chapter 12 the great depression. capitalism -private ownership of business -anyone can own a...
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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 don’t break the law -Also called Free Market Economy
Economy from good to badEconomy from good to bad
-During 1920’s U.S. economy was at all time -During 1920’s U.S. economy was at all time highhigh-Herbert Hoover wins election of 1928-Herbert Hoover wins election of 1928-Most Americans thought good times would -Most Americans thought good times would continuecontinue-Most felt that stock market was a symbol of how -Most felt that stock market was a symbol of how well the U.S. was doing economicallywell the U.S. was doing economically-In 1925, stocks were worth $27 Billion-In 1925, stocks were worth $27 Billion-In 1929, $87 Billion-In 1929, $87 Billion-Wages rose 40% in 1920’s-Wages rose 40% in 1920’s-Unemployment was under 4%-Unemployment was under 4%
Welfare CapitalismWelfare Capitalism
-Business owners found a way to -Business owners found a way to meet workers demands without using meet workers demands without using the unionsthe unions
-Helped to weaken unions-Helped to weaken unions -They provided paid vacations, health -They provided paid vacations, health
plans, English classes, & other plans, English classes, & other benefits requested by workersbenefits requested by workers
-Tried to show people they didn’t -Tried to show people they didn’t need unionsneed unions
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 didn’t 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.
Stock Market Problems BeginStock Market Problems Begin
-Problems with the way the stock market -Problems with the way the stock market used to run also caused economic used to run also caused economic problemsproblems1.1. SpeculationSpeculation -Buying high risk stocks hoping to make a -Buying high risk stocks hoping to make a
quick profit or a high profitquick profit or a high profit
2.2. Buying on MarginBuying on Margin -Buying a stock with little down and borrowing -Buying a stock with little down and borrowing
the rest from the brokerthe rest from the broker
Changes in U.S. SocietyChanges in U.S. Society
-A major change came to the U.S. skyline-A major change came to the U.S. skyline -Empire State Building is started in 1930-Empire State Building is started in 1930 -Cost $41 million-Cost $41 million -Opens in 1931 as largest building in the -Opens in 1931 as largest building in the
worldworld -Today largest building is Burj Khalifa -Today largest building is Burj Khalifa
Tower in Dubai, UAETower in Dubai, UAE -Begins American’s love of skyscrapers -Begins American’s love of skyscrapers
Hoover’s 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
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
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
Great DepressionGreat Depression -Crash ultimately begins the -Crash ultimately begins the Great DepressionGreat Depression
-Severe economic fall from 1929-1941-Severe economic fall from 1929-1941 -Caused huge # of Americans to lose -Caused huge # of Americans to lose
everything from jobs to homes.everything from jobs to homes. -Many took their own lives.-Many took their own lives. -Most were left with nothing but clothes on -Most were left with nothing but clothes on
their backstheir backs -Depression begins to affect every aspect of -Depression begins to affect every aspect of
American lifeAmerican life -Hundreds of factories close-Hundreds of factories close -Thousands lose their jobs-Thousands lose their jobs -No welfare, unemployment, or Social Security-No welfare, unemployment, or Social Security -By 1932, 12 million are unemployed-By 1932, 12 million are unemployed -1/4 of the workforce-1/4 of the workforce -Those still lucky to have jobs had their wages -Those still lucky to have jobs had their wages
cutcut
--U.S. Gross National ProductU.S. Gross National Product was cut in was cut in halfhalf
-Total value of goods and services a -Total value of goods and services a country producescountry produces
-In 1929, GNP was $103 Billion-In 1929, GNP was $103 Billion -In 1933, GNP was $56 Billion-In 1933, GNP was $56 Billion -5500 banks were forced to close-5500 banks were forced to close -9 million savings accounts disappeared-9 million savings accounts disappeared -Begins to affect other countries and force -Begins to affect other countries and force
them into their own depressions.them into their own depressions. -Biggest were Germany, France, and -Biggest were Germany, France, and
EnglandEngland
The EffectsThe Effects► -People at every economic level were affected-People at every economic level were affected► -Hardest hit were those at the bottom of the -Hardest hit were those at the bottom of the
economic scaleeconomic scale► -Homelessness was at an all time high-Homelessness was at an all time high► -Most lived in small homeless areas called -Most lived in small homeless areas called
HoovervillesHoovervilles -Areas where homeless lived-Areas where homeless lived
► -Named for President Hoover-Named for President Hoover► -Most blamed him for the Depression-Most blamed him for the Depression► --Depression also affected minorities--Depression also affected minorities► -Racism and discrimination rose dramatically-Racism and discrimination rose dramatically► -Many forced from their jobs and replaced by whites-Many forced from their jobs and replaced by whites► -56% of blacks were unemployed-56% of blacks were unemployed► -Hispanics and Asian Americans were also forced out -Hispanics and Asian Americans were also forced out
of their jobsof their jobs► -Thousands were deported, even those born in the -Thousands were deported, even those born in the
U.S.U.S.
Dust BowlDust Bowl
Farmers took an even bigger hit when a Farmers took an even bigger hit when a severe drought hit the Midwestsevere drought hit the Midwest
-9 million acres of land became known as -9 million acres of land became known as the the Dust BowlDust Bowl
-750,000 families were forced to sell their -750,000 families were forced to sell their farmsfarms
-Others had them repossessed by bank-Others had them repossessed by bank -Hardest hit were farms in Kansas and -Hardest hit were farms in Kansas and
OklahomaOklahoma -Many moved to California to begin again-Many moved to California to begin again
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
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
2121stst Amendment Amendment
-One political change was the -One political change was the 21st 21st AmendmentAmendment
-Repeals 18th-Repeals 18th -Lasted 14 years-Lasted 14 years -Makes alcohol legal-Makes alcohol legal -Passed in Feb. 1933-Passed in Feb. 1933 -Only 8 states keep a ban on alcohol-Only 8 states keep a ban on alcohol Mississippi finally removes ban in 1966Mississippi finally removes ban in 1966 -Helped stimulate economy by rehiring -Helped stimulate economy by rehiring
workersworkers
The Change of AmericaThe Change of America• -Famous Americans’ lives also changed in
1930’s• Al Capone convicted of tax evasion [1931]• Babe Ruth retires [1935]• Henry Ford becomes hated by workers• Lindbergh’s baby is kidnapped and killed• Calvin Coolidge dies [1933]
1932 Election1932 Election
► -Another major change came with the 1932 -Another major change came with the 1932 electionelection
► -2 candidates were-2 candidates were► Herbert Hoover [Republican]Herbert Hoover [Republican]► Franklin Delano Roosevelt [Democrat]Franklin Delano Roosevelt [Democrat]► -FDR wins by 7 million votes-FDR wins by 7 million votes► -Wanted to bring major changes to U.S.-Wanted to bring major changes to U.S.► -Created a plan called The New Deal-Created a plan called The New Deal► -Plan would change U.S. forever and bring -Plan would change U.S. forever and bring
U.S. out of DepressionU.S. out of Depression
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