41920s SpendingFor example, you could have bought a share in the Radio Corporation of America for $85 in One year later, in 1929, this share could sell for $549.For much of the 1920s, the Stock Market was a bull market, or one with rising stock values.The Stock Market works by people buying a percentage of a company, this is known as buying a share.As a company becomes more affluent, or wealthy, stock shares rise in value from what someone once bought them at which results in a gain in investment.
51920s SpendingPeople who bought stock on margin planned to sell their stocks at a higher price and use the money they made to pay back the loan and keep what remained as profit.This only works, however, if the stock prices continue to increase in value. A decrease, would mean a loss in investment and the inability to pay back the loan.To protect their investments, a broker could issue a margin call, demanding the investor repay the loan at once.Because of the opportunity to make huge profits from small investments, many people were encouraged to buy stock.For those who could not afford to pay the full price of a stock share, buying on margin, or purchasing stocks on credit, or borrowed money, was available.You could borrow money for stocks from stockbrokers. These people would earn a commission on the sale and an interest on the loan.
6Black Tuesday October 29th, 1929 On Tuesday, October 29th, the Stock Market crashed. So many people wanted to sell their stocks and so few wanted to buy that stock prices collapsed. This day became known as Black Tuesday.Stock Market prices peaked in the late summer of 1929Prices then began to dropFrightened investors who had bought stock on margin rushed to sell their stocks in order to pay off their loansOn Thursday, October 24th, panic hit the stock market and within 3 hours, the market lost $11 billion in valueThe trend continued with prices dropping on the following Monday.
7Causes of The Great Depression But the economy did not recover quickly from the downturn that began in Why?The business cycle refers to the up and down pattern the economy follows. When businesses produce more than they can sell, goods pile up. Businesses then cut back on their production and lay off workers.As time passes, an economy will tend to bounce backs. Consumers buy surplus goods, and companies increase production to meet the demand. More workers are hired and unemployment drops.
8Causes of the Great Depression In 1929, only 5% of American households earned 30% of the nation’s income.Meanwhile, 2/3rd of families earned less than $2,500Uneven Distribution of IncomeGoods were being overproduced during the 1920sMany Americans had purchased high-cost items such as refrigerators and cars on installment plansPurchasers could make small down payments and pay the remainder of the item’s price in small monthly paymentsHowever, with these debts, many Americans aren’t spending money buying new itemsSlumps in sales caused many Americans to be laid off
9Causes of the Great Depression Loss of Export SalesMany other countries faced recessions after WWI and could not afford to buy American- manufactured goods or cropsIn 1929, Hoover tried to encourage international tradeHowever, conservative republicans wanted to protect American industry from foreign competition by raising tarrffsThis resulted in the Hawley- Smoot TariffRaised the tariffs rate to highest in American historyResulted in many countries also raising their tariffs and fewer American products being sold overseasCauses of the Great Depression
10Causes of the Great Depression Mistakes by the Federal ReserveInstead of raising interest rates to curb excessive spending on the Stock Market, the Federal Reserve kept its rates very low during the 1920sFailure to raise interest rates resulted in the followingBy keeping rates low, member banks were encouraged to make risky loansLow interest rates led business leaders to think the economy was still expanding. As a result, they borrowed more money to expand production, leading to overproductionOnce the Great Depression hit, the Federal Reserve raised interest rates which tightened credit.Causes of the Great Depression
11Visual Literacy Who and what do you see? What message is this image trying to send?
12The Bank Industry Collapse In December 1930, a merchant visits his local Bank of United States in the Bronx, New York.He asked the bank to dispose of his stock in the bank, or give him the cash value of his sold stocks.The bank’s reluctance to return the man’s money instills fear into the general public who fear banks do not have their money.The Bank Industry Collapse
13The Bank Industry Collapses By the next morning, Bank of United States has collapsedIn the last 60 days on 1930, 600 banks shut downBy 1933, there are 28 states without a single bank openUnemployment goes from 4 million in to 25 million in 1932
14President Herbert Hoover’s Reaction Opposed direct government assistance to individuals affected by the Great DepressionDid not believe the federal government should be involved in such mattersHowever, he did implement some programs, such as the Reconstruction Finance Corporation which loaned $1.2 billion to 5,000 different financial institutions.Those left homeless and unemployed by the Great Depression started forming and living in make-shifts cities known as Hoovervilles.
15American Reaction to Herbert Hoover Many Americans were angry with President Hoover for not aiding the citizens of his country in a time of needMany homeless and unemployed Americans began to wander around the country and became known as hobos.In 1932, the Bonus Army built a new Hooverville in Washington, DC. More than 17,000 people lived there, mostly composed of WWI Veterans and their familiesAmerican Reaction to Herbert Hoover
16The Bonus ArmyThe Bonus Army had come to the capital to demand early payment of a military bonus that was scheduled to be paid in 1945.The government denied their request and all but 2,000 people returned home.
17President Hoover authorized General Douglas MacArthur to use U. S President Hoover authorized General Douglas MacArthur to use U.S. troops to evict the Bonus ArmyMacArthur used force, including tear gas and tanks, to scatter the veteransSeveral veterans were killedThe American public was outraged and this tarnished Hoover’s reputationThe Bonus Army
18The Dust BowlFarmers did not share in the prosperity of the 1920s, and the Great Depression only worsened their situationA severe drought hit the Mid West in the 1930s and made making a living very difficultOklahoma, Texas, Colorado, Kansas were hit hardest
19Many farmers packed up whatever they could fit in the family car or truck and drove to California to look for any kind of work they could find.The Dust BowlTop soil was plowed and used so repeatedly by generations of farmers, that the ground held no nutrients to sustain growthAccompanied by extended drought, static electricity caused high winds to pick top soil up and create great clouds of dust up to 10,000 feet high
20Americans Face Hard Times 1/4th of workers were without jobsLarge numbers of people were hungry and homeless.
21Depression-Era Culture Entertainment became an escape for Americans to forget their worries.Movies and radio became very popular.During the 1930s, more than 60 million Americans went to the movies each week.During this time period, Shirley Temple and Walt Disney became popular movie figures.Movies such as Snow White and the Seven Dwarfs and The Wizard of Oz emerge during this time.
22Depression-Era Culture Movies offered Americans an escape from realitySee a movie for 25 center or less
23Depression Era Culture While movies captured the imagination, radio brought information and entertainment to the home.Radio soap operas provided entertainment and radio adventures such as The Lone Ranger became popular.
24Depression-Era Culture Writers and artists tried to portray life around them.John Steinbeck, author of The Grapes of Wrath tells the story of the Joad family fleeing the Dust Bowl to find a new life in California after leaving their farm.Photographers such as Dorthea Lange produced photographs that demonstrated how the Great Depression had affected average-Americans.
25Visual LiteracyOn a separate sheet of paper, answer the following questions:Who and what do you see in this picture?What do you believe the message of this picture is? (What is going on?)
26Miss Ferrara Virginia and United States History The Great DepressionMiss FerraraVirginia and United States History
27Visual Literacy Who and what do you see? What message is this image trying to send?
281932 Presidential Election The Republicans ran Herbert Hoover as their candidate in the electionThe Democrats put up New York Governor Franklin D. RooseveltMany Americans had begun to blame Hoover for the Great Depression
291932 Presidential Election Franklin D. Roosevelt was the Governor of New YorkHad previously served as a Senator and Assistant Secretary of the NavyStruck with Polio in and became wheelchair boundHowever, he hid this from public view by always standing behind podiums or using others to lean on to help support his weight1932 Presidential Election
301932 Presidential Election Americans saw in Roosevelt an energy and optimism that gave them hope despite the tough economic timesRoosevelt wins the Presidential Election in by a landslide, receiving the electoral vote in all but 6 states
31The Hundred DaysImmediately after Franklin Roosevelt took the office of President, he called Congress into a special session.It lasted from March 9th to June 16th, and became known as the Hundred Days.Roosevelt and Congress immediately got to work to create The New Deal15 programs were created to aid economic recovery
32The New DealThe New Deal was created to battle the Great Depression and aid economic recovery.Roosevelt’s first goal was to restore American confidence in banks.The day after Roosevelt’s inauguration, banks were closed for a “bank holiday”Three days later, Congress’ special session began and the passage of the Emergency Banking Relief Act with President Roosevelt’s signature went into effect.
33The New DealThat Sunday, President Roosevelt gave the first of many fireside chats.Roosevelt explained the EBRAThe government would inspect the finances of every bankOnly healthy banks would be permitted to reopenPrompted Americans to develop trust for banks againThe next day, deposits into banks exceeded withdrawals
34The New DealAlthough Americans were again trusting the bank system, President Roosevelt wanted to ensure that banks and the stock market could be held accountableThe Federal Deposit Insurance Corporation, (FDIC) provides government insurance for bank deposits up to $250,000The Securities and Exchange Commission (SEC) was formed to regulate the stock market and prevent fraud
35The New DealTo help homeowners make their mortgage payments, the Home Owners’ Loan Corporation, (HOLC) was createdThe HOLC bought the mortgages of many homeowners who were behind in their paymentsThe mortgages were then restructured with longer terms of repayment and lower interest ratesThese loans were only given to homeowners who were not farm owners and were still employedIf you were still unable to make payments, the HOLC foreclosed on your home just as a bank would have done
36The New DealThe Farm Credit Administration, (FCA) helped farmers refinance their mortgages so they could keep their farmsThe FCA lent 4 times as much money to farmers as the entire banking system had the year before
37The New DealThe Agricultural Adjustment Act, (AAA) helped stabilize agricultural pricesPrices for farm goods were low because farmers grew too much foodThe government paid farmers to not raise certain livestock and not grow certain cropsFarmers slaughtered 6 million piglets and plowed under 10 million acres of cottonThe program worked and the farm surplus fell sharply by 1936
38The New DealThe National Industrial Recovery Act, (NIRA) addressed business concerns by eliminating unfair competition among companies.This law was passed with help from Secretary of Labor, Frances Perkins, the nation’s first woman cabinet member.Required businesses to have minimum wage and allow collective bargaining.The National Recovery Administration, (NRA) ran the entire programHowever, the program ruled hard to administer and regulate and the Supreme Court ruled it unconstitutional in 1935
39The New DealCongress established the Federal Emergency Relief Act (FERA) to fund state and local agencies to fund relief projectsThe Public Works Administration, (PWA) helped the 1/3rd of unemployed Americans who were construction workers. Instead of hiring workers directly, the PWA awarded contracts to construction companies to build new highways, dams, sewer systems, and schools
40The New DealBy the fall of 1933, neither FERA nor the PWA had reduced unemployment significantlyThe Civil Works Administration (CWA) employed more than 4 million Americans who built roads and airportsUnlike the FERA or PWA that funneled money to state and local agencies, the CWA hired people directly
41The New DealThe Civilian Conservation Corps (CCC) provided jobs for hundreds of thousands of people through projects such as planting trees and improving national parksThe Tennessee Valley Authority (TVA) hired people to build dams and generators, bringing electricity and jobs to rural communities in the Tennessee River valley
42Criticism of the New Deal Some felt that the New Deal went too farExpansion of GovernmentThought the President had too much authorityBusinesses concerned that the high cost of new government programs would lead to new taxes
43Criticism of the New Deal Some felt that the New Deal did not do enoughUS Senator Huey Long from Louisiana thought that the distribution of wealth should be shared among allProposed the rich be taxed and use the money to guarantee every family had an income of at least $5,000.Father Charles Edward Coughlin was a Priest who wanted the government to nationalize, or take over, all of the country’s wealth and natural resources.
44The Second New DealWith Democrats winning more seats in Congress in the election of 1934, Roosevelt continued to introduce more New Deal legislationWith the end of the CWA in 1934, Congress formed a new agency: Works Progress Administration, (WPA) in use from 1935 to 1943
45The Second New DealThe WPA employed some 8.5 million people on tens of thousands of projects all over the country.More than 650,000 miles of roads75,000 bridges built8,000 parks created800 airports founded
46The Second New DealPresident Roosevelt wanted to help those who were “unable…to maintain themselves independently, through no fault of their own.”The Social Security Act provided some financial security for the elderly, the disabled, children, and the unemployedTo help pay for this, the law placed a new tax on workers and employersMarked first time the federal government took direct responsibility for many citizens
47Labor ProgramsWhen the Supreme Court ruled the NRA unconstitutional, Congress passed the National Labor Relations Act, (NLRA)Allowed workers to join labor unions and take part in collective bargainingEstablished the National Labor Relations Board to oversee union activities.
48Unskilled workers, such as those who worked on assembly lines lacked union representation In 1935, the Congress of Industrial Organizations, (CIO) organized workers into unions based on industry, not skill levelUnions proved powerful against businessesThe CIO went on strike against General Motors on New Year’s Eve It lasted for 44 days and instead of leaving the buildings as strikers usually do, they stayed in the factories so they could not be replaced by new workers.This became known as the sit-down-strikeLabor Programs
49Miss Ferrara Virginia and United States History The great DepressionMiss FerraraVirginia and United States History
51Clashes with the CourtIn 1935, the Supreme Court issued a series of rulings declaring several New Deal programs unconstitutionalFeeling threatened, Roosevelt proposed a plan to Congress that would allow the president to appoint a new Supreme Court justice for every justice who was 70 years old or older. Roosevelt would have been able to appoint 6 new justices immediatelyThe plan did not pass through Congress, but the Supreme Court did not overturn any more New Deal legislation
52The Tennessee Valley Authority Affected 7 statesTennessee, Virginia, North Carolina, Georgia, Alabama, Mississippi, and KentuckyHarnessed the power of the Tennessee River and others nearby to produce hydro-electricity
53Recession of 1937Early and mid-1937 saw production levels close to pre-Depression levelsBy late 1937, unemployment once again soaredDue to Roosevelt trying to balance the budgetRoosevelt cut spending on the WPA and PWA just as Social Security took effect, removing $2 billion from the economyLeft 2 million unemployed once again
54Recession of 1937John Keynes believed the government should spend heavily in a recession, even if it required deficit spending to jump start the economyHenry Morgenthau, Treasury Secretary, favored balancing the budget and cutting spendingRoosevelt was hesitant to begin spending again, but began to do so again in by refunding the WPA and PWA
55The New Deal was limited in its success Legacy of the New DealThe New Deal was limited in its successUnemployment remained high and the economy had not completely recoveredMany sight the New Deal and Great Depression as the beginning of “big government”
56What will finally end the Great Depression? Legacy of the New DealWhat will finally end the Great Depression?In the end, the New Deal did not end the Great DepressionHowever, the New Deal greatly expanded the role of the federal government.Programs such as Social Security and the Federal Deposit Insurance Corporation remain today
57Primary source analysis Why were bread lines like these common throughout the United States during the Great Depression?How does the clothing on these men indicate that the Depression was wide- reaching?
58Primary Source Analysis Dear Mrs. Roosevelt, I m now 15 years old and in the 10th grade. I have always been smart but I never had a chance as all of us is so poor. I hope to complete my education but I will have to quit school I guess if there is no clothes that can be bought. Mrs. Roosevelt, don’t think I am just begging, but that is all you can call it I guess. Do you have any old clothed you have throwed back? You don’t realize how honored I would feel to be wearing your clothes. I will close now as it is about mail time. I hope to hear from you soon. (and real soon) Your friend, M. I.Why is this 15 year old girl writing Mrs. Roosevelt?Based on this letter, how did the Depression affect children?
59Exit Card Name 3 states the TVA served What did John Keynes think the government should do during a recession?What is the lasting legacy of the New Deal?What ends the Great Depression?