricultural areas.
**Poverty was worse in country districts than in town.

GAP BETWEEN RICH & POOR

- The gap between rich and poor widened
- The wealthiest 1% saw their income rise 75%
- The rest of the population saw an increase of only 9%
- More than 70% of American families earned less than $2500
per year
A vicious Cycle
1- Most families were poor to buy the goods being produced.
2- Store owners were unable to sell the goods.
**store owners cut back their orders from factories.
3- Factories reduce production
**and laid off workers
4- more workers lost their jobs, more families became poorer
**families bought even fewer goods
**In turn, factories made further cuts in production and laid off more
workers

4- U.S. was a major credit loaner

This was Because of WWI

**America had become Europe’s creditor .In order to repair their damaged
economy after the war.
**European countries were offered loans with extravagant interest from 5%
to 8% per cent. Every European nation owed America war debts. Such
enormous loans were often unsecure many were not repaid.

5- Weak Banking System

**Banking system was feeble and bad.
**There were too many banks and not enough capable bankers to go around
them 25000 banks. More than 3500 had a capital of less than 100,000.
**A safe banking life could not be led on such a capital.

As a result: in 1928 there were thirty one bank failures in Florida, and in
1929 there were 57

6- Hyperinflation
**By 1929, many Americans were investing in the Stock Market
***Even those with small salaries or small savings turned to the stock
market. They thought that in some magical way, they too might tomorrow be
rich. By 1929, 4 million Americans owned stocks

**When everybody invested in the stock market this made the share prices
soar way beyond the real value of the companies they represented.

7- Stock Market Crash

**People bought stocks on margins
- If a stock is $100 you can pay $10 now and the rest later when
the stock rose

THE STOCK MARKET

- The Dow Jones Industrial Average (DJIA) was the barometer of
the Stock Market’s worth.
 - The Dow Jones is a measure based on the price of stocks of 30
large firms traded on the New York Stock Exchange Market.
**Black Thursday
Stocks fall:
**The crash came on Thursday 24th October , the stock market fell and there
was wild selling , which was entirely unexpected.

And then….
- With people panicking about their money investors tried to sell
their stocks
- This leads to a huge decline in stocks

**Black Tuesday
**On October 29, now known as Black Tuesday, the bottom fell out
**16.4 million shares were sold that day – prices plummeted
**Stocks were worthless now
**People who bought on “margins” (credit) now could not pay were
stuck with huge debts
**Investors were now broke

The Start of the Great Depression

- The Stock Market crash signaled the beginning of the Great
Depression
- The Great Depression is generally defined as the period from
1929 –1939 in which the economy plummeted and
unemployment skyrocketed .
- The crash alone did not cause the Great Depression, but it
hastened its arrival

FINANCIAL COLLAPSE
- After the crash, many Americans panicked and withdrew their
money from banks
- Banks had invested in the Stock Market and lost money
- In 1929- 600 banks fail
- By 1933 – 11,000 of the 25,000 banks nationwide had collapsed

and rapidly spread worldwide

- The U.S. was not the only country gripped by the Great
Depression
- Much of Europe suffered throughout the 1920s
- Germany the most affected.
- Which led to a decline of world trade

What do you think the effect on people would be?

1- Farmers were already feeling the effects
**Prices of crops went down
**Many farms foreclosed
2- People could not afford luxuries
**Factories shut down
**Businesses went out
 **People lost their jobs
3- Banks could not pay out money
4- People could not pay their taxes
**Schools shut down due to lack of funds
HARDSHIPS DURING DEPRESSION
- Across the country, people lost their jobs, and thus lost their
homes
- Many families became homeless. and had to live in shanties
(Shanty Towns)

“Hooverville”
Shanty Towns
**A grouping of shacks and tents in vacant lots
**They were referred to as “Hooverville” because of President
Hoover’s lack of help during the depression.
**President Herbert Hoover was the 31st U.S. President

UNEMPLOYMENT SOARS
- Unemployment leaped from 3% in 1929
to 25% in 1933 (14 million unemployed)

SOUP KITCHENS
**One of the common features of urban areas
during the era were soup kitchens and bread
lines
**Soup kitchens and bread lines offered free or low-cost food for
people sponsored by Al Capone

**Malnutrition, starvation, illness………7 Million erased the population

**Some families were forced to relocate because they had no money.

The Effect on Women

**Women in the Great Depression
**Women at that time didn't work after they got married. Single women
were relegated to careers in teaching, nursing or the domestics.
**Traditional roles within the family changed during the 1930s. Men
finding themselves out of work now had to rely on their wives and

children in some cases to help make ends meet.

**Left with little choice, women went against traditions “that married
women did not work outside the home” to help support their families.
**Many women were faced with discrimination when seeking work
because any job held by a woman was seen as a job that was being taken
away from a man.
**They worked as domestic servants, clerks, textiles workers and other
occupations.
Invisible women of the great depression
**The 1930’s was particularly hard on single, divorced or widowed women.
**The focus was on the men and their problems finding jobs. Lack of work
was considered a male problem.
** The women who needed to work to sustain themselves were often hidden
from view. No one, not even the journalists wanted to accept this "women's
reality."
**Government agencies were ill prepared for the amount of women who
needed help during this time. Single, divorced or widowed women suffered
most.
**Furthermore, many women didn't have a permanent address at all. In
order to find a place to sleep, they rode the 5 cent train all night, or they
slept in the park.
**They ate from "penny kitchens." Many women were proud and had to be
practically starving before they would accept charity or handouts of any
kind.

**On the other hand, women found their status enhanced by their new roles.
This employment increased their status and power in the home, gaining
them a new voice in domestic decisions.

CONDITIONS FOR MINORITIES

- Conditions for African Americans and Latinos were especially
difficult.
- Unemployment was the highest among minorities and their pay
was the lowest.
- African Americans were usually the last to be hired and the first to be
fired. They earned less. In 1932 about 50% of blacks were not
employed.
- As conditions deteriorated, violence against blacks increased.
- Many Mexicans were “encouraged” to return to their homeland.

**President Franklin Roosevelt and the New Deal.

**In 1932, Franklin D. Roosevelt, as the presidential candidate of the
Democratic Party, gave a speech addressing the problems of the depression
by telling the American people that, "I pledge you, I pledge myself, to a new
deal for the American people."
**After his inauguration in March 1933., The New Deal began to take shape
immediately .
**The New Deal was a series of programs between 1933 and 1938.
**The programs focused on what historians refer to as the "3 Rs," Relief,
Recovery, and Reform: relief for the unemployed and poor, recovery of the
economy to normal levels, and reform of the financial system to prevent a
repeat depression.
** By 1939, the New Deal programs helped improve the lives of people
suffering from the depression.

The Depression spreads

Around the World
**The Great Depression began in the United States but quickly turned
into a worldwide economic slump after World War I.
** The United States had emerged from the war as the major creditor and
financier of postwar Europe, whose national economies had been greatly
weakened by war debts. **So once the American economy slumped and
the flow of American investment credits to Europe dried up, prosperity
tended to collapse there as well.

**Almost all nations sought to protect their domestic production by

a- imposing tariffs.
b- setting quotas on foreign imports.
The effect of these restrictive measures was to greatly reduce the
volume of international trade.

The effect on Germany

**Germany faced enormous economic problems that had begun during the
war. To pay the expenses of the war and the reparations , the Germans had
simply printed money.
** As a result the value of the mark, German currency, fell sharply and
money lost its value.
**Severe inflation set in. The working classes and the lower middle class
were the most affected in Germany. Angry German workers went on strike.
To pay the strikers' wages, the German government began printing more
and more paper money.
**Germans needed more and more money to buy even the most basic goods.
For example, in Berlin a loaf of bread cost less than a mark in 1918, more
than 160 marks in 1922, and some 200 billion marks by late 1923.

**When too much money is printed it loses its value. As money loses its value
businesses raise prices. This is called Inflation.

**In Germany, unemployment rose sharply beginning in late 1929, and by

early 1932 it had reached 6 million workers, or 25 percent of the work force.

EFFECTS OF DEPRESSION
a- Suicide rate rose more than 30% between 1928-1932
b- Alcoholism rose sharply in urban areas
c- Many people went tomental hospitals as in normal times
d- Many people showed great kindness to strangers
e- Additionally, many people developed habits of savings &
thriftiness
What finally ended the Great Depression?
World War II marked the end of the Great Depression.