1929 Ppt


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1929 Ppt

  1. 1. THE GREAT DEPRESSION 1929 Photos by photographer Dorothea Lange
  2. 2. THE NATION’S SICK ECONOMY <ul><li>Agriculture </li></ul><ul><li>Railroads </li></ul><ul><li>Textiles </li></ul><ul><li>Steel </li></ul><ul><li>Mining </li></ul><ul><li>Lumber </li></ul><ul><li>Automobiles </li></ul><ul><li>Housing </li></ul><ul><li>Consumer goods </li></ul>As the 1920s advanced, serious problems threatened the economy while Important industries struggled, including:
  3. 3. FARMERS STRUGGLE <ul><li>No industry suffered as much as agriculture </li></ul><ul><li>During World War I European demand for American crops soared </li></ul><ul><li>After the war demand plummeted </li></ul><ul><li>Farmers increased production sending prices further downward </li></ul>Photo by Dorothea Lange
  4. 4. CONSUMER SPENDING DOWN <ul><li>By the late 1920s, American consumers were buying less </li></ul><ul><li>Rising prices, stagnant wages and overbuying on credit were to blame </li></ul><ul><li>Most people did not have the money to buy the flood of goods factories produced </li></ul>
  5. 5. GAP BETWEEN RICH & POOR <ul><li>The gap between rich and poor widened </li></ul><ul><li>The wealthiest 1% saw their income rise 75% </li></ul><ul><li>The rest of the population saw an increase of only 9% </li></ul><ul><li>More than 70% of American families earned less than $2500 per year </li></ul>Photo by Dorothea Lange
  6. 6. HOOVER WINS 1928 ELECTION <ul><li>Republican Herbert Hoover ran against Democrat Alfred E. Smith in the 1928 election </li></ul><ul><li>Hoover emphasized years of prosperity under Republican administrations </li></ul><ul><li>Hoover won an overwhelming victory </li></ul>
  7. 7. THE STOCK MARKET <ul><li>By 1929, many Americans were invested in the Stock Market </li></ul><ul><li>The Stock Market had become the most visible symbol of a prosperous American economy </li></ul><ul><li>The Dow Jones Industrial Average was the barometer of the Stock Market’s worth </li></ul><ul><li>The Dow is a measure based on the price of 30 large firms </li></ul>
  8. 8. STOCK PRICES RISE THROUGH THE 1920s <ul><li>Through most of the 1920s, stock prices rose steadily </li></ul><ul><li>The Dow reached a high in 1929 of 381 points (300 points higher than 1924) </li></ul><ul><li>By 1929, 4 million Americans owned stocks </li></ul>New York Stock Exchange
  9. 9. SEEDS OF TROUBLE <ul><li>By the late 1920s, problems with the economy emerged </li></ul><ul><li>Speculation: Too many Americans were engaged in speculation – buying stocks & bonds hoping for a quick profit </li></ul><ul><li>Margin: Americans were buying “on margin” – paying a small percentage of a stock’s price as a down payment and borrowing the rest </li></ul>The Stock Market’s bubble was about to break
  10. 10. THE 1929 CRASH <ul><li>In September the Stock Market had some unusual up & down movements </li></ul><ul><li>On October 24, the market took a plunge . . .the worst was yet to come </li></ul><ul><li>On October 29, now known as Black Tuesday , the bottom fell out </li></ul><ul><li>16.4 million shares were sold that day – prices plummeted </li></ul><ul><li>People who had bought on margin (credit) were stuck with huge debts </li></ul>
  11. 11. By mid-November, investors had lost about $30 billion
  12. 13. THE GREAT DEPRESSION <ul><li>The Stock Market crash signaled the beginning of the Great Depression </li></ul><ul><li>The Great Depression is generally defined as the period from 1929 – 1940 in which the economy plummeted and unemployment skyrocketed </li></ul><ul><li>The crash alone did not cause the Great Depression, but it hastened its arrival </li></ul>
  13. 14. FINANCIAL COLLAPSE <ul><li>After the crash, many Americans panicked and withdrew their money from banks </li></ul><ul><li>Banks had invested in the Stock Market and lost money </li></ul><ul><li>In 1929- 600 banks fail </li></ul><ul><li>By 1933 – 11,000 of the 25,000 banks nationwide had collapsed </li></ul>Bank run 1929, Los Angeles
  14. 15. GNP DROPS, UNEMPLOYMENT SOARS <ul><li>Between 1928-1932, the U.S. Gross National Product (GNP) – the total output of a nation’s goods & services – fell nearly 50% from $104 billion to $59 billion </li></ul><ul><li>90,000 businesses went bankrupt </li></ul><ul><li>Unemployment leaped from 3% in 1929 to 25% in 1933 </li></ul>
  15. 16. HAWLEY-SMOOT TARIFF <ul><li>The U.S. was not the only country gripped by the Great Depression </li></ul><ul><li>Much of Europe suffered throughout the 1920s </li></ul><ul><li>In 1930, Congress passed the toughest tariff in U.S. history called the Hawley- Smoot Tariff </li></ul><ul><li>It was meant to protect U.S. industry yet had the opposite effect </li></ul><ul><li>Other countries enacted their own tariffs and soon world trade fell 40% </li></ul>
  16. 17. CAUSES OF THE GREAT DEPRESSION <ul><li>Tariffs & war debt policies </li></ul><ul><li>U.S. demand low , despite factories producing more </li></ul><ul><li>Farm sector crisis </li></ul><ul><li>Easy credit </li></ul><ul><li>Unequal distribution of income </li></ul>
  17. 18. HARDSHIPS DURING DEPRESSION <ul><li>The Great Depression brought hardship, homelessness, and hunger to millions </li></ul><ul><li>Across the country, people lost their jobs, and their homes </li></ul><ul><li>Some built makeshifts shacks out of scrap material </li></ul><ul><li>Before long whole shantytowns (sometimes called Hoovervilles in mock reference to the president) sprung up </li></ul>
  18. 19. SOUP KITCHENS <ul><li>One of the common features of urban areas during the era were soup kitchens and bread lines </li></ul><ul><li>Soup kitchens and bread lines offered free or low-cost food for people </li></ul>Unemployed men wait in line for food – this particular soup kitchen was sponsored by Al Capone
  19. 20. CONDITIONS FOR MINORITIES <ul><li>Conditions for African Americans and Latinos were especially difficult </li></ul><ul><li>Unemployment was the highest among minorities and their pay was the lowest </li></ul><ul><li>Increased violence </li></ul><ul><li>Many Mexicans were “encouraged” to return to their homeland </li></ul>As conditions deteriorated, violence against blacks increased
  20. 21. RURAL LIFE DURING THE DEPRESSION <ul><li>While the Depression was difficult for everyone, farmers did have one advantage; they could grow food for their families </li></ul><ul><li>Thousands of farmers, however, lost their land </li></ul><ul><li>Many turned to tenant farming and barely scraped out a living </li></ul>Between 1929-1932 almost ½ million farmers lost their land
  21. 22. THE DUST BOWL <ul><li>A severe drought gripped the Great Plains in the early 1930s </li></ul><ul><li>Wind scattered the topsoil, exposing sand and grit </li></ul><ul><li>The resulting dust traveled hundreds of miles </li></ul><ul><li>One storm in 1934 picked up millions of tons of dust from the Plains an carried it to the East Coast </li></ul>Kansas Farmer, 1933
  22. 23. Dust storm approaching Stratford, Texas - 1934
  23. 24. Storm approaching Elkhart, Kansas in 1937
  24. 25. Dust buried cars and wagons in South Dakota in 1936
  25. 26. HARDEST HIT REGIONS <ul><li>Kansas, Oklahoma, Texas, New Mexico, and Colorado were the hardest hit regions during the Dust Bowl </li></ul><ul><li>Many farmers migrated to California and other Pacific Coast states </li></ul>Boy covers his mouth to avoid dust, 1935
  26. 28. HOBOES TRAVEL AMERICA <ul><li>The 1930s created the term “hoboes” to describe poor drifters </li></ul><ul><li>300,000 transients – or hoboes – hitched rides around the country on trains and slept under bridges (thousands were teenagers) </li></ul><ul><li>Injuries and death was common on railroad property; over 50,000 people were hurt or killed </li></ul>
  27. 29. EFFECTS OF DEPRESSION <ul><li>Suicide rate rose more than 30% between 1928-1932 </li></ul><ul><li>Alcoholism rose sharply in urban areas </li></ul><ul><li>Three times as many people were admitted to state mental hospitals as in normal times </li></ul><ul><li>Many people showed great kindness to strangers </li></ul><ul><li>Additionally, many people developed habits of savings & thriftiness </li></ul>
  28. 30. HOOVER STRUGGLES WITH THE DEPRESSION <ul><li>After the stock market crash, President Hoover tried to reassure Americans </li></ul><ul><li>He said, “Any lack of confidence in the economic future . . . Is foolish” </li></ul><ul><li>He recommended business as usual </li></ul>Herbert Hoover
  29. 31. HOOVER’S PHILOSOPHY <ul><li>Hoover was not quick to react to the depression </li></ul><ul><li>He believed in “rugged individualism” – the idea that people succeed through their own efforts </li></ul><ul><li>People should take care of themselves, not depend on governmental hand-outs </li></ul><ul><li>He said people should “pull themselves up by their bootstraps” </li></ul>Hoover believed it was the individuals job to take care of themselves, not the governments
  30. 32. HOOVER TAKES ACTION: TOO LITTLE TOO LATE <ul><li>Hoover gradually softened his position on government intervention in the economy </li></ul><ul><li>He created the Federal Farm Board to help farmers </li></ul><ul><li>He also created the National Credit Organization that helped smaller banks </li></ul><ul><li>His Federal Home Loan Bank Act and Reconstruction Finance Corp were two measures enacted to protect people’s homes and businesses </li></ul>Hoover’s flurry of activity came too late to save the economy or his job
  31. 33. FRANKLIN D. ROOSEVELT- 1932 Roosevelt remained vague on the campaign trail, promising only that under his presidency government would act decisively to end the Depression.
  32. 34. NEW DEAL <ul><li>New Deal-1(1933-35) </li></ul><ul><ul><li>The Agricultural Adjustment Act (AAA), passed in 1933 </li></ul></ul><ul><ul><li>government sought to stimulate increased farm prices by paying farmers to produce less. </li></ul></ul><ul><ul><li>It did little for smaller farmers and led to the eviction and homelessness of tenants and sharecroppers whose landlords hardly needed their services under a system that paid them to grow less </li></ul></ul>
  33. 35. <ul><ul><ul><li>Aimed at restoring the economy from the bottom up </li></ul></ul></ul><ul><ul><ul><li>The Works Progress Administration was a huge federal jobs program that sought to hire unemployed breadwinners for the purpose strengthening their family's well-being as well as boosting consumer demand. </li></ul></ul></ul><ul><ul><ul><li>National Labour Relations Act of 1935 </li></ul></ul></ul><ul><ul><li>New Deal (1935-40s) </li></ul></ul>
  34. 36. WORLDWIDE EFFECTS <ul><li>Australia </li></ul><ul><ul><li>Australia's extreme dependence on agricultural and industrial exports meant it was one of the hardest-hit countries in the Western world </li></ul></ul><ul><ul><li>Falling export demand and commodity prices placed massive downward pressures on wages </li></ul></ul><ul><ul><li>Further, unemployment reached a record high of almost 32% in 1932 </li></ul></ul><ul><ul><li>After 1932, an increase in wool and meat prices led to a gradual recovery </li></ul></ul>
  35. 37. WORLDWIDE EFFECTS(CONT…) <ul><li>Canada </li></ul><ul><ul><li>Harshly impacted by both the global economic downturn and the Dust Bowl, </li></ul></ul><ul><ul><li>Canadian industrial production had fallen to only 58% of the 1929 level by 1932, the second lowest level in the world after the United States </li></ul></ul><ul><ul><li>Total national income fell to 55% of the 1929 level, again worse than any nation apart from the United States. </li></ul></ul>
  36. 38. East Asia <ul><ul><li>The Great Depression in East Asia was of minor impact </li></ul></ul><ul><li>The Japanese economy shrank by 8% 1929–31 </li></ul><ul><ul><li>The invasion and subjugation of Manchuria into a Japanese puppet-state in September 1931, thus providing Japan with raw materials and energy, the Japanese economy was able to recover by 1932 and continued to grow. </li></ul></ul>
  37. 39. France <ul><li>The Depression began to affect France from about 1931 </li></ul><ul><li>France's relatively high degree of self-sufficiency meant the damage was considerably less than in nations like Germany </li></ul><ul><li>Hardship and unemployment were high enough to lead to rioting and the rise of the socialist Popular Front. </li></ul>
  38. 40. Germany <ul><li>Germany's Weimar Republic was hit hard by the depression, as American loans to help rebuild the German economy stopped. </li></ul><ul><li>Unemployment soared, especially in larger cities, and the political system veered toward extremism. </li></ul><ul><li>Hitler's Nazi Party came to power in January 1933. In 1934 the economy was still not balanced enough for Germany to work on its own. </li></ul>
  39. 41. Latin America <ul><li>Because of high levels of United States investment in Latin American economies, they were severely damaged by the Depression </li></ul><ul><li>Chile, Bolivia and Peru were particularly badly affected </li></ul><ul><li>One result of the Depression in this area was the rise of fascist movements. </li></ul>
  40. 42. Netherlands <ul><li>From roughly 1931 until 1937, the Netherlands suffered a deep and exceptionally long depression. </li></ul><ul><li>This depression was partly caused by the after-effects of the Stock Market Crash of 1929 in the United States, and partly by internal factors in the Netherlands. </li></ul><ul><li>Government policy, especially the very late dropping of the Gold Standard, played a role in prolonging the depression. </li></ul><ul><li>The Great Depression in the Netherlands led to some political instability and riots, and can be linked to the rise of the Dutch national-socialist party NSB. </li></ul>
  41. 43. <ul><li>Outbreak of World War II causes </li></ul><ul><ul><li>US factories flooded with orders form armaments and munitions </li></ul></ul><ul><ul><li>Unemployment decreases and production increase </li></ul></ul><ul><ul><li>Depression ends completely by the time the US enters the war in 1941 </li></ul></ul>End to Depression
  42. 44. What did we learn from the 1929 Crash? <ul><li>Market can be very unpredictable </li></ul><ul><li>Investors must not get caught up in market bubble illusions </li></ul><ul><li>Market forces alone may be unable to achieve recovery from economic slump </li></ul><ul><li>Changes were needed in US economic structure </li></ul>
  43. 45. RECESSION 2008 <ul><li>The Lehman Bankruptcy </li></ul><ul><li>Effect on Indian economy </li></ul><ul><li>US debt rescue plan </li></ul>
  44. 47. Does History repeat …. ? ASHISH KUMAR 1 ST SEMESTER