The Economy Hits Bottom Section 10.1. Review What was Henry Ford’s production innovation/...
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The Economy Hits Bottom
Section 10.1
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Review• What was Henry Ford’s
production innovation/ Frederick Taylor’s idea?
• What was its impact of other industries?
• How would you describe the economic policies of the 1920s presidents?
• Why is the decade of the 1920s called the Roaring 20s?
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Fast forward to 1933
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What happened to America?
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ObjectivesAt the end of this lesson you should be able
to:• Define the Great Crash
of 1929 and list at least three (3) causes
• Define the Great Depression and list (4) causes
• List and describe Hoover’s response to the Depression
• Define the Bonus March and its impact on the election of 1932
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Stock Market Crash Presentation
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What was the Great Crash?• Black Tuesday-
October 29, 1929
• Stocks lost 13% of their value
• Considered beginning of the Great Depression
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The Crash
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Why did the Crash Occur?• Overproduction
– Companies who wanted to expand sold stocks (shares of ownership) at the NY Stock Exchange
– Expanded factories/farmlands overproduced goods
• Speculation- investing savings into high yield/high risk stocks in hope for short term profit
– Buying on Margin-low interest loans that allowed speculators to buy stocks with little money (5%)
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• Panic– Brokers ‘called in their loans’
• sold stocks of speculators who could not pay up
– further saturated the market with stocks leading to further decline
– Investors panicked and tried to sell
– Run on banks caused hundred to go under
Why did the Crash Occur?
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How did people react to the Crash?
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What caused the Great Depression?• Great Depression
– period of severely reduced economic activity from October of 1929 to 1939
• Overproduction – farm and manufacturing products
• Uneven wealth distribution– Workers not paid enough
• Tight credit policy – FED raised interest rate
• Decline in foreign trade– US banks lacked $ to loan to
Europeans– They therefore bought less
American goods– High Tariffs led to under
consumption of goods
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What caused the Great Depression?
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Let’s Review
• Name for the 10 year period of severe economic decline:
• Pros and cons of Ford’s assembly line and Frederick Taylor’s scientific management:
• What is buying on margin?• What is Black Tuesday?• Explain the causes of the Depression
– Overproduction:– Credit crunch:– Uneven distribution of wealth:– High tariff:
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How did Hoover respond?• Volunteerism-
– urged businesses/labor leaders to voluntarily freeze wages
– Suggested that they form associations to eliminate harmful competition
• Agricultural Marketing Act– Urged farmers to form associations and
sell crops together– Farm Board not allowed to lend $ to
individual farmers who needed immediate cash
• Hawley Smoot Tariff (1930)– Raised taxes on imports to record
levels– Foreign nations retaliated with their
own tariffs• “We have now passed the worst and shall
rapidly recover.” Hoover
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What was the result of Hoover’s response? • Depression got worse• 32 thousand businesses failed
in 1932• Average family income
– 2, 300 in 1929– $1, 600 in 1935
• Unemployment – 25% by 1932
• Bread/soup lines commonplace
• Relief/charity efforts incapable of meeting demand– Toledo, Ohio = $.02 per meal per
day
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What was the Reconstruction Finance Corporation?
• Reconstruction Finance Corporation– Largest Hoover gov program of
economic aid– loaned $2 billion to faltering
banks, RR, insurance companies
• Hoped to generate confidence and ‘trickle down’ to other businesses– “Millionaires’ Dole”
• Authorized to loan $300 million to state govern for unemployment relief– But only if they were bankrupt
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Bonus Army Presentation
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What was the Bonus Army?• WWI vets promised a bonus payable in
1945• Bonus Army
– group of unemployed veterans descended to Washington to request the bonus 13 years early
• Highly disciplined • 17 thousand including wives, children• Bill defeated in Senate• Walter W. Waters
– “Let us show them that we can take it on the chin.”
• Vets sang America• About 2 thousand remained• Douglas MacArthur and Dwight D.
Eisenhower dispersed the remaining vets– 100 injured, baby died– Doomed Hoover in election
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Describe the Election of 1932.• FDR- “Well
Felix, this will elect me.”
• Hoover viewed as cold, unfeeling, bully
• Jeered, harassed during campaign
• FDR won landside victory
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Conclusion
• What is the Great Crash/causes?
• List 3 things Hoover did to alleviate the Depression?
• What is the Bonus March and how did it affect Hoover?
If you were the president what would you have done to resolve this economic crisis?