1. The Great Depression
Chapters 17 & 18

2. Learning Targets I will be able to…
Explain the causes of the Great Depression
Explain the impact the Great Depression had on the average American
Identify the changing role of government
Describe the goals of the New Deal

3. I. The Business cycle 4 phases
Recession, Depression, Recovery & Prosperity
Looks at economic factors: production, employment, profits, income, investment
Recession- when factors are falling
Depression- when factors are at lowest
Recovery- when factors are rising
Prosperity- good times, factors are at highest point

4. Background 1920’s prosperity & good times
People have jobs & are hopeful
Overproduction/Technology- an increase in goods- consumers did not earn enough to purchase products
Installment plan- (Credit Card) put a small amount down- then pay off the rest over time. This meant more Americans could not afford to buy other goods
Many new investors in stock market no regards to a companies earnings and profit- engaging in speculation.

5. What Led to the Great Crash
Stock Market
System of buying and selling shares (stocks) of companies
Bull Market  10% of households owned stock by 1929
Buying on Margin
Small cash down payment, 10%
Speculation
Took risks, betting the market would continue to rise
The Great Crash
Late 1929: running out of new customers, investors sold their holdings and prices of stock began to drop
Black Tuesday: October 29th, stocks lost $10 to $15 billion in value
Not the major cause of the Depression

6. Causes of the Depression
1. The Great Crash
Late 1929: running out of new customers, investors sold their holdings and prices of stock began to drop
Black Tuesday: October 29th, stocks lost $10 to $15 billion in value
Not the major cause of the Depression, 4 other causes
Stock market crash led to bank failures
Lent money to speculators and invested depositors’ money in the stock market
Cut back on the loans they gave out  recession in the economy
Bank runs: depositors take all of their money out of their bank account
: 3,000 banks were forced to close

7. Causes of the Depression
2. Overproduction & low demand
Layoff in employees
Chain reaction in the rest of the economy
3. Low wages reduce consumers buying power
4. High tariffs
Caused foreign companies to buy fewer products from U.S. companies
5. Failure to raise interest rates
Allowed for risky speculation and led to unemployment

8. Review of Causes Stock Market Crash Overproduction & Low Demand
Low wages reduce consumers buying power (uneven distribution of wealth)
High Tariffs
Low Interest Rates (easy credit)

9. Impact of the Depression
Depression worsened during Hoover’s presidency
9,000 banks failed by 1933
More than 12 million Americans were unemployed by 1933, 25%
Bread lines and soup kitchens
Foreclosures and evictions led to shantytowns
New homeless people put up shacks on unused or public lands
Called “Hoovervilles” to place blame on the president
Hobos
Homeless and unemployed wander around the country mostly by sneaking onto freight trains

10. Impact of the Depression
Dust Bowl
Drop in crop prices caused many farmers to stop cultivating lands
1932: drought struck the Great Plains, soil turned to dust with resulting dust storms
Many had to give up their farms and migrated west
“Okies” and others lived in roadside camps and remained homeless in CA

11. Impact of the Depression
What do you think is going on in this photo?

12. Impact of the Depression
Who do you think these people are?

13. Impact of the Depression
What do you think these men are doing?

14. Photo Activity: Farmer & Sons and Migrant Mother

15. Hoover’s Response Public Works Pumping Money Into the Economy
Government financed building projects to make up for lost jobs
Paying was a problem: didn’t want to raise taxes or run a budget deficit (spending more money than taken in by taxes)
Feared deficit spending would hurt an economic recovery
Pumping Money Into the Economy
Reconstruction Finance Corporation (RFC): make loans to banks, railroads, and agricultural institutions
Failed to give loans with sufficient amounts
Emergency Relief and Construction Act: $1.5 billion to public works and $300 million to states; couldn’t reverse the collapse

16. Hoover’s Response Angry Americans
Hunger marches in Washington D.C.
Farmers revolt
1 million farms foreclosed on between 1930 and 1934
Began destroying crops to raise their prices
Bonus Marchers
WWI bonus for American soldiers to be given out in 1945
March of veterans to Washington D.C. to receive their bonuses early
Stayed in Hoovervilles while petitioning lawmakers and then to buildings
Hoover used military force to remove the veterans from the city
Lingering Depression & Images of Bonus Marchers defined public perception of Hoover

17. Ultimately, Hoover…
Didn’t think the government should provide direct relief to the people
Believed the Depression could be cured by individual initiative

18. Roosevelt’s Response
Came into office willing to try new ideas and experiment, with no concrete agenda
Hundred Days
Congress passed 15 major acts during this time (First New Deal)
Sought advice from many different advisers in different fields of expertise
3 different groups of advisers: all had progressive ideas w/ a belief in some sort of government intervention
Fireside Chats: FDR addressed the nation by radio and explained his goals

19. Roosevelt’s Response: First New Deal
Variety of programs instituted to help reverse the economic crisis
3 Goals: Relief, Recovery, Reform
Fixing the Banks and the Stock Market
Securities and Exchange Commission
Managing Farms and Industry
Agricultural Adjustment Administration, National Industrial Recovery Act
Debt Relief
Direct help to people with their debts
Home Owners’ Loan Corporation (HOLC)

20. Roosevelt’s Response: First New Deal
Spending and Relief Programs
Civilian Conservation Corps, Public Works Administration
Challenges to the New Deal
Economy showed a slight improvement two years after the New Deal
Criticized by the left and the right
Used deficit spending to pay for the New Deal
FDR: worried by failure of rapid economic recovery from the New Deal

21. Roosevelt’s Response: Second New Deal
Hoped to speed up recovery, provide economic security to all, and help w/ his reelection
Works Progress Administration
Relief to increase employment; highways, parks, buildings, airports
Put many people to work
Rise of Industrial Unions
Sit Down Strikes: stopped working, but refused to leave the factory
Social Security Act
Provide some security for the elderly and unemployed workers
One of the most important pieces of legislation in U.S. history
National Housing Act of 1937

22. The New Deal Coalition
White South, farmers, laborers, African Americans, new immigrants, ethnic minorities, women, progressives, intellectuals
Black Cabinet
Court Packing
Supreme Court didn’t support many of the new deal programs
FDR sent a bill to Congress to increase the number of Supreme Court justices
Didn’t pass, helped New Deal programs, hurt FDR’s reputation
Expanding role of government and President
Duty of the government to protect the American people
Larger role of the president