The Great Depression BeginsThe Great Depression Begins

American Studies – Chapters 30-33American Studies – Chapters 30-33

Essential QuestionEssential Question

• What caused the most severe What caused the most severe economic crisis in American economic crisis in American History?History?

• Read Chapter 30 Section 1 & 2 to Read Chapter 30 Section 1 & 2 to find three parallels between the find three parallels between the game and history?game and history?

Reading NotesReading Notes

• Read Section 3 Read Section 3 • List two causes and two effects for List two causes and two effects for

overproduction and underconsumptionoverproduction and underconsumption

• Read Section 4Read Section 4• List and explain two actions the federal List and explain two actions the federal

government took that made the Depression government took that made the Depression worseworse

Speculative BubblesSpeculative Bubbles

• Read Section 5Read Section 5• What is a speculative bubble?What is a speculative bubble?• What are examples of speculative bubbles?What are examples of speculative bubbles?• How do these bubbles affect you?How do these bubbles affect you?

Causes of a Sick EconomyCauses of a Sick Economy

• U.S. IssuesU.S. Issues• Decline in IndustryDecline in Industry

• Foreign CompetitionForeign Competition

• Decreased DemandDecreased Demand

• New sources of energy threaten coal industryNew sources of energy threaten coal industry

• Outdated machineryOutdated machinery

• Decline in Home Construction Decline in Home Construction • Impacts all associated businessesImpacts all associated businesses

More CausesMore Causes

• Agricultural CrisisAgricultural Crisis• Decline in demand for farm goodsDecline in demand for farm goods• Falling pricesFalling prices• Rising farm foreclosuresRising farm foreclosures

• Easy consumer creditEasy consumer credit• Rising debt creates reduced consumer spendingRising debt creates reduced consumer spending

• Uneven distribution of incomeUneven distribution of income• More goods than consumersMore goods than consumers

The Stock MarketThe Stock Market

• What is stock?What is stock?• Individual ownership of a portion (share) of a company Individual ownership of a portion (share) of a company

that is publicly traded (bought and sold)that is publicly traded (bought and sold)

• How do you make money?How do you make money?• Buy low and sell high (difference = profit)Buy low and sell high (difference = profit)

• Buy and hold (company value increases over time)Buy and hold (company value increases over time)

• What are the risks?What are the risks?• No insurance or guarantees of returnNo insurance or guarantees of return

The Stock Market Crash – The Final The Stock Market Crash – The Final Straw!!!Straw!!!• No rules!!!No rules!!!

• Speculation – buying and selling with the intent Speculation – buying and selling with the intent of making quick, large profitsof making quick, large profits

• Buying on margin – buying a stock with a small Buying on margin – buying a stock with a small down payment and borrowing the rest (up to down payment and borrowing the rest (up to 90%)90%)

• See any problems?????See any problems?????• Crash – 10/29/29 (16 million shares traded)Crash – 10/29/29 (16 million shares traded)

• By mid-November investors lost $30 BillionBy mid-November investors lost $30 Billion

Short Term Effects 1929-33Short Term Effects 1929-33

• Bank FailuresBank Failures• By 1933, 6000 banks closed (25% of all banks)By 1933, 6000 banks closed (25% of all banks)• 9 million individual savings accounts lost9 million individual savings accounts lost

• Manufacturing output cut in halfManufacturing output cut in half• 85,000 businesses went bankrupt85,000 businesses went bankrupt

• UnemploymentUnemployment• 1929 – 3% of eligible workers unemployed1929 – 3% of eligible workers unemployed• 1933 – 25% of eligible workers unemployed1933 – 25% of eligible workers unemployed• Remaining workers take reduced pay and hoursRemaining workers take reduced pay and hours

Impacts – Urban AreasImpacts – Urban Areas

• Widespread homelessness Widespread homelessness • Creation of shantytowns (Hoovervilles)Creation of shantytowns (Hoovervilles)• Begging, soup kitchens, bread linesBegging, soup kitchens, bread lines• Destruction of familiesDestruction of families• ““Riding the rails” > 2 million menRiding the rails” > 2 million men

• Increased racial tensionsIncreased racial tensions• Competition for employmentCompetition for employment

Impacts in Rural AreasImpacts in Rural Areas

• Huge numbers of farm foreclosures (over Huge numbers of farm foreclosures (over 400,000 between 1929-1932)400,000 between 1929-1932)

• Environment issuesEnvironment issues• Overproduction destroys soilOverproduction destroys soil• Extreme drought creates ‘Dust Bowl’Extreme drought creates ‘Dust Bowl’

• Migrant familiesMigrant families• Farmers move West for workFarmers move West for work

The Response to the Economic CollapseThe Response to the Economic Collapse

What would you tell those kids?What would you tell those kids?

Proposed SolutionsProposed Solutions

• McNary-Haugen Bill – Price supports for McNary-Haugen Bill – Price supports for key productskey products• For example, For example,

• The U.S. government would buy surplus crops The U.S. government would buy surplus crops (wheat, corn, etc.) at high prices(wheat, corn, etc.) at high prices

• Then the U.S. government would sell the crops at Then the U.S. government would sell the crops at market prices (lower prices)market prices (lower prices)

• The difference (loss) would be covered with a tax on The difference (loss) would be covered with a tax on domestic food salesdomestic food sales

More Proposed SolutionsMore Proposed Solutions

• Hawley-Smoot Tariff – highest protective Hawley-Smoot Tariff – highest protective tariff in U.S. historytariff in U.S. history• Made everything worse!!!Made everything worse!!!

• President Hoover proposed delay in WWI President Hoover proposed delay in WWI debts and German reparationsdebts and German reparations• Too late – Europe goes ‘off’ gold standardToo late – Europe goes ‘off’ gold standard

President Hoover’s ReactionsPresident Hoover’s Reactions

• ““Any lack of confidence in the economic Any lack of confidence in the economic future…..is foolish”future…..is foolish”• Remain optimistic!Remain optimistic!

• Rugged individualism – succeed through effortRugged individualism – succeed through effort

• Limited government involvement in economyLimited government involvement in economy• Federal building projects – Boulder DamFederal building projects – Boulder Dam

• Federal Farm Board – help raise farm pricesFederal Farm Board – help raise farm prices

• Reconstruction Finance Corp – loan money to banks, Reconstruction Finance Corp – loan money to banks, industries, etc. (up to $2 billion)industries, etc. (up to $2 billion)

The Bonus ArmyThe Bonus Army

• WWI veterans scheduled to receive a ‘bonus’ in WWI veterans scheduled to receive a ‘bonus’ in 1945 (about $500 each)1945 (about $500 each)

• 20,000 march to Washington in 193220,000 march to Washington in 1932• WE WANT OUR BONUS NOW!!!!WE WANT OUR BONUS NOW!!!!• Created a shantytown outside of WashingtonCreated a shantytown outside of Washington

• Hoover orders them to leave (most obey)Hoover orders them to leave (most obey)• 2000 stay and are removed by US Army with 2000 stay and are removed by US Army with

force (gas and bullets)force (gas and bullets)• Nation is shocked!Nation is shocked!

Great Depression PicturesGreat Depression Pictures

• Which of the pictures impacted you most?Which of the pictures impacted you most?

• Why?Why?

• Which of the pictures impacted you least?Which of the pictures impacted you least?

• Why?Why?

Franklin Delano RooseveltFranklin Delano Roosevelt

• Elected President 1932 (Democrat)Elected President 1932 (Democrat)• Promised “A New Deal for the American People”Promised “A New Deal for the American People”• Three goals:Three goals:

• Relief for the needyRelief for the needy

• Economic recoveryEconomic recovery

• Financial reformFinancial reform

• Used radio broadcasts to explain goals to the Used radio broadcasts to explain goals to the peoplepeople

Financial ReformFinancial Reform

• Glass-Steagall Banking Act of 1933 – Glass-Steagall Banking Act of 1933 – provide federal insurance for individual provide federal insurance for individual accounts (FDIC)accounts (FDIC)

• Federal Securities Act requires companies Federal Securities Act requires companies to:to:• Provide complete factual financial information Provide complete factual financial information

about the companyabout the company• Created rules for ‘insider’ informationCreated rules for ‘insider’ information

Economic ReformEconomic Reform

• Agricultural Adjustment Act – raise prices by Agricultural Adjustment Act – raise prices by lowering productionlowering production

• National Industrial Recovery Act – promote fair National Industrial Recovery Act – promote fair business practicesbusiness practices• Set competitive pricesSet competitive prices• Establish work standards for hours and child laborEstablish work standards for hours and child labor• Provide workers with the right to unionize and conduct Provide workers with the right to unionize and conduct

collective bargainingcollective bargaining• National Labor Relations Act (Wagner Act) – National Labor Relations Act (Wagner Act) –

protects workers from unfair labor practicesprotects workers from unfair labor practices

Relief for the NeedyRelief for the Needy

• JobsJobs• Civilian Conservation Corp (CCC) provided jobs for Civilian Conservation Corp (CCC) provided jobs for

young men building roads, parks, and planting treesyoung men building roads, parks, and planting trees

• Public Works Administration (PWA) provided money Public Works Administration (PWA) provided money to the states for school and public building constructionto the states for school and public building construction

• Civil Works Administration (CWA) provided Civil Works Administration (CWA) provided construction and teaching jobsconstruction and teaching jobs

• Works Progress Administration (WPA) – created jobs Works Progress Administration (WPA) – created jobs for 8 million people in everything from construction to for 8 million people in everything from construction to musicmusic

More Relief for the NeedyMore Relief for the Needy

• Federal Housing Administration – Federal Housing Administration – government loans for home mortgages government loans for home mortgages

• Social Security Act provides:Social Security Act provides:• Retirement insurance – supplemental insurance Retirement insurance – supplemental insurance

for retirees 65 or olderfor retirees 65 or older• Unemployment compensationUnemployment compensation• Aid to families with children and the disabledAid to families with children and the disabled

The WPA “Dollar”The WPA “Dollar”The WPA “Dollar”The WPA “Dollar”

WPA BookbindingWPA BookbindingWPA BookbindingWPA Bookbinding

Opponents to the New DealOpponents to the New Deal

• Supreme Court RulingsSupreme Court Rulings• NIRA – unconstitutionalNIRA – unconstitutional• AAA – unconstitutionalAAA – unconstitutional• FDR tries to “pack” the courtFDR tries to “pack” the court

• American Liberty LeagueAmerican Liberty League• Government should respect the rights of individuals Government should respect the rights of individuals

and property (especially rich individuals!!)and property (especially rich individuals!!)• Civil Rights – No legislation to limit Civil Rights – No legislation to limit

discrimination or create equality for African-discrimination or create equality for African-Americans!!!Americans!!!

Impacts of the New DealImpacts of the New Deal

1.1. Deficit spending – spending more money Deficit spending – spending more money on programs than the government receives on programs than the government receives in revenuein revenue

2.2. Expanding government’s role in the Expanding government’s role in the economyeconomy

3.3. Protection of workers’ rightsProtection of workers’ rights• National Labor Relations BoardNational Labor Relations Board

More Impacts More Impacts

4.4. Banking and Finance ReformBanking and Finance Reform

5.5. Social SecuritySocial Security

6.6. Environmental protectionEnvironmental protection• Tennessee Valley Authority – built dams to Tennessee Valley Authority – built dams to

generate electricity and prevent floodinggenerate electricity and prevent flooding

End of the Depression?End of the Depression?

• Although the New Deal programs relieved Although the New Deal programs relieved the nation’s suffering and provided hope for the nation’s suffering and provided hope for the American people……..the American people……..

• The massive spending for equipment and The massive spending for equipment and supplies for WWII truly ended the Great supplies for WWII truly ended the Great Depression!!!Depression!!!

Essential VocabularyEssential Vocabulary

• Great Depression Great Depression • Definition: the economic crisis and period of low Definition: the economic crisis and period of low

business activity in the U.S. and other countries, business activity in the U.S. and other countries, roughly beginning with the stock-market crash in roughly beginning with the stock-market crash in October, 1929, and continuing through most of the October, 1929, and continuing through most of the 1930s.1930s.

• Using your own words create a new definition.Using your own words create a new definition.• Create a visual representation of the Great Create a visual representation of the Great

Depression.Depression.