1929-1939

• Stock market
crash
• Didn’t realize
the effect it
would have
• No money to
replenish what Many found being broke
humiliating.
was borrowed
 The Roaring 20’s
• The new concept of
“credit”
• People were buying:
– Automobiles
– Appliances
– Clothes
• Fun times reigned
– Dancing
– Flappers
– Drinking
 Why was this bad?
• Credit system
– People didn’t really have
the money they were
spending
• WWI
– The U.S. was a major
credit loaner to other
nations in need
– Many of these nations
could not pay us back
 EASY MONEY (CREDIT)
• INTEREST RATES ON LOANS WERE TOO LOW =
TOO MUCH BORROWING INTEREST RATES ON
SAVINGS WERE TOO LOW = TOO MUCH
SPENDING (INFLATION) EXCESSIVE REAL
ESTATE CONSTRUCTION = OVERSUPPLY

GHS Rules
 Buying on
Credit

Borrowing Money
80% of radios &
Causes of
60% of cars were
Depression on credit
Wealth is Distributed Unevenly
• Corporate profits rose 65% during the 20s.
• The rich became much richer and the
workers became less poor.
 1920s and 30s salaries
• Bus driver: no power • Highest paid
steering or brakes production workers in
• $1300 or $0.43/hr the 1920’s – Ford
• Teacher Motor Company
• $1227 • $5.00/day or $0.48/hr.
• Waitress • Farm Prices: Potatoes,
Cotton, Pork?
• $520 or $0.20/hr
• $0.01/pound potatoes
• Farmhand
• $0.05/pound cotton
• $216 or $0.07/hr
• $0.05/pound pork
• First minimum wage
under FDR?
 Uneven distribution of Wealth
• Many Poor and Very Few Rich!
• Workers earn so little they can’t buy the
products they produce!
• Wages were as little as 20 – 25 cents per
hour!
• Even the best employer Ford Motor
Company paid only $5.00/Day for a 6AM-
6PM shift!
 Uneven
Distribution of
Wealth
Buying on
Rich got richer
Credit

Borrowing Money
80% of radios &
Causes of
60% of cars were
Depression on credit
 The Stock Market
• People bought stocks
on margins
– If a stock is $100 you
can pay $10 now and
the rest later when the
stock rose
• Stocks fall
– Now the person has
less than $100 and no
money to pay back
 • With people panicking
And then…. about their money
investors tried to sell
their stocks
– This leads to a huge decline
in stocks
– Stocks were worthless now
• People who bought on
“margins” now could not
pay
• Investors were average
people that were now broke
 Uneven
Distribution of
Wealth
Buying on
Rich got richer
Credit

Borrowing Money

Causes of
Depression
Stock
Speculation

•Buying on Margin
•Black Tuesday
• Farmers were already feeling the effects
– Prices of crops went down
– Many farms foreclosed
• People could not afford luxuries
– Factories shut down
– Businesses went out
• Banks could not pay out money
• People could not pay their taxes
– Schools shut down due to lack of funds
• Many families became homeless and had
to live in shanties
 AGRICULTURAL
OVERPRODUCTION

• INCREASED TECHNOLOGY
• GOOD GROWING CONDITIONS
• SUPPLY GREATER THAN DEMAND
 The Great Dust Bowl

• Over use & Over grazing

– No crop rotation
• No soil conservation
• No wind breaks
• Loss of natural grasses and animals
• Climatic change – the drought of the 30’s
•
 Uneven
Agriculture Distribution of
Overproduction Wealth
Buying on
Rich got richer
Great Dust bowl Credit

Borrowing Money

Causes of
Depression
Stock
Speculation

•Buying on Margin
•Black Tuesday
 OVERSPECULATION
• “GET RICH QUICK SYNDROME”
• MARGIN BUYING
• LACK OF GOVT. REGULATION
• PANIC SELLING
• ‘29 MARKET CRASH
•
The New York Stock Exchange

Black Friday, October 24, 1929

 Run on Banks
• The crisis in confidence frightened
depositors who feared for their money.
• Millions tried to withdraw their money
because they feared the banks losing it.
• 1929- 641 banks failed
• 1930- 1350 banks failed
• 1931- 1700 banks failed
 Uneven
Agriculture Distribution of
Overproduction Wealth
Buying on
Rich got richer
Great Dust bowl Credit

Borrowing Money

Causes of
Banks Collapse Depression
Stock
“Runs” on banks Speculation

•Buying on Margin
•Black Tuesday
• Herbert Hoover was
president at the start
• Philosophy: We’ll
make it!
• What He Did: Nothing
• The poor were looking
for help and no ideas
on how to correct or
help were coming
Laissez Faire Economic Policy

• Prior to the Great

Depression the US.
Government ignored
the business cycles of
the US economy. The
Government until
FDR believed that the
American Economy
could fix itself.
Government Today is in charge of
the US Economy!
• Presidents win or lose
elections based on
economic
performance!
Government control
over one third of our
$10 trillion economy!!
 THE BUSINESS CYCLE
• BOOM/PROSPERITY/PEAK
• HIGH DEMAND DESIRE FOR MORE PROFITS
= GREATER INVESTMENT = MORE PRODUCTION
= HIGHER EMPLOYMENT = MORE DEMAND =
HIGHER PRICES (INFLATION)
 THE BUSINESS CYLCLE
• CONTRACTION/SLOWDOWN
• INFLATION/OVERPRODUCTION LESS
PRODUCTION = LAY OFFS = LESS SPENDING =
LOWER CONFIDENCE = LESS INVESTMENT =
HIGHER UNEMPLOYMENT
• UNTIL SURPLUSES ARE USED UP
 BUSINESS CYCLE TROUGHS
• RECESSION = TWO SUCCESSIVE 1/4’s (3
MONTH PERIODS) OF DECLINING GDP ($ OF
GOVT, CONSUMER AND BUSINESS
SPENDING)
• DEPRESSION = UNEMPLOYMENT GREATER THAN 12%
 THE BUSINESS CYCLE
• EXPANSION/RECOVERY
• HIGHER DEMAND SURPLUS REDUCTION =
MORE PRODUCTION = RECALL OF WORKERS =
MORE PURCHASING= INCREASED INVESTMENTS =
ECONOMIC GROWTH
 POOR MONETARY POLICY
• FED RESERVE INCREASED INTEREST RATES
WHICH MADE MONEY/BORROWING MORE
EXPENSIVE & SAVING MORE ATTRACTIVE
INSTEAD OF LOWERING INTEREST RATES TO GIVE
THE ECONOMY A “JUMP START”
 POOR FISCAL POLICY
• HOOVER ADMIN. & CONGRESS CUT SPENDING &
RAISED TAXES TO BALANCE THE BUDGET
INSTEAD OF INCREASING SPENDING & CUTTIN G
TAXES TO “JUMP START” THE ECONOMY
• EX. TEMPORARILY DEFICIT SPENDING
 THE CIRCULAR FLOW
$ COSTS $ INCOMES
RESOURCE
MARKET

RESOURCES INPUTS

BUSINESSES HOUSEHOLDS

GOODS & GOODS &

SERVICES SERVICES

PRODUCT
MARKET
$ REVENUE $ CONSUMPTION
 THE CIRCULAR FLOW
$ COSTS $ INCOMES
RESOURCE
MARKET

RESOURCES INPUTS

BUSINESSES GOVERNMENT HOUSEHOLDS

GOODS & GOODS &

SERVICES SERVICES

PRODUCT
MARKET
$ REVENUE $ CONSUMPTION
 HIGH TARIFFS
• WE TAXED FOREIGN IMPORTS TO PROTECT OUR
PRODUCTS UNDER HOOVER THE HAWLEY
SMOOT TARIFF IS PASSED – THE HIGHEST
PROTECTIVE TARIFF IN US. HISTORY!!! FOREIGN
NATIONS TAXED IMPORTS FROM THE U.S. IN
RETALIATION
• HIGHER PRICES FED UNDERCONSUMPTION
• NATIONS STOPPED PAYING WWI DEBTS TO
THE U.S.
 Uneven
Agriculture Distribution of
Overproduction Wealth
Buying on
Rich got richer
Great Dust bowl Credit

Borrowing Money

Causes of
Banks Collapse Depression
Stock
“Runs” on banks Speculation

•Buying on Margin
Tariffs •Black Tuesday

Hawley-Smoot Tariff
Christmas Day
Breadlines in
New York City,
1931
Police stand guard outside the entrance to New York's closed
World Exchange Bank, March 20, 1931
Unemployed men vying for jobs at the American Legion
Employment Bureau in Los Angeles during the Great
Depression.
Unemployed workers in front of a shack with Christmas tree,
East 12th Street, New York City. December 1937
 Hard Times

Unemployment

· By the early 1930’s,

approximately 25% of the
nation was unemployed.

Man in hobo jungle killing

turtle to make soup,
Minneapolis, Minnesota.
Sept. 1939.
 Families
in Crisis

· Marriage
and birth
rates
dropped.

· Fathers
and some
children
left home
to find
work.
Evicted family with
belongings on street,
December 14, 1929.
 Homelessness

· Homeless families
build shacks out of
wooden crates and scrap
metal.

· These shacks were

known as Hoovervilles.

Seattle, Washington
Central Park,
New York City
“Hooverville,"
New York City,
December 8
1930

[Sign on shack
reads:
"House of
Unemployed"]
Hoover Takes Action • At first,
President
Hoover was
against
offering
direct
government
relief.

• Instead, he
asked private
charities,
such as the
YMCA, to
help.
Many waited in unemployment
lines hoping for a job.
People in cities would wait in line for
bread to bring to their family.
Some families were forced to relocate
because they had no money.
 “Hooverville”
• Some families were
forced to live in
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.
 A drought in the South lead to
dust storms that destroyed crops.

“The Dust Bowl”

 The South Was Buried
• Crops turned to dust=No food to
be sent out
• Homes buried
• Fields blown away
• South in state of emergency
• Dust Bowl the #1 weather crisis
of the 20th century
Two Families During
the Depression
A Farm Foreclosure
Some families tried to make money by
selling useful crafts like baskets.
*FDR*
• When he was
inaugurated
unemployment had
increased by 7
million.
• Poor sections (like
Harlem) had 50% of
the pop. unemployed
• Instated the “New
Deal”
• Yea! Frankie!
• People everywhere were
effected by the depression

• It wasn’t till President

Roosevelt took over and tried
to put the economy back
together that people even saw
a glimmer of hope
Major Historical Happenings...
• Jim Crow Laws
• Scottsboro
Trials
• Recovering
from the Great
Depression
• Racial Injustice
• Poor South
 Jim Crow Laws
• After the American Civil War most
states in the South passed anti-African
American legislation. These became
known as Jim Crow laws.
• These laws included segregation in…
– Schools -- Hospitals
– Theaters -- Water fountains
– Restaurants
– Hotels
– Public transportation
– Some states forbid inter-racial marriages
• These laws were instituted in 1896 and
were not abolished till the late 1950’s
(even then still not completely).
• 9 young African-
American men (13-
20) accused of
raping 2 white girls
in 1931
• Immediately
sentenced to death
• Trials went on for
nearly 15 years
before all the men
were dismissed
• Started on a train bound for
Memphis
• Several white men boarded and
picked a fight with the black men
• Whites were forced off train by the
12 black men. The white men
reported the the black men had
raped two white girls on the train to
authorities
• They were immediately arrested and
tried in front of an all-white jury.
The trials caused a huge uproar
amongst the black community.
• Wrote To Kill a
Mockingbird in
1960
• Based the story on
her life growing
up in Monroeville,
Alabama
• TKAM was the
only novel she ever
wrote
• The character of
“Dill,” Scout and Jem’s
playmate in the novel
was based upon Lee’s
actual neighbor,
Truman Capote
• Capote is famous for
amongst other things,
In Cold Blood and
Breakfast at Tiffany’s.
• It has been said that he
gave Lee Mockingbird
as a gift.
• In 1962 the novel
was turned into a
film starring
Gregory Peck.
• It received a
humanitarian
award and several
Academy Award
nominations