The Great Depression and the New Deal
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The Great Depression and the New Deal

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The Great Depression and the New Deal The Great Depression and the New Deal Presentation Transcript

  •  
  • The Ripple Effect
    • At first, crash only affected those heavily invested in stock market
    • It did not take long for a ripple effect to occur
  • How the Crash Spread
    • Risky loans hurt banks
      • Bank loans to high-risk businesses
      • Businesses unable to pay loans when stocks fell
    • Consumer borrowing
      • Consumers heavily borrowed to purchase goods
      • Consumers unable to pay when banks called in loans
    View slide
  • How the Crash Spread (cont.)
    • Bank runs
      • People feared banks would run out of money
      • Result  ran to banks to withdraw
      • Banks had to recall loans from borrowers
      • Banks could not get money fast enough
    • Bank failures
      • Unpaid loans + bank runs = bank failures
      • Thousands of banks closed
    View slide
  • How the Crash Spread (cont.)
    • Savings wiped out
      • Bank failures wiped out people’s savings
      • By 1933, money from over 9 million accounts had disappeared
    • Cuts in production
      • Businesses could no longer borrow $$ to produce goods
      • People had no $$ to buy goods anyway
  • How the Crash Spread (cont.)
    • Rise in unemployment
      • Because businesses had to cut production, they laid off workers
      • By 1932, over 12 million unemployed
    • Further cuts in production
      • Unemployment +
      • Shrinking economy =
      • Less output of goods
  • Impact on World
    • International banking, manufacturing and trade made the world internationally dependent upon the US
    • US demanded France & Britain pay wartime debts while keeping taxes on imports high
    • Created a situation in which the Allies had to rely on Germany’s reparations
  • Underlying Causes of the Great Depression
    • Stock market crash did not cause the GD
    • Main Causes:
      • Unstable Economy
      • Overspeculation
      • Government Policies
  • Unstable Economy
    • Uneven distribution of wealth
    • Increase in supply, decrease in demand
    • Farmers & workers did not profit from boom
    • This all added to make it increasingly difficult for the economy to quickly recover
  • Overspeculation
    • Too much stock bought on margin
    • Therefore, the stock market boom was based on borrowed money not real value
  • Government Policies
    • Federal Reserve cut interest rates to stimulate economy
    • 1929 – worried about overspeculation  limited US money supply (discourage lending)
    • Result = not enough $$ to help economy recover from crash
  • Poverty Spreads
    • GD had serious social effects
    • Not long until it hit all levels of society
    • Laid off (even white collar)
    • Savings disappeared (literally)
  • “ Hoovervilles”
    • Hardest hit = lower class
    • Many became homeless
    • Homeless built shanty towns out of cardboard or scrap materials
    • Why “Hoovervilles?”
  • Hooverville Children
    • Many blamed President Hoover for not helping
  • Hooverville
    • A woman describes a Hooverville in Oklahoma:
    • “ Here were all these people living in old, rusted-out car bodies,” she noted. “There were people living in shacks made of orange crates. One family with a whole lot of kids were living in a piano box.”
  • Drifters & Hobos
    • Many homeless, jobless people became drifters or hobos
    • Hitchhiked throughout US
    • Many hitched rides and slept in open boxcars or freight cars
  •  
  •  
  • Farm Distress
    • Low crop prices = low income for farmers
    • Many could not pay mortgage  lost farms
    • Things got worse in Midwest as the nation was hit with a terrible drought
  • The Dust Bowl
    • Name given to the central and southern Great Plains in the 1930s when the region sustained a period of drought and dust storms.
  •  
  • “ Black Blizzard”
  •  
  • Surviving the Great Depression
    • Americans pulled together
    • Support for one another & protests led to much needed change
  • Change in America
    • 1933 – 21 st Amendment
      • Prohibition is repealed
      • Seen as a failed social experiment
  • Changes in America (cont.)
    • Empire State Building
      • 102 stories – 1,250 ft. tall
      • Employed thousands
      • Costs $41 million (half of est. costs)
      • Bragging rights for US
  • End of an Era (1920s)
    • Al Capone
      • Arrested
    • Calvin Coolidge
      • Died
    • Charles Lindbergh
      • Son kidnapped &
      • murdered
    • Babe Ruth
      • Retired
  • The Election of 1932
    • Herbert Hoover (R)
      • “Brother Can You Spare a Dime?”
    • Franklin Delano Roosevelt (D)
      • “ Happy Days Are Here Again!”
      • Who would you vote for????
  • Hoover vs. FDR
  • Hoover’s Policies
    • Agricultural policies ultimately failed
    • Mid-term elections – Dems gained control of Congress
    • Tried to create jobs by spending more on:
      • Buildings
      • Roads
      • Parks
      • Dams (incl. Hoover Dam)
  • Hawley-Smoot Tariff (1930)
    • Highest import tax in history
    • Attempt to protect domestic industries from foreign imports
    • Backfired b/c Europe raised their tariffs, thus leading to slowdown in international trade
  • RFC (1932)
    • Reconstruction Financing Corporation
    • Gave gov’t credit to many industries, railroads and insurance companies
    • Lent money to banks
    • Hope = money at top would work its way down and help economy as a whole
    • How did people at the bottom view it?
  • RFC (cont.)
    • People saw the RFC as the gov’t helping banks & big business while ordinary people were starving.
    • As a result, Hoover’s popularity took a nose dive
  • The Roosevelts
    • Franklin Delano Roosevelt (D) & Eleanor Roosevelt
    • Distant cousins (yes, I know that’s nasty)
    • 6 children
  • Eleanor Roosevelt
    • Niece of Teddy
    • “ Ugly Duckling”
    • Educated in England & France
    • Intelligent, warm – well liked
    • very involved in several causes/ reform movements
  • The Election of 1932
    • Despite a wealthy upbringing, Roosevelt had extreme compassion for those less fortunate
    • Why do you think this appealed to America?
  • 1932 Election (cont.)
    • Symbol of optimism and hope
    • FDR won by landslide
    • Served most consecutive terms as president (4) until his death in 1945
  • 1933 Inaugural Address
    • “ The only thing we have to fear, is fear itself…”
  • The First 100 Days
    • Immediate relief = goal
    • March 9 - June 16, 1933  a record number of bills sent, all of which passed easily
    • Emergency Banking Bill
      • March 12 - FDR announced soundest banks would reopen.
      • March 13 - deposits at those banks exceeded withdrawals
  • First 100 Days (cont.)
    • "Capitalism was saved in eight days," said Raymond Moley
    • This was critical b/c it demonstrated to Congress that the New Deal was the real deal
  • First 100 Days (cont.)
    • Other bills included the creation of the:
      • Federal Emergency Relief Administration
      • Civilian Conservation Corps
      • Reconstruction Finance Corporation
      • Tennessee Valley Authority
  • First 100 Days (cont.)
    • Congress also:
      • gave the Federal Trade Commission broad new regulatory powers
      • provided mortgage relief to millions of farmers and homeowners.