The Great Depression

The Great Depression

A time of economic hardships in America and beyond

Life after World War I (WWI)

WWI ended in 1918. In the 1920s Americans experienced great wealth and prosperity. The economy was doing very well. Demand for goods was high. Both production and employment were on the rise. People had extra money to spend. More Americans than ever owned houses and cars. They bought luxuries. They bought stock on the stock market. Life was good.

• Businesses do well

• People have work

• People have money

• People can pay money so businesses do well

Multiple Choice

How would you describe life in 1920s America?

• Okay, not great

• Very good

• Hard

Businesses and the economy

When companies are producing a lot, they can employ a lot of people and the economy is good. If not enough of the product is purchased, there is a surplus and prices have to go down. This hurts the company. The company will stop producing as much and lay off workers. The economy suffers, until people buy up the goods and the company starts increasing production again. This business cycle happens all the time on a somewhat small scale.

Multiple Choice

True or False: when a company is doing well, they employ more people.

• True

• False

Multiple Choice

True or False: if a company can not sell enough of its product, it is doing well.

• True

• False

Buying stock

People pay (and sometimes borrow) money to invest in companies by buying their stock. They hope that, when the companies do well, they can earn interest and/or then sell their shares in the company and make money. Buying stock that you think will increase in price is called SPECULATING.

Multiple Choice

What do you call it when you invest in something and hope it will make you a profit?

• Higgledy Piggledy

• Goose-egging

• Speculating

• Disco dancing

Bull or Bear Markets

When the stock market goes up and up, as in company’s values increase, it is called a BULL MARKET. When stock prices fall, it is called a BEAR MARKET. The market normally rises and falls a bit over time, but doesn’t usually do anything drastic and stay that way for any length of time.

Multiple Select

What do you call it when the stock market is rising and companies are doing well?

• Bull market

• Hippo market

• Mouse market

• Hannafords

The Crash

In September 1929 the stock market reached a high point. On October 23, 1929, however, it dropped sharply. The following day, October 24, 1929 thousands of investors became nervous and tried to sell their stocks before the prices fell any more. By noon, the stock market had lost $9 billion in value. This day has become known as BLACK THURSDAY. It rose a little bit, but then crashed completely on October 29, 1929, which became known as BLACK TUESDAY. In just one day the market lost a full year’s profits.

Multiple Choice

Why did investors want to sell their stocks all of a sudden? (Fear that the price would go lower)

On BLACK THURSDAY and BLACK TUESDAY, did the stock market go up or down? (Down)

The Great Depression started with the crash of the _____ _______?

• Hannaford

• Ruby Tuesday

• Stock Market

The Great Crash, continued

Many speculators lost everything. They had to sell personal belongings to be able to pay off their debts (china, clothing, jewelry, etc.) Even Americans who had not invested in the stock market felt the effects of the Great Crash as those around them ran out of money for basic, everyday items. 

Multiple Choice

What did people have to sell in order to pay off their debts?

• Clothing, jewelry, china, etc.

• Their books

• Their pets

• Hamburgers

Multiple Choice

People who ran out of money no longer had enough money for what?

• Limosines

• Basic, everyday items

• New Nike sneakers

Banks

Banks were hurt by the stock market crash because they had loaned money to investors who now couldn’t pay it back. Some banks ran out of money and had to close. Banks closing caused people to panic and they went to their banks to withdraw their money so that they would not lose it. (Nowadays our money is insured, so we wouldn’t lose it.) In 1931 alone, some 2294 banks closed because they ran out of money. Millions of Americans lost their life savings.

Multiple Choice

Who else, besides people, ran out of money?

• Schools

• Pet stores

• Banks

Businesses

The bank crisis lead to a business crisis. When businesses lost their money at the bank, they couldn’t operate, so they closed.

Multiple Choice

When the banks closed, what else ended up closing?

• Businesses

• Houses

• Cars

Recession economics

• Businesses lose money

• Businesses lay off people

• People don't have money

• People can't support business

The economy suffered

Industries slowed their production and cut their work forces. Unemployment skyrocketed. People struggled to feed and house themselves. Local governments and private charities didn’t have enough money to support all the people who needed help.

Multiple Choice

When banks and businesses closed, what happened to people’s jobs?

• They easily got new ones.

• They lost them.

Around the world

Elsewhere in the world, other countries lost confidence in American goods and stopped buying them. Europeans were still recovering from WWI and could not afford American goods. Because Europeans weren’t buying American goods, America placed high tariffs or taxes on European goods. Since the Europeans then couldn’t sell their goods, they didn’t have money to buy American goods.

Multiple Choice

Did Europeans help Americans by buying up goods and spending money in America?

• Yes

• Maybe

• No

The role of government

President Herbert Hoover felt that recovery should come through voluntary cooperation - not from the Federal Government (as in people helping people). He did help such businesses as the railroads, banks and other important businesses. People were fed up with Hoover and his lack of help.

Multiple Choice

How did President Hoover want people to get help?

• From other people.

• From aliens

• From Africa

Multiple Choice

What help did President Hoover give?

• He helped little old ladies

• He helped animals

• He helped the railroads and the banks

• He helped the auto industry

A new president

In 1932 they elected Franklin Delano Rosevelt (FDR), a democrat into the office of president. During his first 100 days in office FDR passed several programs to battle the Great Depression. These became known as THE NEW DEAL. The Federal Government payed for the New Deal programs by raising taxes and by spending more money than it had.

Multiple Choice

What is the name of the person elected President in 1932?

• Franklin Delano Roosevelt

• Paul Hakanson

• Mr. Desilets

• Mrs. Roosevelt

Multiple Choice

What is the name of the group of programs that FDR put into place to help Americans recover from the Great Depression? (last question)

• The New Deal

• Politics as usual

• "I have a plan"