Hard Times

…are Hoovering over us.

The1928 ElectionHerbert Hoover vs. Al Smith

Issues of the 1928 election & the outcome…

Objective…• Describe Hoover’s

background & philosophy on government.

Herbert Hoover

The irony of the 1928 election…

• Iowa – Republican• Quaker• Self made man• Food Administration• WWI Food Relief• Sec. of Commerce • “Dry”

Hoover’s philosophy on government…

• American Individualism (1922)• “Volunteerism”…

• “a cooperative, socially responsible economic order”…

Objective…

• Explain the basic concepts of the stock market.

The Bull Market• Stock prices rise in the 20s• The market is viewed as a get rich quick opportunity • The basic concept of the stock market…

Watching the ticker tape at the height of the bull market.

The most basic concept of the stock market…

Stock Market 101• What is a share of stock?• Why do companies sell shares of stock?• Why do people buy stock?• What determines the value of stock?• What does it mean for stock to be over

valued (vs. under valued)?…

Stock Market Simulation

1) Bull Market vs. Bear Market

• Making money in the stock market:• Long term investment…

• Speculation…

3) Margin buyers…

Stock Market Simulation

IIHow will you invest your money?

ObjectiveIdentify & explain the causes of

the 1929 stock market crash.

G-Docs Mini-ProjectCauses of the 1929 Stock Market Crash

• Using G-Docs create a “Presentation “ and connect me to the “Presentation”

• HW: Read the assigned articles & complete the summary sheets for the assigned homework.

• In class, your assigned group will complete a “Presentation” prioritizing the 6 most significant causes of the 1929 Market Crash. (#1 = most... #6 = least) .... Use Mozilla Foxfire

• Make sure the first slide (title slide) was has the names (first & last) of your group members.

• Each of the 6 slides (7 counting Title slide) dedicated to a cause will have “cause statement” at the top & below it a clear explanation of the cause.

• Identify the person in your group who prepared the slide with their full name in the cause statement.

• Place a asterisk (*) at the beginning of the cause statement if it correlates to NYT article

• The project will be graded, but will not be presented.

Google Docs Mini-Project:Causes of the 1929 Stock Market Crash

Objective... Determine the causes of the 1929 Market Crash.

II. NYT Primary Source Articles on the 1929 Market Crash:– NYT, 1929: Primary 1 - "Wall Street Hums on the Day of Rest to Catch Up on Work“http://www.nytimes.com/library/financial/102829crash-sunday.html – NYT, 1929: Primary 2 - "Stock Prices Slump $14,000,000,000 in Nation-Wide Stampede to Unload;

Bankers to Support Market Today"

http://www.nytimes.com/library/financial/102929crash-slump.html– NYT, 1929: Primary 3 - "Stocks Collapse in 16,410,030-Share Day, but Rally at Close Cheers Brokers;

Bankers Optimistic, to Continue Aid"

http://www.nytimes.com/library/financial/103029crash-lede.html– NYT, 1929: Primary 4 - "Stocks Mount in Strong All-Day Rally; Rockefeller Buying Heartens Market; 2-Day

Closing Ordered to Erase Strain"

http://www.nytimes.com/library/financial/103129crash-mount.html– NYT, 1929: Primary 5 - "Stocks UP Again On Flood Of Buying; Discount Rate Cut Here And In London;

Back to Normal, Reserve Board Finds"

http://www.nytimes.com/library/financial/110129crash-stocks.html

III. Secondary Article on the causes of the 1929 Market Crash:http://www.economicshelp.org/blog/76/economics/wall-street-crash-1929/

2) The weakness developing within the market?...

… the # of Americans owning stock?

The Stock Market Crash* Not a 1 or 2 day event

Wall Street on Oct. 29, 1929

What happened on "Black Tuesday?”…

The Stock Market Crash

• The market lost 40 billion from Oct 29 to April of 1930

• The market crash is followed by The Great Depression

• The low point: 1932-33• The only solution to the

Great Depression will be WW II

“the fundamental business of America is sound” - Hoover

The Crash 4) Why did the stock market crash? …Relate to the games

• Speculation & “Irrational exuberance”• Margin purchase... • PANIC selling to avoid loses• Confidence in the market is replaced with fear…No demand for stock• The availability of credit for business allowed for over expansion...• Over production • The banking system collapses...• Lack of government regulation…

The Causes of the 1929 Market Crash

* 5) What was Andrew Mellon’s evaluation of the slump?

What did Mellon mean when he said that the market crash & economic slump will...•“Purge the rottenness out of the system”•“The high cost of living will come down”•“People will work harder”•“People will live more moral lives”

Think…Where did the 40 billion in market

assets (money) go when the market crashed?

Paper profit…

Think…Is paper profit real?...

The impact of the Wall Street Crash…· 12M people out of work· 20K companies bankrupt· 1600 banks close· 1 in 20 farmers evicted· 23K suicides in one year–highest ever

All of the above become issues in the Great Depression.

Objective

Summarize the reasons why the Great Depression occurred.

Recession v. Depression

Objective… Explain the differences between a

recession & a depression

Venn Diagram: Recession v. Depression

An economic slow down...• Consumer spending drops• Production (GDP), investment, household incomes, business profits & inflation drop• Increased bankruptcies • Unemployment rise•Governments response: Increasing money supply, increasing government spending & decreasing taxation.

Recession

A long-term downturn in economic activity...•Effect more than one country • Lasting a long time• No buyers…suppliers cut production• Large increases in unemployment • No availability of credit• Price deflation • Bank failures

Depression

Underlying Weaknesses6) Why is it inaccurate to say that the stock market

crash caused the Great Depression?

http://money.howstuffworks.com/recession5.htm

GNP: Gross National Product… The total amount of goods & services

produced within our economy

1929: GNP = $104 billion1933: GNP = $56 billion

7) The underlying causes of the Great Depression?...

“the worst economic slump in U.S. history” • Stock market crash & financial panic• High Tariffs limiting trade• Over production in industry• Weak agricultural economy• Unequal distribution of wealth

Activity…The 5 Causes of the Great DepressionUnite the cause of the Great

Depression you have been given with four other causes and prepare to explain one of the causes when

called upon.

Interpret the following quote…

“In effect, the automobile of American capitalism had one foot pressed to the accelerator of production and

another on the brake of consumption.”

- # of Americans owning stock?

8) Mass Unemployment 1929–1945

Mass Unemployment9) What did it mean to be unemployed and without

hope in the early 1930s?

10) Which groups found it easiest to keep work?

Unemployment:Men line up outside an employment agency hoping to find work.

Selling apples to survive

Does the government have a responsibility to help people in need?

Why?

What objections might there be if the government helps people in need?

Answer the following questions…

Objective… Analyze President Hoover’s

philosophical and leadership response to the market crash and depression.

Hoover’s beliefs…• This is “a business cycle” …“a temporary

slump”…“The economy would fix itself”

• Government should play a limited role in

socio-economic problems. • Government’s role was to encourage &

facilitate cooperation, not to control it. • Private solutions to socio-economic problems

• Preached:“American Individualism”…“Welfare is not useful for society”

Hoover’s Failure*11) What was Hoover’s response to the

Depression and its massive suffering?

• Slow to respond• Calls for city, state & private aid• Meets with key business leaders…

Hoover’s Failure12) How were the needs of the

unemployed addressed in the early years of the Depression?

Hoover’s Failure14) What was Hoover’s plan and what

assumption was it based on? Hoover: Too little, too late

Hoover takes action… • Emergency Committee for

Employment (1930)…

• The Reconstruction Finance Corp. (RFC) (1932)…

- Emergency financing for banks, life insurance, railroads and other large businesses.

- “Trickle down” economics

• Emergency Relief Act (1932)…

On what forces outside the U.S. did President Hoover

blame the country's economic problems?...

Objective… Describe the “human cost” of the Great Depression.

“No event of the twentieth century had a more profound impact on American life”

Photo Journalist Project

A picture is worth one thousand words.

Mass unemployment….•1929… 3% unemployment•1933… 25% unemployment

Urban unemployment: -Lowell, MA 90% -Cleveland,OH 50% -Akron, OH 60% -Toledo, OH 80%

The Depression Devastates Peoples Lives

- Massive unemployment - Homeless/ Hoovervilles/ Shanty towns…- Soup kitchens & breadlines…- The younger generation travels – Hobos - African Americans: Lowest paid, first fired,

targets of violence- People stop going to doctors/dentists- People give up dreams

Where are the conditions of the Great Depression the most difficult to manage?

Rural or urban? Why?...

The Human Cost• Mortgage failures• Multiple families live

together• Divorce rate decreases • Marriages decrease -25%• College enrollment drops• Males: Anxiety related to

unemployment… Low self esteem

• 3x normal the # admitted to mental hospitals

• 1928-32: Suicide rate + 30%

Poverty brings long term health effects for children…

Malnutrition cause long term health issues for

children

The later impact on health…50% of the men drafted for World War II in 1940-

41 were rejected for medical or dental reasons…

December 1st, 1932

Dear President Hoover,

My name is ___________________________________ and I have witnessed firsthand the economic hardships of the Great Depression. I have witnessed…

As a citizen of this once great country I ask that you….

Sincerely,

A letter to Hoover…

Hooverville, USA

Soup line / Breadline

What irony is expressed in his picture?

Hoboes or “Wild Boys” of the rails

Rural homeless…

Penny auctions…

“Hooverisms”…Hoover is a “scapegoat”

– “Hoover-flag”…– “Hoover-blanket”…– “Hoover-hog”…– “Hoovervilles”…

“Mellon pulled the whistleHoover rang the bell

Wall Street gave the signal And the country went to Hell.”

Why do Americans hate Hoover?…

http://xroads.virginia.edu/~ma04/hess/Slang/Hooverisms.html

15) The 1932 protests…- Farmers’ Holiday Association…- The “Bonus Army”…

Farmers’ Holiday Association Meeting

Dumping milk…

The WWI “Bonus Army”Who? What? Where? When? Why?

http://www.youtube.com/watch?v=dWvCCxOUsM8

Hoover’s Administration

• Congress passes the Smoot-Hawley Tariff (1930)…

- International trade down 50%

http://www.youtube.com/watch?v=dxPVyieptwA

The 1932 Election

Herbert Hoover (Republican)

vs.

Franklin D. Roosevelt (Democrat)

Activity: Article review… On Ending the Great Depression… Count off by 3..1)Hoover - Different 2)Roosevelt - Different3)Hoover Roosevelt - Similar4)Review your assignment with your group and write the differences or similarities on the board. …Be prepared to share with the class.

Hooverball

Quiz terms….• Black Tuesday

• GNP

• Bull Market

• Smoot-Hawley Tariff

• Speculator

• Margin purchase

• Paper profit

• Recession v. depression

• Emergency Committee on Unemployment• Andrew Mellon

• Over valued v. under valued stock

• Causes of the Market Crash

• Causes of the Great Depression

• Reconstruction Finance Corporation (RFC)

• Who did Hoover’s efforts to end the Great Depression most help?