Roaring 20’s• U.S. prosperity in the 1920s had been based to a large extent on the sale of

houses and automobiles. • Consumers for the first time could buy houses and cars on the installment

plan, and they were eager to do so. • These purchases created jobs for workers:

– Building homes, cars, furniture and appliances – The steel and other materials that were used to produce cars– Jobs were also created as business firms built new plants and bought

new equipment to produce what consumers wanted. – Governments built paved roads for the new automobiles and electric

plants and water and sewage facilities to service the new households. • The prosperity of workers in all these industries allowed them to spend a lot

of money, thus providing income to other workers — income which they in turn spent to buy other goods and services. ( Multiplier Effect)

The American economy went from unprecedentedprosperity in the 1920s to unprecedented

misery in the 1930s. It was an extraordinaryreversal. Why did it occur???

Consider: Look at the list of jobs below. At your group, discuss which careers might be eliminated first in an economic downturn.

Make a list in sequential order.

• Factory worker making machinery • Car salesman • Autoworker• Steelworker • Sell furniture • Sell clothing • Grocery store worker • Restaurant worker • Construction worker • Furniture factory worker

Multiplier Effect in Reverse

The multiplier effect can work in reverse. By the late 1920s, U.S. business activity began to slow down as the economy entered what began as a

mild recession. Sales of homes and new automobiles (durable goods) began to fall.

Business firms slowed their expansion of new plants, causing workers

who made a living building plants or producingmachinery to lose their jobs.

Simulation

You will be given a career card for this simulation. Do not reveal

your careers to others.

Group Discussion

• Create a list of TEN items that you would eliminate from your household if the U.S. economy experienced another major recession. Remember, you MUST find ways to save money in order to provide for your family. Start small and add bigger cut backs as you make your way down the list to simulate greater economic struggles.

• After you have completed your list, use the concept of the multiplier effect to consider the loss of jobs. List all occupations that you believe will be affected.

The Beginning of the Great Depression for Georgia

Georgia began to suffer from a depression long before the rest of the United States.

Reading Check Quiz

1. What happened on October 29, 1929?2. What is this day also known as? 3. Name three causes listed in last night’s reading

for the Great Depression. 4. T/F Georgia was already in an economic

depression before the stock market crash. 5. What did President Hoover do about the

Depression? Which vocabulary word would explain his attitude?

Destruction of King CottonThe Boll Weevil

• The beetle hatch in the yellow flower of the cotton plant. As the flower becomes a boll (the place where the fibers are formed), the larvae feeds on the growing white, fluffy cotton, making useless.

• Appeared in 1915 and quickly spread across Georgia. • By 1923, cotton production had dropped from bales from 2.8 million

bales in 1914 to only 600,000 Drought

• In 1924-1927, a major drought hit Georgia.• The drought ruined most of Georgia’s other crops.• Between 1920 and 1925 over 375,000 farm workers left Georgia

and the number of working farms fell from 310k to 249k. • Banks that had lent farmers money took huge losses and many farm

related business closed.

Boll Weevil Blues

The Dust Bowl

11

Sample Slide with Image

1) Describe what you see in this picture.2) When and where do you think this picture was taken?

Explain your answer.

The Dust Bowl

Dust Storms

Migrant family in San Francisco, 1935

Farmer leveling dust hills in Texas, 1938

Displacement and Migration

The Great Depression Hits the Country

1929 – 1939

What caused the Great Depression?• It wasn’t just one factor,

but many:– Stock market speculation– Over borrowing – Personal Debt– Bank failure– Reduction in purchasing – Laissez-faire attitude– Overproduction of

agriculture – High Tariffs– Stock market crash

Over-borrowing

• The people of the United States had borrowed more money than they could afford to pay back.

• This hurt the banks that loaned the money and the businesses waiting for their payments.

• Many business that did not get repaid had to lay off workers.

Stock market Crash of 1929• The stock market is a place where “shares” of

corporations are sold.• Stock Market Speculation

– This is speculating (betting) that share prices would go up, so banks and individuals purchased more than they had money to buy.

– Many were buying purchasing stocks on a margin, or portion of what it was worth.

• If a stock is $100 you can pay $10 now and then resell it later when the stock price rose– The investor had the right to sell the stock even though it

was not paid for and would sell it when the stock went up in order to pay the rest off. This caused the price to go up making them higher than what they were worth

• Stock prices began to decline in September and early October 1929, and on October 18 the fall began. Panic set in, and on October 24, Black Thursday, a record 12,894,650 shares were traded. Stock holders lost over $40 billion dollars and businesses were never able to recover.

• Video

Bank Failures aka: The Bank Run• During the 1920’s and 1930’s, banks did

not have insurance protecting deposits.• If enough bank customers tried to

withdraw their money, the bank would eventually run out. This is called a bank failure.

• After the stock market crash, this actually happened and many banks failed causing many people to lose their life savings.– In 1931 alone, 31 banks failed in

Georgia. • The few banks that managed to stay in

business were hesitant about making loan, which slowed the purchasing power of big businesses and the individual buyer.

Setting the Scene• Imagine that you suddenly lost

everything you had- your home, your parents lost their jobs, your savings, your car, and all your personal possessions…everything.– What would you do?– How would you survive?

• You friends and family members are in the same situation so there is no one to turn to for help.

• This is the situation many found themselves in when the Great Depression of the 1930’s hit America.

Bank Closings during The Great Depression

Year Number of Bank Closings

192019211922192319241925192619271928192919301931 19321933

168505367646775618976669499659

1,3522,2941,4564,004

Laissez-faire Attitude • Laissez-faire is a policy or

attitude of letting things take their own course, without interfering.

• The people and government officials believed that the economy would work itself out without government help.

• Hoover continued to tell the people...”prosperity is just around the corner.”

• So, the government did not take action and nothing improved

Reduction in Purchasing

• After the stock market crash combined with economic fears, the average consumer stopped purchasing goods.

• People stopped buying goods, so companies lowered production rates causing many to lose their jobs.

• The unemployment rate reached 25% further reducing the purchasing power of the average consumer.

OverproductionAgriculture

• Before major droughts hit the Midwest, many farmers overproduced.

• In the 1920’s, Midwest farmers produced record numbers of agriculture products leading to a dramatic drop in the price of these products. This limited the profit margin for farmers.

• In the 1930’s a major drought hit the Midwest driving thousands of farmers from their homes and added to the millions of Americans already out of work.

Industry• While agriculture struggled, industry

soared in the decade before the Wall Street Crash. In the ‘boom’ period before the ‘bust’, a lot of people were buying things like cars, household appliances and consumer products.

• Importantly, however, these purchases were often made on credit. And as production continued a fast pace, the market quickly dried up; too many products were being produced with too few people earning enough money to buy them.

• Companies lost large amounts of money leading to more layoffs

A Farm Foreclosure

After your quiz

• Put your quiz and answer sheet on the table.• Take a handout off the table• Read the excerpt from the story (in the bucket)

– Answer the TWO question on your notes sheet from yesterday

– Interpret the quote • NOW- read the lyrics of the TWO songs (in the

bucket ALSO). On the BACK of your new handout, answer the questions.

How did WWI contribute to the Great Depression?

Read the excerpt from Out of the Dust to determine how.

Miss Freeland said, “During the Great War we fed the world. We couldn’t grow enough wheat to fill all the bellies. The price the world paid for our wheat was so high it swelled our wallets and our heads, and we bought

bigger tractors, more acres, until we had mortgages and rent and bills beyond reason, but we all felt so useful, we didn’t notice. Then the war ended and before long, Europe didn’t need our wheat anymore, they could grow their

own. But we needed Europe’s money to pay our mortgage, our rent, our bills. We squeezed more cattle, more sheep, onto less land, and they grazed down

the stubble till they reached root. And the price of wheat kept dropping so we had to grow more bushels to make the same amount of money we made

before, to pay for all the equipment, all the land, and the more sod we plowed up, the drier things got, because the water that used to collect there under the grass, biding its time, keeping things alive through the dry spells

wasn’t there anymore. Without the sod the water vanished, the soil turned to dust. Until the wind took it, lifting it up and carrying it away.

Such sorrow doesn’t come suddenly; there are a thousand steps to take before you get there. But now sorrow climbs up our

front steps, big as Texas, and we didn’t even see it coming, even though it’d been making its way straight for us all along.

• As farmers expanded their production to aid the war effort during WWI. • They also mechanized their techniques, a process which both improved

their output but also cost a lot of money, putting farmers into debt. • In addition, land prices for many farmers dropped by as much as 40

percent – as a result, the agricultural system began to fail throughout the 20s, leaving large sections of the population with little money or no work.

• Thus, as demand dropped with increasing supply, the price of products fell, in turn leaving the over-expanded farmers short-changed and farms often foreclosed.

• This saw unemployment rise and food production fall by the end of the 1920s.

How did WWI contribute to the Great Depression?

Meaning behind the quoteSuch sorrow doesn’t come suddenly; there are a thousand steps to take before you get there. But now sorrow climbs up our front

steps, big as Texas, and we didn’t even see it coming, even though it’d been making its

way straight for us all along.

What is your interpretation?

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.

Herbert Hoover• President Hoover bore much of the blame in the minds of the

American people for The Great Depression. The stock market crashed less than eight months into his presidency.

• Most experts, including Hoover, thought the crash was part of a passing recession, so he failed to recognize the severity of the situation or leverage the power of the federal government to squarely address it

• .As the Depression became worse, however, many called for increased federal intervention and spending. But Hoover refused to involve the federal government in forcing fixed prices, controlling businesses, or manipulating the value of the currency, all of which he felt were steps towards socialism.

• He gave indirect aid to banks and local public works projects, but he refused to use federal money for direct aid to citizens, believing it would weaken public morale. Instead, he focused on volunteerism to raise money.

• During his reelection campaign, Hoover tried to convince Americans that the measures they were calling for might seem to help in the short term, but would be damaging in the long run.

• He was soundly defeated by Franklin D. Roosevelt in 1932.

http://www.gilderlehrman.org/

“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 perceived lack of help during the depression.

Depression Era Music

How do they compare?

The Great Depression 1929 - 1939

• Bank failures = 50%• Unemployment = 25%• Stock market crash of 1929 • Laissez-faire attitude • Hoover’s lack of response

The Great Recession 2008-2009

• Bank failures = 0.6%• Unemployment 8.5%• Subprime mortgage loans• Change in American values • Federal stimulus

Similarities

• People borrowed more than what they could pay back

• Speculation- stocks vs housing prices • Lack of money leads to decreased spending,

which slows production, and further adds to unemployment.

*FDR*• When he was

inaugurated unemployment had increased by 7 million.

• Poor sections (like Harlem) had 50% of the pop. unemployed

• Instituted the “New Deal”

• Video