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Write an argument explaining why the stock market crashed in 1929.  Use insights you gained Write an argument explaining why the stock market crashed in 1929.  Use insights you gained

Write an argument explaining why the stock market crashed in 1929. Use insights you gained - PowerPoint Presentation

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Write an argument explaining why the stock market crashed in 1929. Use insights you gained - PPT Presentation

Warmup The Great Depression 8E11 Explain how conflict cooperation and competition influenced periods of economic growth and decline 8H21 Explain the impact of economic political social and military conflicts on the development of North Carolina and the United States ID: 643160

great depression hoover people depression great people hoover life stock market 1929 government economic economy money daily iii goods

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Slide1

Write an argument explaining why the stock market crashed in 1929. Use insights you gained from our simulation.

Warm-up Slide2

The Great DepressionSlide3

8.E.1.1 Explain how conflict, cooperation, and competition influenced periods of economic growth and decline.8.H.2.1

Explain the impact of economic, political, social, and military conflicts on the development of North Carolina and the United States.

StandardsSlide4

Herbert Hoover

won the election of 1928 because people were pleased with the economy and didn’t want a lot of change

-promised “a chicken in every pot, and a car in every garage”

-also said, “I have no fears for the future of our country, it is bright with hope.”

I.

Life in the 1920s

:Slide5

Hoover, viewed as having a strong belief in “big business” and “

small government

”, was considered by some to have a “

laissez-faire” viewpoint

as the Great Depression took hold

.

Hoover

feared that too much intervention or coercion by the government

would destroy individuality and self-reliance, which he considered to be important American values.As the economy quickly deteriorated in the early years of the Great Depression, Hoover declined to pursue legislative relief, believing that it would make people dependent on the federal government.

I.

Life in the 1920sSlide6

The Stock Market Crash of 1929

Time.comSlide7

Immediate Cause – the Stock Market Crash

:

Prices of stock rose throughout the 20s

By Sept. 1929, the Dow Jones average reached 381

-

Dow Jones

– the price of stocks from 30 of the largest companies in the U.S.II. The Great Depression:Slide8

Thursday, October 24, 1929 – some stockholders began to pull out of the market – afraid of a crash

Tuesday, October 29, 1929

:

-“Black Tuesday” -the day the stock market crashed

-investors panicked and started selling before their stock became worthless

-Dow Jones fell to 261 (41 in 1932) -between $6 and $9 billion was lost

II.

The Great Depression:Slide9
Slide10

Effects of the Crash

Investors leave stock market and invest in commodities like gold.

At the time, US economy was on the gold standard. Each dollar would be traded for its exact value in gold. This led to the government worrying that gold would run out.

The FED decided to raise interest rates in order to raise value of the dollar. This causes businesses to lose its liquidity. Liquidity allows businesses to invest and grow.

With no liquidity, businesses tend to cut back, which means layoffs.

Layoffs would drive the country into burdensome-high unemployment

.Slide11

Hidden Causes

:

Unequal distribution of wealth

:

-people were very rich or very poor

-20% of the nation lived in poverty (late 1920s) -over 70% of Americans

had no

savings and couldn’t afford consumer goods that were being produced II. The Great Depression:Slide12

In 1929, $2,500 was considered by economists as the income necessary to support a family

Wages are on the decline (EX: Mining (84.5 cents in 1923 to just 62.5 cents in 1929))Slide13

Trickle-down?

Wealthy Americans tended to spend less on economy supporting goods and more on luxuries

Wealth then becomes bottled-up

Consequently, there is less demand to keep employment and investment high

Economic transactions then slow downSlide14

Installment buying:

-the buyer pays a certain amount down, and then pays the rest in installments (payments) with interest -easy credit

-some people created huge debts

II.

The Great Depression:Slide15

Warmup (in notebook)

What kinds of economic problems cause depressions?

Why should people care about inequalities between the rich and the poor?

What happens when the middle class shrinks?

How did the 1929 stock bubble build up?Slide16

Bank failures:

-

banks were poorly managed

-people lost money (sometimes their life savings) when their bank closed

-7,000 banks closed in the 1920s

II. The Great Depression:Slide17
Slide18

Increase in unemployment

:

-new factory machinery required fewer workers

High tariffs

(tax on imports) on foreign goods: -decreased competition, which increased prices of certain goods

II.

The Great Depression:Slide19

Huge farm surpluses:

-

led to a drop in farm prices

-many farmers lost their farms because no one needed their food

II.

The Great Depression:Slide20

III. Daily Life during the Depression

:

Children were forced to work

Many people became homeless

-many of the homeless lived in small villages made of cardboard boxes and crates nicknamed “

hoovervilles

” (named after Pres. Hoover who was blamed for the Depression)Slide21
Slide22
Slide23

III. Daily Life during the Depression

:

Some men and families became

hobos – rode the rails looking for work and food

Many farmers had more food than they could sell

-people didn’t have the money to buy it

-some food was destroyed in an effort to decrease the supply so prices could increaseSlide24

GUTHRIE’S MUSIC CAPTURED ERA

Singer Woody Guthrie used music to capture the hardship of the Great Depression

Guthrie traveled the

country singing about America

GuthrieSlide25

Guthrie’s song about W-S

http://

www.youtube.com/watch?v=8kWMgQpgq-4Slide26
Slide27
Slide28

III. Daily Life during

the

Depression

:

Droughts occurred on the Great Plains

-this region became known as the Dust Bowl because it was so dry -many moved west to CA looking for work because the dust storms destroyed their crops -these people were often called okies

because most were from OKSlide29
Slide30

III. Daily Life during the Depression

:

The Grapes of Wrath (1939) – novel written by John Steinbeck about one family’s struggle in moving to CA

Pres. Hoover wasn’t willing to spend enough money to provide relief to the people (believed economy would fix itself)Slide31
Slide32

III. Daily Life during the Depression:

Bonus Army March

:

-in 1924 Congress approved a bonus payment to all who served during WWI

-the money was to be paid in 1945

-

June 1932- 20,000 veterans marched into Wash. D.C., set up camps, and said they wouldn’t leave until they received their bonus -Hoover ordered the police to remove the protesters

-2 veterans were killed – made Hoover look badSlide33
Slide34
Slide35

John Maynard KeynesDraw and explain his business cycle

A new economist comes into play…Slide36

The General Theory of Employment, Interest, and Money

In the classical model, unemployment caused by the Great Depression should have been solved by

wage reductions

that would rapidly clear the labor market. However, this did not seem to be happening.

Keynes argued that

market forces are not an adequate ‘adjustment mechanism

’; only

government

has the capacity and the responsibility to stabilize the economy. Slide37

Keynes on gov’t role

The role of government is to stimulate demand through spending in times of economic slack.

In times of economic downturn, this can be achieved either through

lowering tax rates

or

increasing government expenditures

.

According to Keynes, governments should

gain deficits (debt) and borrow money in times of downturn

; these debts can be

repaid

through higher taxation in times of economic growth.