The Great Depression

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Chapter 12

• The Great Depression

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• Capitalism
• -Private ownership of business
• -Anyone can own a business
• -No government ownership of business
• Capital
• -What you sell to make money
• -Whatever product your business
  makes/sells/provides to people
• Law of Supply and Demand
• -If you have a lot of something, prices are low
• -If you have little of something, prices are high
• Free Enterprise
• -You may run your business any way you like as
  long as you dont break the law
• -Also called Free Market Economy

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Economy from good to bad

• -During 1920s U.S. economy was at all time high
• -Herbert Hoover wins election of 1928
• -Most Americans thought good times would continue
• -Most felt that stock market was a symbol of how
  well the U.S. was doing economically
• -In 1925, stocks were worth 27 Billion
• -In 1929, 87 Billion
• -Wages rose 40 in 1920s
• -Unemployment was under 4

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Welfare Capitalism

• -Business owners found a way to meet workers
  demands without using the unions
• -Helped to weaken unions
• -They provided paid vacations, health plans,
  English classes, other benefits requested by
  workers
• -Tried to show people they didnt need unions

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Danger Signs

• -Although some made money in stock market, mostly
  the rich got richer.
• -Huge businesses dominated industry
• -200 corporations controlled 49 of American
  economy
• -Small of families held most of the wealth
  0.1
• -Most Americans didnt have savings accounts
  80
• -Another problem was the huge amount of personal
  debt
• -More and more people using credit on goods they
  could not afford.

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Stock Market Problems Begin

• -Problems with the way the stock market used to
  run also caused economic problems
• 1. Speculation
• -Buying high risk stocks hoping to make a quick
  profit or a high profit
• 2. Buying on Margin
• -Buying a stock with little down and borrowing
  the rest from the broker

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Changes in U.S. Society

• -A major change came to the U.S. skyline
• -Empire State Building is started in 1930
• -Cost 41 million
• -Opens in 1931 as largest building in the world
• -Today largest building is Burj Khalifa Tower in
  Dubai, UAE
• -Begins Americans love of skyscrapers

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Empire State Building
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Burj Khalifa Tower
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Hoovers Problems Continue

• -Hoover believed problems would fix themselves
• -Tried to get business to keep wages high
  voluntary
• -Passed the Hawley-Smoot Tariff
• -Creates the highest tariff in history
• -Makes economy worse
• -Creates the Reconstruction Finance Corporation
• -Group to help banks
• -Does little

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Section 2Domino Theory

• -The U.S. economy begins to fail for many
  reasons.
• -1st is the Domino Theory
• -Factories begin to lay off workers
• -These workers have less money to spend
• -B/c people were spending less, stores were
  ordering less
• -B/c stores were ordering less, factories
  produced less
• -B/c factories produced less, they needed less
  workers
• -Factories start to lay off more workers
• -The newly laid off workers now have less money
  to spend and process begins again

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Stock Market Crash

• -In 1929, stocks are at an all time high
• -Dow Jones Industrial Avg. was at all time high
• -Avg. of stock prices for major U.S. companies
• -381 for 1929
• -Many people felt it was time to cash in and gain
  huge profits.
• -Dow Jones and stock prices began to fall rapidly
• -Oct. 24, 1929 was called Black Thursday
• -3 billion lost in one day
• -Americans raced to get out of stock market
• -No regulations on selling or stoppage of sales
• -Oct. 29, 1929 was called Black Tuesday
• -16.4 million shares of stock were sold in one
  day
• -Dow Jones fell from 381 to 198.7
• -30 Billion lost
• -At first, only the 4 million investors in the
  stock market were affected by the crash

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Great Depression

• -Crash ultimately begins the Great Depression
• -Severe economic fall from 1929-1941
• -Caused huge of Americans to lose everything
  from jobs to homes.
• -Many took their own lives.
• -Most were left with nothing but clothes on their
  backs
• -Depression begins to affect every aspect of
  American life
• -Hundreds of factories close
• -Thousands lose their jobs
• -No welfare, unemployment, or Social Security
• -By 1932, 12 million are unemployed
• -1/4 of the workforce
• -Those still lucky to have jobs had their wages
  cut

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• -U.S. Gross National Product was cut in half
• -Total value of goods and services a country
  produces
• -In 1929, GNP was 103 Billion
• -In 1933, GNP was 56 Billion
• -5500 banks were forced to close
• -9 million savings accounts disappeared
• -Begins to affect other countries and force them
  into their own depressions.
• -Biggest were Germany, France, and England

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The Effects

• -People at every economic level were affected
• -Hardest hit were those at the bottom of the
  economic scale
• -Homelessness was at an all time high
• -Most lived in small homeless areas called
  Hoovervilles
• -Areas where homeless lived
• -Named for President Hoover
• -Most blamed him for the Depression
• --Depression also affected minorities
• -Racism and discrimination rose dramatically
• -Many forced from their jobs and replaced by
  whites
• -56 of blacks were unemployed
• -Hispanics and Asian Americans were also forced
  out of their jobs
• -Thousands were deported, even those born in the
  U.S.

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Dust Bowl

• Farmers took an even bigger hit when a severe
  drought hit the Midwest
• -9 million acres of land became known as the Dust
  Bowl
• -750,000 families were forced to sell their farms
• -Others had them repossessed by bank
• -Hardest hit were farms in Kansas and Oklahoma
• -Many moved to California to begin again

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Dust Bowl Range
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Dust Bowl Farm in Kansas
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Dust Storm in Oklahoma
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Americans Helping Others

• -As bad as the Depression was, Americans worked
  to help each other
• -Protested rent increases
• -Helped farmers re-buy their land
• -Political groups also worked to help Americans
• -Most Americans had faith that govt. would help
  them
• -Others felt govt. needed changes
• -Gave support to the Communist and Socialist
  parties

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Bonus Army Incident

• -Final straw was the Bonus Army Incident
• -1932
• -WWI vets march on D.C.
• -Wanted bonus for fighting in WWI that was due to
  be paid in 1945
• -Govt. said no, they had to wait until 1945
• -Led to violence
• -Hoover sends in Army under Gen. Douglas
  MacArthur to remove protestors
• -Many are injured seriously

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Bonus Army Camps
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21st Amendment

• -One political change was the 21st Amendment
• -Repeals 18th
• -Lasted 14 years
• -Makes alcohol legal
• -Passed in Feb. 1933
• -Only 8 states keep a ban on alcohol
• Mississippi finally removes ban in 1966
• -Helped stimulate economy by rehiring workers

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The Change of America

• -Famous Americans lives also changed in 1930s
• Al Capone convicted of tax evasion 1931
• Babe Ruth retires 1935
• Henry Ford becomes hated by workers
• Lindberghs baby is kidnapped and killed
• Calvin Coolidge dies 1933

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1932 Election

• -Another major change came with the 1932 election
• -2 candidates were
• Herbert Hoover Republican
• Franklin Delano Roosevelt Democrat
• -FDR wins by 7 million votes
• -Wanted to bring major changes to U.S.
• -Created a plan called The New Deal
• -Plan would change U.S. forever and bring U.S.
  out of Depression

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Hoover vs. FDR