Great Depression

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A historical look at the Great De

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Great Depression

  1. 1. Historical Significance <ul><li>Uganda, 1980 </li></ul>
  2. 2. To Kill a Mockingbird
  3. 3. <ul><li>Jim Crow Laws </li></ul><ul><li>Scottsboro Trials </li></ul><ul><li>Recovering from the Great Depression </li></ul><ul><li>Racial Injustice </li></ul><ul><li>Poor South </li></ul>
  4. 4. <ul><li>After the American Civil War most states in the South passed anti-African American legislation. These became known as Jim Crow laws. </li></ul><ul><li>These laws included segregation in… </li></ul><ul><ul><li>Schools -- Hospitals </li></ul></ul><ul><ul><li>Theaters -- Water fountains </li></ul></ul><ul><ul><li>Restaurants </li></ul></ul><ul><ul><li>Hotels </li></ul></ul><ul><ul><li>Public transportation </li></ul></ul><ul><ul><li>Some states forbid inter-racial marriages </li></ul></ul>
  5. 5. <ul><li>These laws were instituted in 1896 and were not abolished till the late 1950’s (even then still not completely). </li></ul>
  6. 6. Harper Lee
  7. 7. <ul><li>Wrote To Kill a Mockingbird in 1960 </li></ul><ul><li>Based the story on her life growing up in Monroeville, Alabama </li></ul><ul><li>TKAM was the only novel she ever wrote </li></ul>
  8. 8. <ul><li>The character of “Dill,” Scout and Jem’s playmate in the novel was based upon Lee’s actual neighbor, Truman Capote </li></ul><ul><li>Capote is famous for amongst other things, In Cold Blood and Breakfast at Tiffany’s . </li></ul><ul><li>It has been said that he gave Lee Mockingbird as a gift. </li></ul>
  9. 9. <ul><li>In 1962 the novel was turned into a film starring Gregory Peck. </li></ul><ul><li>It received a humanitarian award and several Academy Award nominations </li></ul>
  10. 10. The Great Depression
  11. 11. <ul><li>Recession : When your neighbor loses his or her job. </li></ul><ul><li>Depression : When you lose your job. </li></ul>
  12. 12. <ul><li>Worst economic disaster of the 20th century. </li></ul><ul><li>Cause or causes are still debated. </li></ul><ul><li>A defining event, especially for the government’s involvement in the economy. </li></ul><ul><li>Useful for learning important macroeconomic concepts. </li></ul>
  13. 13. <ul><li>Inflation : A sustained increase in the general price level (often calculated in terms of the Consumer Price Index (CPI)). </li></ul><ul><li>Deflation : A sustained decrease in the general price level. </li></ul><ul><li>Money Stock : The stock of assets that serve as media of exchange (e.g., coin, currency, checking accounts). </li></ul>
  14. 14. <ul><li>Real output (GDP) fell 29% from 1929 to 1933. </li></ul><ul><li>Unemployment increased to 25% of labor force. </li></ul><ul><li>Consumer prices fell 25%; wholesale prices 32%. </li></ul><ul><li>Some 7000 banks failed. </li></ul>How Great was the Great Depression?
  15. 15. <ul><li>Stock market crash </li></ul><ul><li>Didn’t realize the effect it would have </li></ul><ul><li>No money to replenish what was borrowed </li></ul>Many found being broke humiliating.
  16. 16. <ul><li>Credit system </li></ul><ul><ul><li>People didn’t really have the money they were spending </li></ul></ul><ul><li>WWI </li></ul><ul><ul><li>The U.S. was a major credit loaner to other nations in need </li></ul></ul><ul><ul><li>Many of these nations could not pay us back </li></ul></ul>
  17. 17. <ul><li>The new concept of “credit” </li></ul><ul><li>People were buying: </li></ul><ul><ul><li>Automobiles </li></ul></ul><ul><ul><li>Appliances </li></ul></ul><ul><ul><li>Clothes </li></ul></ul><ul><li>Fun times reigned </li></ul><ul><ul><li>Dancing </li></ul></ul><ul><ul><li>Flappers </li></ul></ul><ul><ul><li>Drinking </li></ul></ul>
  18. 18. <ul><li>People bought stocks on margins </li></ul><ul><ul><li>If a stock is $100 you can pay $10 now and the rest later when the stock rose </li></ul></ul><ul><li>Stocks fall </li></ul><ul><ul><li>Now the person has less than $100 and no money to pay back </li></ul></ul>
  19. 19. <ul><li>With people panicking about their money investors tried to sell their stocks </li></ul><ul><ul><li>This leads to a huge decline in stocks </li></ul></ul><ul><ul><li>Stocks were worthless now </li></ul></ul><ul><li>People who bought on “margins” now could not pay </li></ul><ul><li>Investors were average people that were now broke </li></ul>
  20. 20. S&P Composite Index
  21. 21. Historical Significance <ul><li>Milk Coronet </li></ul>
  22. 22. <ul><li>Herbert Hoover was president at the start </li></ul><ul><li>Philosophy: We’ll make it! </li></ul><ul><li>What He Did: Nothing </li></ul><ul><li>The poor were looking for help and no ideas on how to correct or help were coming </li></ul>President Hoover
  23. 23. <ul><li>Farmers were already feeling the effects </li></ul><ul><ul><li>Prices of crops went down </li></ul></ul><ul><ul><li>Many farms foreclosed </li></ul></ul><ul><li>People could not afford luxuries </li></ul><ul><ul><li>Factories shut down </li></ul></ul><ul><ul><li>Businesses went out </li></ul></ul><ul><li>Banks could not pay out money </li></ul><ul><li>People could not pay their taxes </li></ul><ul><ul><li>Schools shut down due to lack of funds </li></ul></ul><ul><li>Many families became homeless and had to live in shanties </li></ul>What about the people?
  24. 28. <ul><li>Some families were forced to live in shanty towns </li></ul><ul><ul><li>A grouping of shacks and tents in vacant lots </li></ul></ul><ul><li>They were referred to as “Hooverville” because of President Hoover’s lack of help during the depression. </li></ul>
  25. 29. Hooverville
  26. 30. $ value imports of 75 countries
  27. 31. Out of the Dust: The South and the Dust Bowl
  28. 32. “ The Dust Bowl”
  29. 33. <ul><li>Crops turned to dust=No food to be sent out </li></ul><ul><li>Homes buried </li></ul><ul><li>Fields blown away </li></ul><ul><li>South in state of emergency </li></ul><ul><li>Dust Bowl the #1 weather crisis of the 20th century </li></ul>
  30. 38. Historical Significance <ul><li>Integrated Circuit, 1959 </li></ul>
  31. 39. <ul><li>When he was inaugurated unemployment had increased by 7 million. </li></ul><ul><li>Poor sections (like Harlem) had 50% of the pop. unemployed </li></ul><ul><li>Instated the “New Deal” </li></ul><ul><li>Yea! Frankie! </li></ul>
  32. 40. <ul><li>Rapid money supply growth (end of banking panic, gold inflows) </li></ul><ul><li> rising price level </li></ul><ul><li> falling real interest rate </li></ul><ul><li> and increased spending. </li></ul>
  33. 42. Business Investment, Billions of Dollars; Annual Data Treasury bill yield minus inflation rate
  34. 44. <ul><li>Rapid money supply growth (end of banking panics, gold inflows)  rising price level, falling real interest rate and increased spending. </li></ul><ul><li>FDR and the New Deal? </li></ul><ul><ul><li>Restored confidence in banking system (FDIC) </li></ul></ul><ul><ul><li>Early years marked by regulation/reform, little new spending (alphabet programs, e.g., NRA, WPA, PWA, CCC, etc.) </li></ul></ul><ul><ul><li>Later years saw increased spending </li></ul></ul>
  35. 45. <ul><li>Rapid money supply growth (end of banking panics, gold inflows)  rising price level, falling real interest rate and increased spending. </li></ul><ul><li>FDR and the New Deal? </li></ul><ul><ul><li>Restored confidence in banking system (FDIC) </li></ul></ul><ul><ul><li>Early years marked by regulation/reform, little new spending (alphabet programs, e.g., NRA, WPA, PWA, CCC, etc.) </li></ul></ul><ul><ul><li>Later years saw increased spending </li></ul></ul><ul><li>World War II (when unemployment finally fell below 10%) </li></ul>
  36. 46. <ul><li>People everywhere were effected by the depression </li></ul><ul><li>It wasn’t till President Roosevelt took over and tried to put the economy back together that people even saw a glimmer of hope </li></ul>
  37. 47. <ul><li>The Depression was not a failure of capitalism or markets, but rather a failure of the Federal Reserve. </li></ul><ul><li>Monetary policy should maintain price stability – avoid deflation and inflation. </li></ul><ul><li>The Fed should respond to financial crises that increase the demand for money or threaten to disrupt the payments system. </li></ul>
  38. 48. The End

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