CHAPTER 25

The Great Depression

Buying on Margin was

risky because you were

buying stock without

having the money to

purchase the stock. If

the stocks dropped you

would be bankrupt.

Today it is like using

credit cards.

D E S C R I B E W H Y B U Y I N G O N M A R G I N WA S R I S KY. W H AT I S S I M I L A R T O

B U Y I N G O N M A R G I N T O D AY ?

Banks had invested in the

Stock Market

The banks lost money

giving loans to people to be

able to buy on margin.

The banks did not have

enough money to cover

customer accounts.

LIST 2 THINGS THAT CAUSED BANKS TO CLOSE IN 1929?

People lost their life savings

because they had put their

money in the bank but the

bank did not have the money

to pay out to them if they

wanted it. It should not

happen today if the bank is

FDIC, insured by the Federal

Government

HOW DID SOME PEOPLE LOSE THEIR L IFE SAVINGS? COULD THIS

HAPPEN TODAY?

1. Over Production of

goods. This caused a

drop in prices, people

lost their jobs.

2. Uneven distribution

of wealth, most

people did not have

enough money to

continue to buy

goods.

LIST 5 CAUSES OF THE GREAT DEPRESSION, THEN EXPLAIN HOW

EACH WAS A CAUSE

3. Declining world trade,

Europeans could not afford

goods because they had been

devastated by WWI

4. High Tariffs- Europeans

businesses could not sell

goods in the US as a result

they did not have money to

spend.

LIST 5 CAUSES OF THE GREAT DEPRESSION, THEN EXPLAIN HOW

EACH WAS A CAUSE

5. Monetary Policy-

Taxes and high interest

rates forced people to

not spend money

causing deflation or a

hoarding of money.

LIST 5 CAUSES OF THE GREAT DEPRESSION, THEN EXPLAIN HOW

EACH WAS A CAUSE

Hoover did not do much in

terms of Government

programs. He felt businesses

and individuals should help by

hiring and promoting

business. He did create the

RFC that helped businesses

but he avoided helping

individuals.

H O W D I D P R E S I D E N T H O O V E R R E S P O N D T O T H E D E P R E S S I O N ? W H AT WA S H I S B E L I E F ?

People chose Roosevelt

because he promised to

help individuals right

away. Hoover was

blamed for the economic

problems and his

reluctance to help

individuals.

WHY DID PEOPLE CHOOSE ROOSEVELT OVER HOOVER IN THE

ELECTION OF 1932?

Roosevelt felt the

government should

directly help the people

by creating jobs and

setting up social

programs. This was

called the “New Deal”

DESCRIBE HOW ROOSEVELT BELIEVED THAT THE ECONOMY

SHOULD BE “F IXED” , WHO, HOW?

Roosevelt built trust in

banks by closing

(Emergency banking act)

them all for a period of

time and only re-opening

those banks that were

“healthy”. They created

the FDIC which insured

a person’s money in the

bank.

DESCRIBE HOW ROOSEVELT BUILT BACK TRUST IN BANKS?

The Civil Works

Administration (CWA)-

employed more than 4

million Americans,

building roads and

airports.

L I S T 3 N E W D E A L P R O G R A M S T H AT E M P L O Y E D P E O P L E T O B U I L D P U B L I C

P R O J E C T S, A L S O D E S C R I B E W H AT T H E Y D I D .

The Civilian

Conservation Corps.

(CCC)- provided jobs for

hundreds of thousands

of people through

projects such as planting

trees and improving

national parks.

L I S T 3 N E W D E A L P R O G R A M S T H AT E M P L O Y E D P E O P L E T O B U I L D P U B L I C

P R O J E C T S, A L S O D E S C R I B E W H AT T H E Y D I D .

The Tennessee Valley

Authority (TVA)- hired

people to build dams and

generators, bringing

electricity and jobs

L I S T 3 N E W D E A L P R O G R A M S T H AT E M P L O Y E D P E O P L E T O B U I L D P U B L I C

P R O J E C T S, A L S O D E S C R I B E W H AT T H E Y D I D .

Farm Credit

Administration (FCA)

helped farmers refinance

their mortgages and

save their farms.

L I S T 2 N E W D E A L P R O G R A M S T H AT H E L P E D FA R M E R S , D E S C R I B E H O W T H E Y H E L P E D .

The Agricultural

Adjustment Act (AAA)

Helped stabilize

agricultural prices.

L I S T 2 N E W D E A L P R O G R A M S T H AT H E L P E D FA R M E R S , D E S C R I B E H O W T H E Y H E L P E D .

Those who felt the New Deal

went too far criticized the

enormous expansion of the

Federal Government. The high

cost of new government

programs would lead to new

taxes and give the government

too much power like American

Liberty League.

L I S T T W O C R I T I C I S M S O F T H E N E W D E A L A N D G I V E A S P E C I F I C E XA M P L E O F A

G R O U P O R P E R S O N F O R E A C H C R I T I C I S M

Then there were those

who thought the New

Deal did not go far

enough like Francis

Townsend. Some wanted

to tax the wealthy to

help the poorest citizens.

L I S T T W O C R I T I C I S M S O F T H E N E W D E A L A N D G I V E A S P E C I F I C E XA M P L E O F A

G R O U P O R P E R S O N F O R E A C H C R I T I C I S M

The CWA expired in

1934 and was replaced

by the Works Progress

Administration. They

both put people to

W H AT N E W D E A L A C T E X P I R E D I N 1 9 3 4 ? W H AT A C T R E P L A C E D I T ? W H AT D I D T H E S E

T W O L AW S D O ?

A severe drought

caused farmers to lose

their land. They could

not pay their mortgages

and lost their farms

D E S C R I B E W H AT L E D FA R M E R S T O L O S E T H E I R L A N D ?

The Great Depression put a

great deal of stress on families.

Many could not pay their bills and

lost their home. Children quit

school to work. They had to live

in “Hoovervilles.” Discrimination

worsened for minority groups.

Many moved to California to find

jobs, but in many situations there

were no jobs available.

W H AT E F F E C T D I D T H E G R E AT D E P R E SS I O N H AV E O N FA M I L I E S ?

The WPA helped the

arts because they

created music,

sculptures, paintings,

movies, and literature

that reflected the

difficulty of the times.

They also gave work to

all kinds of people.

D E S C R I B E H O W T H E W PA H E L P E D T H E A R T S

New Deal Programs

still in existence today

are FDIC and Social

Security.

W H AT N E W D E A L P R O G R A M S S T I L L E X I S T T O D AY ?