Causes of the Great Depression Ana Bhandari
The Panic of 1873 Jay Cooke was a Wall Street Banker. Post-War Railroad construction. Cook raised money through bond sales and individual banks also invested in railroads. (The Northern Pacific Railroad and Union Pacific Line) When Cooke was unable to find funds on September 13th,1873 his firm went bankrupt. This caused a ripple effect and the NY Stock exchange had to be suspended of trading for two weeks.
The Effects of the Panic of 1873(1873-1879) The US economy had some growth from 1840 to 1860. Several people lost their jobs. People like Andrew Carnegie, John Rockefeller, and Cyrus McCormick took advantage of the the panic and grew in influence. (monopolize) It exposed the extent of income inequality. This lasted from October 1873 to March 1979.
The Panic of 1893 The Collapse of the Philadelphia and Reading Railroads caused panic. As people in the US became concerned they pulled their money out of the stock market. Europe also pulled money they had invested. Railroads were over built, and business had borrowed money for expansion. Sherman Silver Purchase Act(stop deflation) Mining Silver caused the value of silver to decrease. People became nervous that the value of their bonds backed by silver had no value.
Effects of the Panic of 1893 The US government borrowed $65 million in gold from JP Morgan who was a Wall-Street Banker to maintain the gold standard. Showed the effects of not having a stable economic foundation and how quickly the economy can go down hill.
The US Economy Leading to the 1900 s The South remained mostly agricultural. The North and midwestern populations grew due to immigration. The use of railroad increased. Due to the increase of growth in the railroad system the iron and steel benefited. Year Steel Production From 1867 to 1873 19,643 long tons to 198,796 1881 1,588,314 long tons
World War 1 The assassination of the Austrian Archduke Franz Ferdinand on June 28 1914 by Gavrilo Princip. Sarajevo, Bosnia The initial assassination attempt fails. Gavrilo Princip was in a cafe and sees that the Archduke has taken a different route, he walks over shoots the Archduke and his wife Sophie.
Why was this assassination significant? Archduke Franz Ferdinand is the heir to the Austro Hungarian Empire. He is the nephew of Franz Joseph who was the ruler of Austria Hungary. July 28th Austria Declares war on Serbia. Because they believed that Serbia did not do justice in punishing the people who killed Franz Ferdinand. Because the Russians felt they had close ties with the Serbians the russians began to mobilize gather their troops) August First Germany declares war on Russia August third Germany declares war of France.
August first. Germany invades Belgium to get to France. Giving the british a valid reason to go to war with Germany. Because of the empires the world is at war with each other.
The US Gets involved: President Woodrow Wilson has just won reelection of the basis of keeping the US out of war. April of 1917 due to the unrestricted submarine warfare. The US goes to war with Germany. The sinking of the Lusitania. The Zimmerman Telegram. Arthur Zimmermann german Foreign Secretary, sends an encoded telegram to the Mexicans. This made the american people angry because they believed that Germany will sink more ships.
The Economic Impact of WW1 Before the war the US was in a recession. When the war began (even before the US became involved) there was an increase in economic activity from 1914 to 1918. This was because the British bought goods used for the war from the US. With Britain weakened after the war, New York emerged "as London's equal if not her superior in the contest to be the world's leading financial center."
THE US BECOMES MORE POWERFUL By the early 1900 s the US produced more steel than the British. Natural Resources Reserves for Coal, iron ore, copper, petroleum, timber. Land for agriculture.
Industrialists: Henry Ford: His invention of the assembly line. In 1902 he founded the Ford Motor Company. Rockefeller: Standard Oil Company Andrew Mellon: He was born into wealth because his father success in industrial development in Pittsburg.
The Roaring Twenties: Economics The US economy began to flourish. (increased by 40%). The average income for an individual increase.($6,460 to $8,016) The stock market s value increased 20% each year.
The Roaring Twenties: Culture The 19th amendment was ratified in August 18th, 1920. More women worked in white-collar jobs allowing them to buy more items. Woman became consumers. Flappers: Fashionable young woman. Bobbed their hair, and wore more revealing clothing.
The Roaring Twenties: Culture Refrigerators, washing machines, as well as vacuum cleaners became more available to people. Radios more than 50% of families in the roaring twenties had a radio. Airplanes Rise of consumption within the urban population. More people lived in cities
The Roaring Twenties: Prohibition The 18th amendment was ratified in 1919 and by 1920 the Federal Volstead Act closed very bar and place people went drinking in the US. Liquor Trade Simply went underground. This began bootlegging Giving rise to individuals such as Al Capone
The Roaring Twenties: Social Tension As part of the Great Migration severa African Americans moved to Northern Cities. Within them brought Jazz to cities as well as the Harlem Renaissance. Harlem Renaissance: Harlem was a neighborhood in NYC which had a large African American population and became a destination as part of the Great Migration. Poets, writers, artists and philosophers and Jazz was a large component. Jazz became more popular to white audiences.
Significant People in the Harlem Renaissance WEB DuBois: He was the first African American to graduate with a PHD from Harvard. He was a spokesperson for African American Rights Langston Hughes: Introduces Jazz Poetry. (Zute Suits) African American clothing changed. It s Impact in America: African American writers and musicians began to gain respect in a more global scope. Change perception of African Americans.
Great Depression For Farmers: During WW1 Farmers made a lot of money by selling food to Europe. After the war Europe grew their own food and no longer need the US. Leading to overproduction of food making it difficult for farmers to make money. Deflation The depression came early for farmers. (After WW1)
Banks/The Stock Market. Only ⅓ of the nations 24,000 banks belonged to the Federal Reserve. Banks were not ensured. (money was not safe) The Idea of Credit was invented. Buy now, pay later. Stock Fever People were borrowing money to invest into the Sock Market. When people were buying stocks they would get loans from the bank. The New York Stock Exchange increased from 27 billion dollars to 87 billion dollars.
Calvin Coolidge The chief business of the American People is business After the death of Warren G. Harding. Coolidge becomes president of the US. Laissez-Faire
OPCVL Origin: This speech was delivered by President Calvin Coolidge on August 11th,1924. On White House Grounds on Washington DC.
OPCVL Purpose: The purpose of this speech was for President Calvin Coolidge to express his belief that freedom is founded upon and free as successful economy. I want the people of America to be able to work less for the government -- and more for themselves.i want them to have the rewards of their own industry. This is the chief meaning of freedom. Value: This shows how both Coolidge and his administration believed that a Laissez-Faire economy would be beneficial to the US. It also reveals his ideologies in regards to cutting federal spending. If the government should add 100 million dollars of expense, it would represent four days more work of these wage earners. These are some of the reasons why I want to cut down public expense. Limitation: This Speech was delivered when the economy was doing well, this only shows the administration's ideology before the Great Depression and is justified at the time.
Andrew Mellon He was Coolidge s Secretary of Treasury who was a multimillionaire. He was a believer in reducing taxes for the rich. He believed that this would create jobs. He wanted to balance the budget by cutting federal spending. The Mellon Plan was to reduce taxes on the wealthy.
Effects of the Mellon Tax Cuts (The Mellon Plan 1924) Allowed the economy to grow in the roaring twenties. 1922-1929 the gross national product grew in an average annual rate of 4.7%. 1922-1929 unemployment decreased 6.7% to 3.2%
Herbert Hoover The Great Depression took place only months after he was inaugurated. He was believed to have not acknowledged that the Great Depression was in fact taking place.
Bibliography (MLA) McElvaine, Robert S. The Great Depression: America, 1929-1941. Three rivers Press, 2009. Veronique de Rugy March 4, 2003. 1920s Income Tax Cuts Sparked Economic Growth and Raised Federal Revenues. Cato Institute, 4 Mar. 2003, www.cato.org/publications/commentary/1920s-income-tax-cuts-sparked-economic-growth-raised-federal-revenues. U.S. Department of the Treasury. Andrew W. Mellon (1921-1932), www.treasury.gov/about/history/pages/awmellon.aspx. Log in. Britannica School, school.eb.com/levels/high/article/great-depression/37849. The Economics of World War I, www.nber.org/digest/jan05/w10580.html. Calvin Coolidge: Impact and Legacy. Miller Center, 31 July 2017, millercenter.org/president/coolidge/impact-and-legacy. A Spotlight on a Primary Source by Herbert Hoover. The Gilder Lehrman Institute of American History. Herbert Hoover on the Great Depression and New Deal, 1931 1933 Gilder Lehrman Institute of American History, www.gilderlehrman.org/content/herbert-hoover-great-depression-and-new-deal-1931%e2%80%931933.
Sites used: https://www.cato.org/publications/commentary/1920s-income-tax-cuts-spark ed-economic-growth-raised-federal-revenues https://www.treasury.gov/about/history/pages/awmellon.aspx http://school.eb.com/levels/high/article/great-depression/37849 http://www.nber.org/digest/jan05/w10580.html https://millercenter.org/president/coolidge/impact-and-legacy https://www.gilderlehrman.org/content/herbert-hoover-great-depression-and -new-deal-1931%e2%80%931933
Most Americans in positions of authority, whether in business or government, were devout believers in old-time economics when the Depression began. Their faith was so strong that it would not have been surprising to hear them joining in a hymn that went something like: Give me that old-time economics, Give me that old-time economics, It was good enough for Bill McKinley, And that s good enough for me.