2. The Great Depression and the New Deal
• Today we will:
• Roots of the Great Depression
• Life during the Great Depression
• FDR and the New Deal
• Global Depression and European Unrest
• Next time we will:
• Move into Interwar political developments in Europe
• Begin the overview of WWII
3. The Great Depression
• Video:
https://www.youtube.com/watch?v=GCQfMWAikyU&list=PL8dPuuaLjXtM
wmepBjTSG593eG7ObzO7s&index=34
• Recap - The American economy was essentially a house of cards.
• Farmers -> lose subsidies + decreased sales -> Can’t Pay their loans -> displaced
farmers
• Banks -> loans to buy stocks on “margin” + any break in prosperity -> people can’t
pay their loans back -> banks don’t have income coming in -> banks sell the stocks to
recoup some of their losses -> Stock Market collapses
• Buying stocks on “margin” meant that an individual could buy stock using a combination of
cash and credit, banks would then hold the stock as collateral for the credit portion
• This system was only viable as long as stocks continued to increase in value, allowing the
individual to pay off the loan to the bank for the remainder of the stock’s purchase cost
• Stock Market collapse -> panic about the economy -> people (in massive numbers)
try to withdraw their money -> banks (shocker) don’t actually have enough money
on hand to pay out -> banks collapse -> more panic, cycle repeats
4. The Great Depression
• Recap - The American economy was essentially a house of cards.
• Industry had already begun to slow before 1929 -> businesses had started to
cut back labor costs (fire people) -> when banks begin to collapse, businesses
can no longer take out short-term loans to pay their workforce -> massive
layoffs occur -> former employees now have no income to buy things ->
production decreases even more -> cycle repeats
• Businesses often took out short term loans to make payroll, then paid those loans back
when profits were made, once banks started collapsing/stopped lending, this system no
longer worked
• Massive interwar recession in Europe decreased foreign markets for American
goods -> tariffs put in place to help American businesses -> decrease foreign
markets even more -> layoffs in US meant little to no domestic markets -> see
above cycle
5. Unemployment
Unemployment peaked at 25% in
1933, just as Hoover was leaving office
and FDR became president.
It would decrease under the New Deal
programs, only going up after some of
the programs were shut down by the
Supreme Court, or were allowed to
lapse by the FDR administration (1937-
1938).
Ultimately, what decreased it the most
was the return to a wartime economy
in the early 1940s.
6. Life in the Great Depression Men at a gas station in the South
9. The effects of the Dust Bowl
From Dorothea Lange’s series,
Migrant Mother, 1936
10. Hoovervilles
Homeless camps and shantytowns that arise because
of widespread homelessness in the early 1930s were
called “Hoovervilles,” after Pres. Hoover, who was
seen as ineffective at helping Americans Hoovervilles often appeared on the edges of
cities, or in public spaces. Famously, one was even
in Central Park in NYC.
11. The Dust Bowl
• Massive drought during the 1930s and early
1940s
• Made the bad situation for farmers even worse
• Colorado, New Mexico, Nebraska, Kansas,
Oklahoma, Texas, and Arkansas are hit the
hardest
• 800,000 people pack up an head west, thinking there
would be more opportunity
• Grapes of Wrath is a novel about this migration (John
Steinbeck)
• What was a “Black Blizzard?”
12. FDR and the New Deal
• Video:
https://www.youtube.com/watch?v=6bMq9Ek6jnA&list=PL8dPuuaLjX
tMwmepBjTSG593eG7ObzO7s&index=35
Side note: Why do we
often see FDR sitting,
or behind a podium?
13. New Deal Reforms
Posters from the New Deal
programs, and a list of New
Deal agencies created
(“alphabet soup”).
14. Remember this slide from earlier? It gets worse…
• Recap - The American economy was essentially a house of cards.
• Farmers -> lose subsidies + decreased sales -> Can’t Pay their loans -> displaced
farmers
• Banks -> loans to buy stocks on “margin” + any break in prosperity -> people can’t
pay their loans back -> banks don’t have income coming in -> banks sell the stocks to
recoup some of their losses -> Stock Market collapses
• Stock Market collapse -> panic about the economy -> people (in massive numbers)
try to withdraw their money -> banks (shocker) don’t actually have enough money
on hand to pay out -> banks collapse -> more panic, cycle repeats
• Industry had already begun to slow before 1929 -> businesses had started to cut
back labor costs (fire people) -> when banks begin to collapse, businesses can no
longer take out short-term loans to pay their workforce -> massive layoffs occur ->
former employees now have no income to buy things -> production decreases even
more -> cycle repeats
• Massive interwar recession in Europe decreased foreign markets for American goods
-> tariffs put in place to help American businesses -> decrease foreign markets even
more -> layoffs in US meant little to no domestic markets -> see above cycle
See next slide
15. The European Depression
• In addition to all of the collapsing systems in the US:
• Germany (and others) owed massive amounts of reparations to Britain, France, and
other European countries
• With their own economy slow to bounce back after the war, they have to take out
loans to pay reparations (from US banks)
• Britain and France had taken large amounts of loans from US banks during the war,
and relied on reparation payments to pay them back
• So, if you are keeping track…we (the US) are loaning money to Germany, so they can
pay reparations to GB and France, so GB and France can pay their loans back to us
(the US). What could possibly go wrong?
• Around the same time that US banks began to decline because of domestic
issues (and not give more loans to Germany), the Germans default on their
loans and reparations (and get a new leader who has no intentions of
paying them back).
• This plummets Europe (and much of the world) into financial chaos
alongside the US
16. Final Thoughts
• Was World War II inevitable?
• For next time:
• Read Chapter 26
• Next week we will look at an overview of the
war and the Holocaust
• We will also look at life in the US and the
aftermath of the war
• Have a good weekend!
