1. The Great Depression Begins
The Roaring 20s Come Crashing Down

3. Roaring 20s False Growth= Overproduction
1920s Consumer Economy:
Based on productivity/purchasing power/employment cycle
Between U.S. production doubled… but due to technological innovation
No new jobs added
More goods available…but lacks demand = Overproduction

4. Roaring 20s False Growth = Unequal Distribution of Wealth
Unequal Distr. of Wealth
1% owns as much as bottom 42% of American families (sound familiar?)
42% below poverty line
Small middle class
Low savings…cut back on purchases
Further hurts econ.
But this is all a thing of the past, right?...Not so fast…
Robert Reich in which he argued that income inequality is the defining issue for the United States—Reich states that 95% of economic gains went to the top 1% net worth (HNWI) since 2009 when the recovery allegedly started.
Daily Show: Unequal Distribution of Wealth

5. Unequal Distribution of Wealth Today
 according to research by UC-Berkeley professor Emmanuel Saez
Top 10% of nation, possess 50.5% of nation’s income
U.S. income inequality is the highest it’s been since 1928. 
In 1982, the highest-earning 1% of families received 10.8% of all pretax income, while the bottom 90% received 64.7%
2012, the top 1% received 22.5% of pretax income, while the bottom 90%’s share had fallen to 49.6%.

6. So Why Does All This Matter?
What was the impact of income inequality on the economy?

7. Entering a Depression Activity
Unequal distr. of wealth
Not enough $ being spent…why?
Chronic surpluses
Layoffs/plant closings
Even fewer goods purchased
More layoffs
People can’t pay back credit
Bank failures
Bank runs (only small % get their $)
Fewer goods purchased etc…

8. Overview: Causes of the Depression
Slowing Economy
Uneq. Distr. Wealth→ Overproduction →layoffs
Institutional Causes
Corruption in Stock Market…Leads to Stock Crash
Buying on Margin/Speculation
Stock Crash (Black Tuesday)…Leads to Banking Collapse
Banks lost on stock investments/bad loans
Banks Collapse…People Lose Life Savings→ Panic
Banking Panic → Bank Runs → More Bank Closures
More people lose $ → Less $ to Spend→ ↑ unemployment

9. Causes: Weakness in the Stock Market…Buying on Margin
Public invests in comp. by purchasing stocks…in return…expect a profit
Booming 1920s economy… money plentiful…banks quick to make loans to investors
Buying on Margin
Investors only had to pay 10% of stock’s actual value at time of purchase…balance paid at later date (buying stocks on credit!)
When stocks drop…Margin Calls…investors struggle to pay back loans

10. Causes: Weaknesses in the Stock Market…Speculation
Stock Speculation
Led to artificially inflated stock prices; rise in stocks was not based on profits/earning reports…
People buy and sell stocks (artificially raising stock price) to make a quick $
B/c of all this buying/selling stock value increased (i.e. GE stock $130→$396/share)
Quick turnover doesn’t aid comp…need long term investments
Unscrupulous Traders
Buy and sell share intentionally to inflate a comp. stock value
Gave false confidence in US market

11. The Market Crashes Oct. 1929:
Running out of investors (uneq. Distr. Of wealth)
Today: Top 5% own 82% of individual stocks
Investors confidence dropped→ market collapse
Black Tuesday: Oct. 29, 1929
Panic Selling (16.4 million shares sold!)
All try to sell at once…bottom falls out
Brokers make “margin calls”
Many bankruptcies as banks call in loans
Recognized as “start” of Depression
Minority of people (10%) traded stocks, but they possessed vast wealth → crash has ripple effect on the economy

12. Black Tuesday—Oct. 29, 1929 The Stock Market Crashes
NYC Stock Market crash worsened the depression…which would last until 1942

13. “Anyone who bought stocks in mid-1929 and held onto them saw most of his or her adult life pass by before getting back to even.”
Black Monday",[12] more investors decided to get out of the market, and the slide continued with a record loss in the Dow for the day of 38 points, or 13%. The next day, "Black Tuesday", October 29, 1929, about 16 million shares were traded, and the Dow lost an additional 30 points.[13][14][15] The volume on stocks traded on October 29, 1929 was "...a record that was not broken for nearly 40 years, in 1968".[14] Author Richard M. Salsman wrote that "on October 29—amid rumors that U.S. President Herbert Hoover would not veto the pending Hawley-Smoot Tariff bill—stock prices crashed even further"

14. Banking Collapse The fall of the Banks Stock Collapse…
Banks had loaned billions to investors/speculators &…
Invested bank customers $ in stock market
Stock Collapse…
Investors unable to pay back loans…Bank investments falter
Banks lose their customers money they had invested in stocks
Banks cut back on loans
Less Investment

15. Bank Runs Banks on verge of collapse… Bank Runs
Deposits not insured…thus if bank collapses…
…People lose all their money…leads to Bank Runs
Bank Runs
Customers make run to banks to withdraw deposits…crushes banks
Only a fraction of people get their money out…rest lose their $
10% banks go under

16. Impact on the Poor
Mass consumption already low…even lower after bank collapses
Unemployment ↑
No govt. asst. at first
B/c purchasing power ↓… productivity cut back… further unemployment
Vicious Economic Cycle…
Unemployment
Purchasing Power Productivity

17. Dust Bowl (1930-1936) What factors caused Agricultural Depression?
Overproduction; Drying up of foreign markets; cheap crops from other countries driving prices down
Dust Bowl
Where: Great Plains ( )
Causes?
Severe drought, poor farming methods led to rapid soil erosion…
Period of severe dust storms causing major agricultural and ecological damage in U.S.
Millions of acres of farmland = useless
100s of thousands lose their homes (Okies)
Many Migrate to California
Travel farm to farm picking fruit/crops at starvation wages
John Steinbeck: The Grapes of Wrath

18. Lawrence Svobida was a Kansas wheat farmer
who saw his life’s work destroyed in the 1930s.
“When I knew that my crop was irrevocably [forever] gone
I experienced a deathly feeling which, I hope, can affect a
man only once in a lifetime. My dreams and ambitions . . .
and my shattered ideals seemed gone forever. The very
desire to make a success of my life was gone, the spirit and
urge to strive were dead within me. Fate had dealt me a
cruel blow above which I felt utterly unable to rise.”

19. 2.5 million people left the Great Plains

20. Causes of the Depression Thesis Activity
Step 1:
Preview the reading on the causes of the Great Depression
Step 2:
Write a thesis statement in response to the following prompt:
To what extent did the economic prosperity of the 1920s, disguise serious economic problems?
To what extent was the Stock Market Crash in 1929 responsible for the start of the Great Depression?

21. Photo Analysis Prompts
What’s one common theme you can identify between the photos you viewed?
Which photos stood out to you the most and why?
What was the setting of the photos?
What’s one question you have after viewing the photos?
What’s one question you’d like to ask the individuals in the photos?
What can you assume about the Great Depression from the photos you observed?

22. Entrance Card/Exit Slip
Write a thesis statement for the following prompt:
Should the 1920s be considered a period of economic prosperity or one in which the economic growth was based on false hopes?
Step 1: Decide which position you are going to take.
Step 2: Make an outline listing arguments you will use to support your position
Step 3: Write your thesis statement

23. Hoover’s Response
…Or Lack Thereof

24. Election of 1928: “Calm before the Storm”
Al Smith (D) v. Herbert Hoover (R)
Alfred E. Smith
Catholic
Advocated Social Legislation
Repeal of Prohibition
Herbert Hoover
Head of Food Administration (WWI)
Sec. of Commerce (Coolidge)
Hoover’s Views on Government
1922 publ. American Individualism
Condemns government regulation (Laissez-Faire)

25. Hoover Elected: 1928
"We in America today are nearer to the triumph over poverty than ever before in the history of any land...We have yet reached the goal, but given a chance to go forward with the policies of the last eight years, we shall soon with the help of God be in sight of the day when poverty will be banished from this nation." Herbert Hoover 1928

26. The Depression Hits… 12 million unemployed (25%) Hobos Rise
50% in Chicago
Hobos Rise
Millions lose savings
GNP decreases 33%
Prices decrease 40%
Rural: reduce meals, kids shoeless
30,000 businesses close (1932); Mass bank failures

27. Stats of the Great Depression
Fertility Rates (per 100,000 women aged 15-44) in 1928: 93.8 in 1929: 89.3 in 1930: 89.2 in 1931: 84.6 in 1932: 81.7 in 1933: 76.3 in 1934: 78.5 in 1935: 77.2 in 1936: 75.8 in 1937: 77.1 in 1938: 79.1 in 1939: 77.6 in 1940: 79.9 in 1941: 83.4 in 1942: 91.5 in 1943: 94.3
Average divorce rate, (per 1,000 people) : : : : : 2.5
Average rate of death by suicide (per 100,000 population) : : : 15.4

28. Opener:
Identify 3 causes of the Great Depression, as well as explain how each caused the economy to sink into a depression.

29. President Hoover’s Initial Response
Against Government Intervention
Opposed federal aid to unemployed
State/City Government should provide aid
Calls on private agencies/charity to help poor/unemployed
Bread Lines/Soup Kitchens
Provide funds to feed livestock; not people though
Opposes deficit spending
Encourage private business to maintain investment
Wanted a balanced budget
Depression worsens…forced to act
Public Works Projects
Reconstruction Finance Corp.
Pro-Business
Hoover fails to understand how important spending had become

30. Shantytowns: “Hoovervilles”

32. Finding Escape in Film
Average Weekly Movie Attendance in 1927: 57 million in 1930: 90 million in 1931: 80 million in 1932: 60 million in 1933: 50 million

33. Radio & Comics

34. Global Depression Worsens: Tariff Wars (1931)
Smoot Hawley Act
Highest level tariff in US History
Impact?
Fatal error...world had become a GLOBAL ECONOMY
Foreign Reprisals
U.S. productivity decreased again

35. Global Economy
1931, the Soviets flooded the world market with cheap wheat
Need $ to pay back loans to Austrian Banks…can’t meet payments
Austrian banks had borrowed from German banks
Austrian banks and loaning German banks therefore were forced into bankruptcy
German banks had borrowed from Americans
U.S. banks began to go bankrupt
Wiping out life savings of thousands of Americans
Soviet Wheat ½ price of American

36. AMERICANS REACT TO HOOVER
Hoover increasingly unpopular
Out of Touch…
Relief…Too Little, Too Late
NCC, Reconstruction Finance Act, Federal Home Loan Act, Some Public Works (Hoover Dam)
Bonus March Begins on D.C.

37. Frustration Fuels Protest
Bonus Army March
WWI Vets march on Washington demanding early payment of the cash bonuses due to them in 1945.
Estimated 15,000-20,000 vets
Vets set up HOOVERVILLES
Shantytowns Set up
Hoover Meals
Food scraps
After one year Bonus Marchers forcibly dispersed by the Army (MacArthur/Eisenhower)…What impact did this have on public’s view of Hoover?

38. Political Cartoon 1
What is symbolism of the squirrel and why is it a “wise economist?”
What has happened to the man? What does that mean for him?
What point is the cartoonist trying to make?

39. Political Cartoon 2
What is “it” and why should America “Blame it on Hoover?”
 Who might the people that are pointing at Hoover be and why did the cartoonist pick them?
What point is the cartoonist trying to make?

40. Political Cartoon 3 Who are the two people in the cartoon?
What do all the items on the desk symbolize?
What point is the cartoonist trying to make? What evidence from our class discussions supports the author’s interpretation of political response to the Great Depression?

41. Franklin D. Roosevelt
The New Deal

42. Election of 1932 Hoover (R) Roosevelt (D)
Opposes direct federal public assistance
Rugged Indidvidualism
State/Local Asst./Charity
Public Works
Pro-Business (RFC)
Roosevelt (D)
Governor of New York
Promise New Deal
Broaden role of Govt.
Govt. has duty to help its people in need
Public Works Projects
Direct Relief, Reform

43. 1932 Election Results Results Hoover (R) v. Roosevelt (D)
Popular Vote: 57%
Electoral college: 89%
Hoover (R) v. Roosevelt (D)
Hoover…No Hope
Roosevelt…Landslide Victory

44. FDR’s Inaugural Address
Inaugural Address Analysis

45. The New Deal The New Deal: Revolutionary: Changes Way Govt. Functions
Roosevelt’s plan/programs to solve the econ. Problems of the Depression
(though many programs still exist today)
Revolutionary: Changes Way Govt. Functions
Estbl. idea that government should play an active role ensuring the well-being of its citizens
Relief, Recovery, Reform
Relief: Immediate Aid/Assistance (unem.)
Recovery: Long Term Growth for the Nation to Pull Out of Depression
Reform: Changes to Economy/Govt. to Ensure It Doesn’t Happen Again

46. The First New Deal: The Hundred Days
Period in which Roosevelt guided thru congress 15 major bills which, together, formed the basis of the First New Deal…began addressing cause/effect of Depression
Specific Actions:
National Bank Holiday; Glass Steagall Act; FDIC
Securities and Exchange Commission
HOLC
AAA
CWA; CCC; PWA
FERA

47. Fireside Chats

48. RADIO BROADCAST
Fireside Chats
An American family sits around the radio listening to President Roosevelt answer his critics in his first fireside chat.
“There is an element in our financial system more important than currency [money], more important than gold, and that is the confidence of the people. Confidence and courage are the essentials of success in carrying out our plan. You people must have faith; you must not be stampeded by rumors or guesses. Let us unite in banishing [driving away] fear. We have provided the machinery to restore our financial system; it is up to you to support and make it work. It is your problem no less than it is mine. Together we cannot fail.”
According to Roosevelt, how should the American people help the government deal with the banking crisis?

49. Step 1: Banking Crisis 1st Step: What were the problems w/ the banks?
Bank Holiday
Banks Closed…Why?
Govt. Inspections…Banks allowed to open when “healthy”
Restores Confidence=People Redeposit $/Banks Invest
Glass Steagall Act and FDIC (1933 Banking Act)
Separates Investment and Commercial Banking
Repealed in 1999…Partial Cause of Current Recession
FDIC: Government Insures Bank Deposits
W/in 4 days of Bank Holiday…people deposit ½ money had withdrawn into banks
Government promises to back banks w/ unlimited amount money (increase supply)

50. Step 2: Stock Market Reform
What were the problems with the Stock Market?
Securities & Exchange Commission
Police the Stock Market
Restrict Buying on Margin
Monitors productivity reports/fraud on market
Dropped the ball in lead up to 2007…Bernie Madoff

51. Step 3: Put More $ in Circulation
US Off the Gold Standard: Increase $ in Circulation
Must turn gold in to Fed
Inflation: Cause dollar value to lower
Keynesian Economics
Inflation Gives Government Spending Power
Wages and Prices Increases

52. Step 4: Direct Government Intervention
NIRA and NRA
Form Industry Codes
Hours; prices; production limits; set up minimum wages
Recognize Unions
Permit Collective Bargaining
Restore Competition
Liberty League
NIRA Challenged as Communist
Supreme Ct. Overturns NIRA in Schechter Poultry v. U.S.…Executive Branch overreached its leg. Power.

53. Step 4: Direct Government Relief
Home Owners Loan Corporation
Aid for Unemployed
Civilian Conservation Corps (CCC)
Infrastructure Projects, Forestry, Flood Control
African Americans Excluded
Fed. Emergency Relief Admin. (FERA)
Gave states $ to provide relief/public works projects
Works Progress Administration (WPA)
Takes over for FERA; 8 million jobs
National Youth Administration (NYA)
Work & Education for youth (16-24)
Financial Aid
Created million jobs, but unemployment still 6 million

54. WPA

55. Step 4: Direct Government Intervention
Tennessee Valley Authority
Used to Promote hydroelectric power…7 states
Control Flooding
River Navigation
Lowers Costs….Nationalized

56. Step 4: Direct Government Intervention
Agricultural Adjustment Act
Subsidies: Farmers paid not to produce
Negatives
A.A. farmers disprop. Hurt
Food production down when millions starving
Declared Unconstitutional (1935)
Food Stamp Act of 1939
Gave away surplus food to poor
Guaranteed small farmers a market

57. Step 5: Social Reform National Labor Relations Act (Wagner Act)
Legitimized Unions, Strikes, Collective Bargaining
Negotiate as group for wages and better conditions
Outlawed blacklists and anti-union activities
Social Security Act
Retirement, Survivors, and Disability Insurance
Unemployment Insurance
Medicare (Health insurance for elderly)
Provides cash grants to states for Medicaid
Children’s Health Insurance Program
Fair Labor Standards Act
Minimum Wage
44 hr. work week; Overtime
Child Labor Laws

58. Criticisms of New Deal Criticism on the Left Huey Long
New Deal didn’t go far enough
Want greater involvement to address uneq. distr. of wealth
Huey Long
Champion of the Poor
Share Our Wealth Society
Call for Mass Redistribution of wealth
Francis Townshend
Intro. idea of creating Social Security
Father Coughlin
Called for nationalizing the banking system
Conservative Criticisms
Opposition from Wealth Industrialists…Why?
Criticized by some as “Socialism”
NIRA
Social Security
Tennessee Valley Auth.
Wagner Act
Too much regulation of business
Growing federal govt. at expense of states’ rights
Deficit Spending causing growing debt

59. New Deal Under Attack The Supreme Court & the New Deal
Court Strikes Down NIRA/NRA
Schechter Poultry Company v. U.S. (1935)
Court argued had given Executive branch too much legislative authority…
Court Strikes Down the AAA
U.S. v. Butler (1936)
Ruled Fed. Govt. was impeding upon States’ authority
Considering cases on Social Security and Wagner Act
NIRA Business Codes: set prices, established minimum wages, limited factories to two shifts a day, shortened worker hours with goal of opening more job opportunities
Guarantee right to form unions

60. Roosevelt and Court Packing Scheme
Election of 1836: FDR wins in Landslide
Mandate to continue New Deal
Goal 1: Reorganize the Supreme Court; add judges…Why?
Sup. Ct. had just ruled New Deal programs unconstitutional …worries about fate of others
Court Packing: Pres. would get to appoint. add.’l justice for every justice 70 or older
Potential Result: court would’ve ↑9→15 justices
Political Mistake: Checked by Congress
Congress blocking Court packing: Checks & Balances

61. 1937 Recession 1937, Econ. reaching pre-Dep. Levels
Calls to cut govt. spending
Concern w/ debt
Triggers Recession
FDR authorizes funds for WPA/PWA
Keynesian Economics
What accounted for rapid drop in unemployment b/n ?

62. Growing International Concerns
1939: FDR proposes no new domestic Reforms
Election of 1940
Breaks tradition: seeks 3rd term
Big issue: WWII…allies (G.B.) embroiled v. Nazi Germany
FDR Wins in 1940

63. Impact of the New Deal
2,500 hospitals, 45,000 schools, 13,000 parks/ playgrounds, 7,800 bridges, 800,000 miles of roads, 1,000 airfields, employed 50,000 teachers
New Deal stimulated the economy…but only WWII would solve any lingering issues
Changed role of federal government: good or bad?
Social Security
FDIC & SEC
TVA
Financial Aid to Students
Min. Wage/40 hr. week
Protection for unions/collective bargaining
Farm Subsidies
Keynesian Economics
Deficit Spending

64. Minorities in the Depression
“Last Hired, First Fired”
Excluded from some public works programs
Disproportionately hurt by AAA programs
Harlem decimated as funding stopped flowing to black communities

65. Minorities & the Impact of the New Deal
WPA records accounts of former slaves
Party Demographic Shift: Northern African Amer., farmers, immigrants, women, progressives, and intellectuals make up the New Democratic Party
First woman, Frances Perkins, and Africans Americans appt. to Cabinet positions
“Black Cabinet”
Mary McCleod Bethune
Bethune-Cookman College
Advisor to FDR

66. Selected New Deal Programs
Program Purpose
Emergency Banking Relief Act Gave the executive branch the right to regulate banks
Farm Credit Act (FCA) Refinanced loans to keep farmers from losing their land
Civilian Conservation Corps (CCC) Created jobs for single, unemployed young men
Agricultural Adjustment Act (AAA) Paid farmers to grow less (declared unconstitutional)
Tennessee Valley Authority (TVA) Built dams and power plants in the Tennessee Valley
Federal Deposit Insurance Corporation (FDIC) Guaranteed deposits in individual bank accounts
National Industrial Recovery Act (NIRA) Established fair competition laws (declared unconstitutional)
Civil Works Administration (CWA) Provided jobs for the unemployed
Works Progress Administration (WPA) Created jobs in construction, research, and the arts
National Youth Administration (NYA) Provided part-time jobs to students
National Labor Relations Act (Wagner Act) Recognized unions’ right to bargain collectively
Social Security Act Provided government aid to the retired and unemployed

67. Main Ideas of Great Depression
1. The U.S. stock market crashed in 1929.
2. The economy collapsed after the stock market crash.
3. Many Americans were dissatisfied with Hoover’s reaction to economic conditions.
4. Roosevelt defeated Hoover in the election of 1932.
5. Congress approved many new programs during the Hundred Days.
6. Critics expressed concerns about the New Deal.
7. New Deal programs continued through Roosevelt’s first term in what became known as the Second New Deal.
8. Roosevelt clashed with the Supreme Court over the New Deal.
9. Parts of the Great Plains came to be known as the Dust Bowl as severe drought destroyed farms there.
10. Families all over the United States faced hard times.
11. Depression-era culture helped lift people’s spirits.
12. The New Deal had lasting effects on American society.