Crash and Depression
(1929-1933)
I. The Economic Cycle
I. Workings of the Economic / Business Cycle
Warm-up:
What would you do with $1,000,000?
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I. Workings of the Economic / Business Cycle
Objectives:
 Identify and explain the workings of each part of the economic cycle of the United States.
 Determine why the economy in the 1920s appeared healthy to most Americans.
Parts of the Business Cycle
The economic cycle is the natural fluctuation of the economy between periods of expansion (growth) and contraction
(recession).
 Expansion / Recovery – _________________________________________________________________________
_____________________________________________________________________________________________

Peak / Boom – The highest point between the end of an economic expansion and the start of a contraction in a
business cycle.

______________________________– A phase of the business cycle in which the economy as a whole is in decline.

Trough / Depression – The stage of the economy's business cycle that marks the end of a period of declining
business activity and the transition to expansion.
The Business Cycle
Healthy Economy?
 Many middle class people began to use credit to purchase items during the 1920s .

Between ______________________________________________________________________________________

_____________________________________________________________________________________________
Consumers went on a buying spree during the 1920s, which increased productivity of goods

_______________________________________ – total value of goods and services a county produces – grew at an
annual rate of 6 percent a year from 1921 to 1929 (as opposed to one percent for the decade before.
Did we learn?
1. What are the four parts of the business cycle?
a. expansion / recovery
b. peak / boom
c. contraction / recession
d. trough / depression
2. List three reasons that the economy appeared healthy during the 1920s
a. increase in consumer credit usage
b. increase in electric power
c. increase in GNP
II. The Stock Market Crash
Warm-Up:
What does this photo tell us about the impact of the Stock Market Crash of 1929?
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II. The Stock Market Crash
Objectives:
 Describe the events that led to the stock market crash in 1929.

Explain_______________________________________________________________________________________
_____________________________________________________________________________________________
The Stock Market
 Stock Market - a particular market where stocks and bonds are traded; stock exchange.
 Stock Market participants include:
1. individual investors (day traders, 401k)


2. ___________________________________________________________________________________________
3. publicly traded companies (Ford, Best Buy)
Prices of stocks change based on whether they are in high demand or low demand, and the demand for a certain
security is based on its rate of return and risk level.
Dow Jones Industrial Average (DJIA) – an average of stock prices of major industries
Let’s pretend…
 When you were born you parents did this:
- Put $1,000 in Ford Motor Company stock and it
earned 10% a year (on average) for your entire life
 At age 10 you would have: $2,594.00




At age 20 you would have: $6,728.00
At age 30 you would have: $17,450.00
_______________________________________________________________: $45,259.00
At age 50 you would have: $117,391.00

At age 65 you would have: ________________________
Let’s pretend some more…
 Your extremely wealthy grandfather gives you $500,000 dollars’ worth of Ford stock on your 18th birthday

- The stock is valued at __________________________________________________________________________
- Ford Motor Company has a bad year (tires on
their trucks are faulty – causing many accidents
and some fatalities)
- This ________________________________________________________________________________________
their company and subsequently their stock price
which plunges to $5.00 a share
What is your birthday gift worth?
__________________________________
The Stock Market Boom
 In early 1928 the DJIA __________________________________
 By March 4, 1929 it had risen 122 points to 313


______________________________________________________________ it had reached 381
Prices for many stocks had climbed far above their real value – in terms of the company’s earnings and assets

Quote from Bank official after the slight fall of stock prices: ____________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
The Stock Market Crash: Black Thursday
 On Thursday October 24 worried investors began to sell and prices fell dramatically.
 General Electric ________________________________________________________________________________
_____________________________________________________________________________________________

___________________________________ claimed that the nation’s business “is on a sound and prosperous basis.”
The Stock Market Crash: Black Tuesday
 Over the weekend a group of investors tried to stop the bleeding by pooling their money together to buy stock


____________________________________________________________________________________– compared
to an average of 4 to 8 million shares on a typical day.
This collapse of the stock market became known as the Great Crash.


By November 13th the DJIA _____________________________________________________________________
Losses totaled 30 billion
The Great Depression
 The economic contraction that began with the Great Crash triggered the most severe economic downturn in the
nation’s history—the Great Depression.

The Great Depression ___________________________________________________________________________
_____________________________________________________________________________________________

______________________________________________________________________________________ Rather,
both the Great Crash and the Depression were the result of deep underlying problems with the country’s economy.
Effects of the Great Crash, 1929
Underlying Problems: Debt
 Personal debt increased because people figured that they could count on future income to pay for items purchased on
credit
Underlying Problems: Too many goods – not enough demand .

By __________________________________________________________________________________________

_____________________________________________________________________________________________
Although wages were increasing people could not afford to buy goods at the rate that they were being produced
Underlying Problems: Farmers and Workers
 Falling farm prices left many farmers unable to pay the debts for land and machines.

Banks struggle when farmers could not pay their loans – _______________________________________________

_____________________________________________________________________________________________
Factory workers suffered from long hours for low wages.
- In a Tennessee town women worked 56 hours a week, ________________________________________________
Underlying Causes of the Depression…
An Unstable Economy:
- The prosperous economy of the 1920s lacked a firm base.
- _______________________________________________________________________________________Those
who had the most tended to save or invest rather than buy goods.
- Industry produced more goods than most consumers wanted or could afford.
Underlying Causes of the Depression…
Government Policies:
- During the 1920s, the Federal Reserve System, cut interest rates to assist economic growth. In 1929, it limited the
money supply to discourage lending.
- As a result, __________________________________________________________________________________
_____________________________________________________________________________________________
Underlying Causes of the Depression
Overspeculation:
- __________________________________________________________________________and then pledged those
stocks as collateral to buy more stocks.
-The stock market boom was based on borrowed money.
Assessment
1. Which of the following did not lead to the Stock Market Crash of 1929?
a. falling farm prices
b. low workers wages
c. increasing personal wages
d. lack of product demand
2. List three main causes of the Great Depression.
a. Unstable economy
b. Government policies
c. Overspeculation
III. Social Effects of the Great Depression:
Warm-Up
Describe what this picture says about this period in American history?
III. Social Effects of the Depression
Objectives:
 Discuss the ways in which poverty spread during the Great Depression.
Poverty Spreads
 People of all levels of society faced hardships ________________________________________________________
 Unemployed laborers, unable to pay their rent, became homeless.

Sometimes the homeless built shacks of tar paper or scrap material. ______________________________________
_____________________________________________________________________________________________
The Dust Bowl
 Farm families suffered from low crop prices.
 As a result of a severe drought and farming practices that removed protective prairie grasses, dust storms ravaged
the central and southern Great Plains region. This area, stripped of its natural soil, was reduced to dust and became
known as the Dust Bowl.
 The combination of the terrible weather _____________________________________________________________
_____________________________________________________________________________________________
A Dust Storm in Kansas
 A wall of dust approaches a Kansas town, as shown in "Effect of Dust Storms on Health," U.S. Public Health
Service, Reprint No. 1707 from the Public Health Reports 50(40) October 4, 1935. (Image courtesy of the NOAA
Photo Library)
Impact of the Dust Bowl
Quick Facts:
 More than _______________________________________________________________________________
 2.5 million people moved away from the Great Plains
 There were 14 dust storms in 1932 – 134 in 1937


The storms __________________________________________________________________________
The term “Dust Bowl” was used for the first time after a reporter used the term to describe the worst dust storm –
Black Sunday ________________________________
Poverty Stains Society
Impact on health:
 Some people __________________________________________________________________________________
 Children suffered long-term effects from poor diet and inadequate medical care.
Stresses on families:
 Living conditions declined as families crowded into small houses or apartments.

Men felt ______________________________________________________________________________________
_____________________________________________________________________________________________
 Working women were accused of taking jobs away from men.
Discrimination Increases:
 Competition for jobs produced a rise in hostilities against African Americans, Hispanics, and Asian Americans.


_________________________________________________________
Aid programs discriminated against African Americans.
What do you know?
1. A _____________________________________________was a town of homes that were made out of scrap paper and tar.
2. What factors contributed to disaster for farming families living in the Dust Bowl?
(A) Drought
(B) Farmers plowing under prairie grasses
(C) Decreased prices for agricultural goods
(D) All of the above
IV. Surviving the Great Depression
Warm-Up: Hobo Symbols
How did such a symbol system help hobos and the homeless?
Why do you think they wanted to help each other?
IV. Surviving the Great Depression
Objectives:


Describe the different ways that Americans pulled together to survive the Great Depression.
Discuss the many reasons for Herbert Hoovers unpopularity during the early stages of the depression.
Young People Ride the Rails
 Many young people left ______________________________________________________________________
 By the mid 1930s about 250,000 teenagers were living on the road and using trains as transportation
“I wanted to stay home and fight poverty with my family. But my father told me I had to leave…. But I didn’t have it in my mind
to leave until he told me, ‘Go fend for yourself. I cannot afford to have you around any longer.’” – Clarence Lee
Americans Pull Together
 Throughout the country, people ___________________________________________________________________
 Neighbors in difficult circumstances helped those they saw as worse off than themselves.
 When banks foreclosed on a farm, neighboring farmers would bid pennies on land and machines, which they would
then return to the original owners. _________________________________________________________________

_____________________________________________________________________________________________
Some Americans called for radical political and economic change. They believed that a fairer distribution of wealth
would help to end the hard times.

__________________________________________helped many people to fight everyday despair.
Seeking Political Solutions
 Although Americans were dealing with very poor conditions, they did not call for violent political change
“Ten million unemployed continue law abiding. No riots, no trouble, no multi-millionaires cooked and served with
cranberry sauce, alas.” – William Saroyan, 1936
Some Americans turn to Communism
 Many Americans used the economic unrest to turn to a system of government _______________________________
 In the 1932 election over 100,000 people voted for a communist candidate.

The communist and socialist parties called for a ______________________________________________________

_____________________________________________________________________________________________
Socialist candidate Norman Thomas won 881,951 votes in the 1932 presidential election
Signs of Change: Prohibition Repealed
 In February 1933, Congress passed the _____________________________________, which repealed the eighteenth
amendment prohibiting the sale of alcohol.
Twenty First Amendment:
Section 1. The eighteenth article of amendment to the Constitution of the United States is hereby repealed.
Section 2. The transportation or importation into any State, Territory, or possession of the United States for delivery
or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.

________________________________________________________________________________ repeal, but most
Americans welcomed the end to a failed social experiment
Signs of Change: The Empire State Building

_____________________________________________________________________________ on the construction.


The cost of construction was ___________________________________________________
At that time, it was the world’s tallest building and had 102 stories and 67 elevators.
Signs of Change: The End of an Era
Many things that symbolized the 1920s faded away:
 Organized crime gangster ________________________________________________________________________
 Calvin Coolidge died.

_____________________________________________________________________
Assessment
 What was a penny auction?
(A) An event at which stocks once highly valued were auctioned off for a penny.
(B) An event at which laborers eager for work auctioned off their labor for pennies.
(C) An event at which neighbors, in an effort to help each other, auctioned their spare rooms for a penny.
(D) An event at which neighboring farmers bid pennies on land and machines, which the buyers then returned to the
original owners.

What form of government did many Americans turn to during the Great Depression
_____________________________________

The _____________________________________repealed the Eighteenth Amendment and legalized alcohol again.
V. The Election of 1932
Warm-Up
Differentiate the following quotes:
Herbert Hoover
“Economic depression cannot be cured by legislative action or executive pronouncement. Economic wounds must be healed
by the action of the cells of the economic body - the producers and consumers themselves.”
President Herbert Hoover, December, 1930
Franklin D. Roosevelt
“The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common
sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something.” - FDR, May, 1932
V. The Election of 1932
Objectives:
 Differentiate the two opposing ideals on government during the election of 1932.

Explain the outcome and significance of ______________________________________________________
Hoover’s Limited Strategy
 Hoover convinced business leaders to help maintain public confidence in the economy.


To protect domestic industries_________________________________________________________________, the
highest import tax in history. European countries also raised their tariffs, and international trade suffered a
slowdown.
Hoover set up the _________________________________________________________________________, which
gave government credit to banks, industries, railroads, and insurance companies. The theory was that prosperity at
the top would help the economy as a whole. _________________________________________________________
_____________________________________________________________________________________________
Hoover’s Unpopularity Grows
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


Hoover _______________________________________________________________________________________
_____________________________________________________________________________________________
Hoover did not support federal public assistance because he believed it would destroy people’s self-respect and
create a large bureaucracy.
Many people blamed ________________________________________________________________________
His image soured as he was shown in a newspaper feeding his dog after saying:
“Our people ____________________________________________________________________________
Bonus Army: Veterans March on Washington D.C.
 Finally, public opinion soured for Hoover when he called the __________________________________________ to
disband a protest of 20,000 unemployed World War I veterans called the Bonus Army.

_________________________________________________________________________ to drive the marchers out
of the city and burned their makeshift camp to the ground.
A “New Deal” for America
 FDR promised a _______________________________________________________________________________
 He was ready to experiment with government roles in an effort to end the Depression.



___________________________________________________________________________, Roosevelt had set up
an unemployment commission and a relief agency.
_________________________________________________________________________________________ She
worked for public housing legislation, state government reform, birth control, and better conditions for working
women.
When the Roosevelt's campaigned for the presidency, they brought their ideas for political action with them.
The Election of 1932
F.D.R.
 Believed that government had a responsibility to help people in need.
 Called for a reappraisal of values and more controls on big business.
 Helped many Americans reassess the _______________________________________________________________


_____________________________________________________________________________________________
Much of his support came from urban workers, coal miners, and immigrants in need of federal relief.
_________________________________________________________________________________ and almost 89
percent of the electoral vote.
Herbert Hoover
 Believed that __________________________________________________ should not try to fix people’s problems.
 Argued that federal aid and government policies to help the poor would alter the foundation of our national life.


He ______________________________________________ to help the poor and argued against giving the national
government more power.
Hoover gave very few campaign speeches and was jeered by crowds.
Assessment
1.What was one way President Hoover wanted to battle the Depression?
(A)
Federal relief programs
(B)
U.S. expansion into foreign markets
(C)
Stock market investment
(D)
Voluntary aid
2. Franklin Roosevelt promised a _____________________ _______________________
for America.
3. The _________________________ ____________________________was forced out of Washington
D.C. by General Douglas MacArthur.