2.1 Prosperity and crisis in the United States

• History
• Middelbare school
• havo, vwo
• Leerjaar 3

2.4: The Great Depression

AGE 9. The Time of World Wars

people in this lesson

Herbert Hoover

president (republican)

1929 -1933

Franklin D Roosevelt

president (democrat)

1933 - 1945

Word Duty

stock: share; stocks can be bought or sold on a stock market

Wall Street Crash of 1929: stock market crash that started the Great Depression

Great Depression: great 10-year economic crisis that affected all Western industrialised countries and started in 1929 in the USA

Hooverville: shanty town in the USA built by homeless people during the Great Depression

New Deal: series of programmes launched by President Roosevelt to solve the problems caused by the Great Depression

Dawes Plan: plan of the Allies after WW I to solve Germany’s financial problems by giving billions of US dollars as a loan to Germany.

KEY WORDS

Important dates in this lesson:

1924: Dawes Plan

1929: Black Thursday, start of Great depression

1933: Roosevelt starts New Deal

What you will learn in 

this lesson

• What caused the Great Depression in the USA
• Which two methods were implemented to recover from the Great Depression 
• What the New Deal was
• How the economic situation in the U.S. affected the economical and political situation in Germany

Introduction

During the 1920s, the economy of the United States of America was booming. Industry grew and skyscrapers were built. One could buy cars and other luxury goods on credit, which means that you pay for something later. Getting a loan was easy, but this led to problems when in 1929 an economic crisis struck the USA.

the charleston is a dance that developed in the USA after WW1

https:

Black Tuesday

Wall Street in New York is known as the financial heart of the Western world. Here you will find some of the biggest stock exchanges in the world. A stock means that you have bought a part of a company. Such a fraction of a company can be bought or sold on a stock exchange. When this company makes profit, the value of its stocks rise. During the Roaring Twenties, the United States economy grew, bringing new prosperity for many Americans. Some people used their savings to buy stocks, hoping to get rich quickly, even if they had to use borrowed money. Stocks were in high demand, so prices went up for a long time. All went well until 24th October 1929: the Wall Street Crash of 1929, or Black Tuesday, brought an end to this prosperity. The value of many stocks went down, prompting owners to sell their stocks as soon as possible. 

Consequence of the ‘Black Friday’: cars are being sold for cash. Dated December 1929.

summarize

1. always write down the title of the paragraph.
   
2. write down what Wall Street's stock market is.
   
3. write down what the Roaring Twenties were
   
4. write what happened on Black Tuesday
   

1. Put the events of the stock market crash in the correct order

When stock prices got irrationally high, people started to sell.

Consumption decreased, which resulted in loss of jobs.

Many people and companies bought stocks

People who were jobless bought less goods, which caused consumption to decrease

Stock prices lowered; people and companies lost a lot of money and went bankrupt.

Because of all these rapid sales, the financial market collapsed. People lost their trust in economic growth: nobody wanted to buy stocks, with the result that stocks lost their value. Those who had invested their money in stocks lost everything. In the weeks that followed, companies and industries went bankrupt; their investments had become worthless and fewer people bought their products. Employees were fired and the jobless Americans could no longer pay back the loans that they had taken out to fund their purchasing on credit. This caused the banks to go bankrupt. Setbacks in agriculture made the situation even worse and an economic crisis was the result.

summarize

1. Explain how the collapse of the stock market caused a depression cycle.
   

Poverty and unemployment

The economic crisis could not be solved quickly and easily. It lasted from 1929 until the late 1930s. This period is called the Great Depression, because it was the longest, deepest financial crisis of the 20th century that eventually affected the whole world. Millions of people lost their jobs and fell into poverty. Suddenly they did not have enough money to pay their mortgage or rent, so they had to sell their houses and live on the streets. Many could not even afford to eat and were depended on charity organisations for free food. Those people who lost their houses had to live in shantytowns. Even in the famous Central Park in New York, the homeless built a slum made up of hundreds of small wooden huts. These shantytowns were called Hoovervilles, named after president Hoover. Herbert Hoover was the Republican president of the USA between 1929 and 1933. He believed that the government should not intervene in economic affairs and that the economy would recover on its self. But during his presidency, the USA did not escape the grasp of poverty. Would it ever recover from the Great Depression?

An impoverished American family living in a slum, 1936.

summarize

1. write down the title of this paragraph
   
2. write down how long the Great Depression lasted
   
3. write down some effects the Depression had on American people
   
4. write down how Hoover wanted to solve the crisis
   

2. Which sentence from "Poverty and unemployment"
fits this photo best? Write it down as a quote.

3. President Hoover did little to relieve the peoples’ needs. What motive did he have for this policy?

The Road to recovery 

In 1932, president Hoover was not re-elected. He lost to the Democratic candidate Franklin Delano Roosevelt. FDR had promised to battle the crisis with a strategy he called the New Deal. It was the opposite of Hoover’s vision, because Roosevelt involved the government in stopping the crisis. He gave unemployed people money from the state, called the dole. With this, he wanted to help the poor and give a boost to the economy. He ordered large building projects in which the unemployed constructed roads, parks, dams and bridges. At the same time, the working conditions of labourers were improved. Roosevelt also gave subsidies to farmers and helped the banks, which were inspected more frequently. Spending government money seems strange in a time of crisis, but it restored trust, reduced unemployment and gave people money to spend; this all helped the economy to run more fluently again, but the great prosperity of the Roaring Twenties would not return until after World War II.

Cartoon that predicts the deficit of the New Deal. Franklin Delano Roosevelt with a pump that does not work. Dated 1935.

Presidential nicknames

U.S. Presidents sometimes become known by their initials when they are in office and afterwards too: Franklin Delano Roosevelt is known as FDR, John Fitzgerald Kennedy as JFK and Lyndon Baines Johnson as LBJ. President Dwight David Eisenhower was nicknamed Ike.

summarize

1. write down the title of this paragraph
   
2. write down what the New Deal was. Include some examples and don't forget to mention the president's name
   
3. write down what the effect of the ND was.
   

4a. Explain why President Hoover was not re-elected,
using the numbers in the box.

4b. Statement: The New Deal was a success.
Use the numbers in the box to think of arguments
for and against the statement.

5. Roosevelt ordered large building projects. Think of two ways in which the building of a bridge can boost the economy.

6. In 1939, World War II broke out. It meant an immediate stimulus for the economy. Discuss this with a classmate and think of at least two ways in which the outbreak of war could stimulate the American economy.

7. Which statement is true?
Statement I: Democrat President Hoover believed the economy would recover without any intervention of the government.
Statement II: Republican President Roosevelt involved the government in stopping the crisis.

1. Both statements are true.
2. Both statements are false.
3. Only statement I is true.
4. Only statement II is true.

8. Compare Hoover and Roosevelt.
Who was a more left-wing and who was a more right-wing politician when it came to solving the economic crisis? Explain your answer.

Crisis in Germany

The global impact of the Great Depression was huge. It spread all over the world because Americans did not buy foreign goods anymore and banks wanted their loans back. Europe was hit hard, especially Germany.

After World War I, the Germans not only had difficulties in governing their country, but also in restoring the economy. They were burdened by the punishments of the Treaty of Versailles. When in 1923 Germany was unable to pay for reparations, the French and Belgians invaded the Ruhr area, planning to get the money themselves. The German workers went on strike and their government paid them with extra printed money. This led to hyperinflation, which means that the German Mark lost its value. The USA helped Germany and ordered the French and Belgians to withdraw their armies to prevent an escalation of violence. 

1923 German children use bundles of banknotes as building blocks.

summarize

1. write down the title of this paragraph
   
2. write down 2 reasons why the depression spread across the world
   
3. write down why Germany's war reparations led to a hyper inflation
   

9. Look at both sources.
Explain the causal link between the two
(= one event helped to cause the other)

The Allies also helped with the Dawes Plan to solve the problem of Germany’s war reparations. The Dawes Plan led to economic growth in Germany, but its economy was not completely restored by 1929. During the Great Depression, the Americans withdrew their money, which brought German banks and companies to bankruptcy. Just as in the USA, millions of Germans lost their jobs, money and houses. The Great Depression increased hatred felt by German people for the Treaty of Versailles. The growing discontent about the Weimar government and a widespread feeling of insecurity caused the rise of two political parties that revolted against the democratic Weimar Republic: the communists and the Nazis.

Title: Berlin, Amerikanisches Gold für die Reichsbank, Dezember 1924

summarize

write down the title of this paragraph

write down what the Dawes Plan was (you can use the schematic)

write down what the effect of the Dawes Plan was on the German economy.

write down what the effect of the Great Depression was on the German economy and politics

10a. Use both sources to explain which goal the
U.S. had with the Dawes Plan,
besides helping Germany.

10b. Look at the schematic of the Dawes Plan.
What arrow could you add to make it complete?

1. U.S. to Allies
2. Allies to Germany
3. Germany to Allies
4. Germany to U.S.

Finally, here you can write down a question about
something from this lesson that you don't fully understand yet.

congratulations

congratulations