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The great depression
- 2. 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, http://www.shmoop.com/great-depression/ (accessed November 28, 2010)
- 3. How Could ThisHappen? 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?
- 4. Could another depression happen? This is a video! To view go to: http://got.im/e3v
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- 6. Unemployment: • Topped out at 1933 25% • Around 10% Now looking for work • Around 17% total
- 7. 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
- 8. Risks of theMarket • Stocks go up and down Holiday Short-term shopping iPads go investors season on sale selling iPad announced Stock price of Apple this year
- 9. September 1929: Greatest Crashin history
- 10. Causes 1. Speculation: Buyingstock with the plan to sell it again quickly when the market rises 2. 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
- 11. causes 3. Using toomuch credit: Booming economy, advertising, easy loans and installment plans made people borrow more than they could pay back 4. Overproduction: Too much stuff to sell, no one to buy it 5. Unequal distribution of wealth: Rich people got richer but workers’ wages didn’t rise, so they couldn’t buy the stuff being made
- 12. causes 6. Government policies:No regulation of the stock market 7. Problems in European economy impacted the U.S. 8. Weak farm economy: production too high, prices too low, debt too much
- 13. But most ofall.. • Overconfidence: Investors felt like if they bought stocks they couldn’t lose. They were wrong.
- 14. 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”
- 16. Industrial Production 1919-1933
- 17. Relief? • No welfaresystem 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
- 18. Hoover’s response • 1sttried 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
- 19. 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)
- 20. 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
- 21. 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)
- 22. 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”
- 23. International economic collapse • Spring of 1931: Europeans banks start failing without U.S. lending them money • Pushed American economy even lower
- 24. RFC • Reconstruction andFinance Corporation (1932): Federal program to provide loans to troubled banks, railroads and other business. First to operate on a large scale • Still not enough
- 25. 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
- 26. Hoover calls introops • 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
- 28. The New Deal •FDR (Franklin Delano Roosevelt) elected by a landslide in 1932 • People wanted change from Hoover’s laissez-faire policies
- 29. New deal philosophy •Experiment to find solutions • 3 R’s: Relief for the unemployed Recovery for businesses Reform of economic institutions (regulations)
- 30. First 100 days • 100 day session • Passed every bill FDR proposed • More laws than any Congress in history • Bank holiday • Ended prohibition
- 31. Fireside chats • Radiobroadcasts explaining the recovery policies directly to the people
- 32. First new deal1933- 1935 • Focused on relief for unemployed • Turned federal government into an employer
- 33. 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
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- 46. Direct assistance • SocialSecurity Act: monthly payments to elderly, disabled and dependent children. Also unemployment insurance • Shift in thinking about the role of government
- 47. Critics of thenew 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
- 48. opponents • Father CharlesCoughlin: 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
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- 51. Grow 8 to15 feet deep
- 52. Tractors + Dryland=dust
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- 58. “Okies” migrated to California
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