The great depression


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The great depression

  1. 1. what was it?• “For most Americans, at most times in American history, the economy has provided real opportunity for real individual success. But what would you do if the economy suddenly stopped providing that opportunity? If it no longer seemed to matter how hard you worked, how smart you were, how responsibly you took care of your money? If the system just stopped working, seemingly dooming you to a life of poverty through no fault of your own? Would you blame yourself? Would you work harder, striving to prosper, against all odds, within the failing system? Or would you try to change the system itself? And if so, what would you try to change it into?”1 1. Shmoop Editorial Team, "The Great Depression, "Shmoop University, Inc., 11 November 2008, (accessed November 28, 2010)
  2. 2. How Could This Happen?By the test you will be able to answer:• Why did the stock market crash?• Why was the economy so bad for so long?• How did it affect people?• How did the government try to stop it?• Did it work?• What made the economy get better again?• Could this happen again? Are we headed to another Depression?
  3. 3. Could another depression happen?This is a video!To view go to:
  4. 4. Unemployment now
  5. 5. Unemployment: • Topped out at1933 25% • Around 10%Now looking for work • Around 17% total
  6. 6. Stock market• Stock: A small piece of a company that is bought and sold• Stock market: A place where stocks and bonds are “traded” (bought and sold)• Goal is to buy the stock, hold on to it for a time, and sell it for more than you paid
  7. 7. Risks of the Market • Stocks go up and down Holiday Short-term shopping iPads go investors season on sale selling iPad announcedStock priceof Apple thisyear
  8. 8. September 1929:Greatest Crash in history
  9. 9. Causes1. Speculation: Buying stock with the plan to sell it again quickly when the market rises2. Buying on margin: Borrowing money to buy stocks Example: I make a down payment of $5 for a $50 share, you promise to pay back the rest when you sell the stock  I can buy $1,000 worth of stock for only $100. If stock crashes, I still owe $900
  10. 10. causes3. Using too much credit: Booming economy, advertising, easy loans and installment plans made people borrow more than they could pay back4. Overproduction: Too much stuff to sell, no one to buy it5. Unequal distribution of wealth: Rich people got richer but workers’ wages didn’t rise, so they couldn’t buy the stuff being made
  11. 11. causes6. Government policies: No regulation of the stock market7. Problems in European economy impacted the U.S.8. Weak farm economy: production too high, prices too low, debt too much
  12. 12. But most of all..• Overconfidence: Investors felt like if they bought stocks they couldn’t lose. They were wrong.
  13. 13. Beginnings of the Depression• Stock market crash triggered chain of events• Bank failures: Over 9,000 banks closed or went bankrupt 1930-1933• Shrank the money supply and led to deflation• Low prices mean low profits• Production drops• People are laid off• 53% people are “underemployed”
  14. 14. Industrial Production 1919-1933
  15. 15. Relief?• No welfare system to help with food, rent, clothing, medical care, etc.• Families turned to state-and-local relief systems and charity organizations• Agencies not set up to deal with it—only “fringes” of society, extremely poor• Many went without help• Some die of starvation
  16. 16. Hoover’s response• 1st tried to restore confidence• Voluntary cooperation: Hoover invited business, labor and agricultural leaders to White House. Wanted them to cooperate for recovery. No striking and no laying off or cutting production• Didn’t work
  17. 17. Hoover’s philosophy • "I do not believe that the power and duty of the General Government ought to be extended to the relief of individual suffering. . . . The lesson should be constantly enforced that though the people support the Government the Government should not support the people." (1930)
  18. 18. Self reliance or government aid?• Hoover’s ideas about self-reliance shaped his policies on rebuilding the economy and providing relief• Felt that charities and religious organization should provide relief on voluntary basis• He tried to stimulate the economy with public construction projects, but they were not enough
  19. 19. Help for farmers• Agricultural Marketing Act (1929): first major government program to help maintain crop prices• Hawley-Smoot Tariff (1930): Tariff on 75 imported farm products gave protection to American farmers (later backfired)
  20. 20. Hoover loses support• Public approval very low; Democrats win many Congressional seats in 1930 midterm elections• Americans blame Hoover for the crisis• Name shantytowns where unemployed live “Hoovervilles”
  21. 21. International economic collapse• Spring of 1931: Europeans banks start failing without U.S. lending them money• Pushed American economy even lower
  22. 22. RFC• Reconstruction and Finance Corporation (1932): Federal program to provide loans to troubled banks, railroads and other business. First to operate on a large scale• Still not enough
  23. 23. Bonus Army, 1932• Or “Bonus Expeditionary Force”• 200,000 WWI veterans• Demand early payment of the $1,000 bonus promised to them• Marched on Washington, camped out and refused to leave
  24. 24. Hoover calls in troops• Hoover calls in Gen. McArthur to lead calvary, an infantry regiment and 6 tanks to descend on their camps• Forcibly removes men, breaks up protest• Last straw for public support of Hoover• No way he’ll win the next election
  25. 25. The New Deal• FDR (Franklin Delano Roosevelt) elected by a landslide in 1932• People wanted change from Hoover’s laissez-faire policies
  26. 26. New deal philosophy• Experiment to find solutions• 3 R’s: Relief for the unemployed Recovery for businesses Reform of economic institutions (regulations)
  27. 27. First 100 days• 100 day session• Passed every bill FDR proposed• More laws than any Congress in history• Bank holiday• Ended prohibition
  28. 28. Fireside chats• Radio broadcasts explaining the recovery policies directly to the people
  29. 29. First new deal 1933- 1935• Focused on relief for unemployed• Turned federal government into an employer
  30. 30. New Deal Programs• Civilian Conservation Corps: Employed young men to work on federal land• Tennessee Valley Authority: Hired men to build dams for irrigation and cheap electricity• Works Progress Association: Hired men to build schools, parks, bridges, roads, etc. Also hired artists and many others to keep them employed
  31. 31. Promoting confidence
  32. 32. Health and sanitation
  33. 33. Arts and culture
  34. 34. Travel and tourism
  35. 35. Educational programs
  36. 36. Community activities
  37. 37. Federal writers project
  38. 38. Citizenship education
  39. 39. Social values
  40. 40. Social values
  41. 41. Direct assistance• Social Security Act: monthly payments to elderly, disabled and dependent children. Also unemployment insurance• Shift in thinking about the role of government
  42. 42. Critics of the new deal• Liberals: not enough help for the poor, helped businesses too much• Conservatives: gave government too much power, bordered on communism, didn’t want deficit spending
  43. 43. opponents• Father Charles Coughlin: wanted to inflate currency and nationalize all banks• Dr. Francis Townsend (Townsend Plan): 2% of federal sales tax pay for $200/month for retired people• Huey Long: Senator from Louisiana, give everyone a large monthly income by heavily taxing the rich; radical
  44. 44. Prairie grass roots
  45. 45. Grow 8 to 15 feet deep
  46. 46. Tractors + Dry land=dust
  47. 47. Dust storms
  48. 48. “Okies” migrated to California
  49. 49. Premature aging