3. The Great Depression 1929-1941 “Brother, can you spare a dime?”

4. The DEPRESSION: Causes & a Spark Causes of the Depression, Part 1 Overproduction, too much stuff (Factories and Farms) a. Factory Workers begin to lose their jobs - Workers cannot buy goods (widget-maker can’t afford a widget!) b. Farmers Can’t Pay Their Bills -low prices (can’t pay back loans / make a living)

5. The DEPRESSION: Causes & a Spark Causes of the Depression, Part 2 Bank Failures a. People default on loans (Can’t pay Back) b. Banks close and lose capital (money) c. Banks cannot cover their deposits, because it was lent out to bad creditors 5,000 banks close between 1929-1932 People lose entire LIFE SAVINGS! Famous “bank runs” (or run on banks) occurred at this time a as people rushed to get their money out before the bank closed.

6. The DEPRESSION: Causes & a Spark Causes of the Depression, Part 3 Buying on Margin (Borrowing $$) - Buy stock by just paying a small portion of what the stock is worth ex.- 100 shares at $10= $1000 only pay $300; You still owe $700 -Problem: if the market dips and you lose your money, you can’t pay back stock broker what you owe  the stock broker can’t pay back bank  bank is out of money… SPECULATION!  …when speculation doesn’t pan out…ummm…it’s bad.

7. = + People Default on Loans Banks have no money to give people Banks Close People Lose savings

8. SUPER FUN, FUN HISTORY ANALOGY! (THIS IS TO THIS AS THAT IS TO THAT) WW1: Nationalism, Imperialism, Alliances and Militarism ARE TO the Assassination of Archduke Ferdinand.  the spark AS Overproduction, Bank failures, speculation and buying ‘on margins’ ARE TO ______________?______________.  the spark

9. The DEPRESSION: Causes & a Spark SPARK of the Depression Stock Market Crash! October 29, 1929 Summer 1929, Investors begin to sell stocks Supply & Demand: Massive Sell-Off (low demand…) so prices begin to ____?____

10. The DEPRESSION: Causes & a Spark SPARK of the Depression Stock Market Crash! The values of stocks plummets – those with wealth on Tuesday were poor by Friday

14. CompanyBefore GD%+/- after 10/1929During GD General Motors (GM)$73(-89%)____?____ U.S. Steel$266(-92%)____?_____ RCA$101(-97%)____?____ Montgomery Ward$138(? %)____$4____ Nyolc, huszonketto, ketto.ot, kilencvenhet%)

16. $30 billion in stock values "disappear" by mid-November, 1929.

17. HW: Bookwork: READ pp. 246-251. On p. 251: do #1, 3, 4, 5, 6 + p 248 (graphs) 1 and 2 + critical thinking on p 249.

18. …end part one.

20. Run on a Bank

21. President Hoover & The Great Depression (1929-1933) Hoover’s reaction: cut government spending and raise taxes to try to balance federal budget; this worsened economy Hoover preferred private efforts to revive the economy; did not believe the government could/should intervene Laissez Faire Economics – government should not intervene in the economy Finally Hoover realized government help was essential: approved public works programs including famous Boulder Dam. (aka?)

22. But Herbert Hoover’s legacy was also set in stone….due to 25% unemployment and poverty….

23. “Hoovervilles”: reaction/protest to new American poverty.

26. Franklin D. Roosevelt defeats Herbert Hoover in 1932 election Who was Franklin Roosevelt? -Fifth cousin of Teddy -Democrat -Served in the Navy and as Governor of NY -Stricken with polio (an often deadly disease of the 1900’s) o Polio left him paralyzed at 39 years old, FDR regained some use of his legs

27.  FDR and the New Deal  -FDR’s First 100 days: -shutdown of banks- only healthy ones would reopen -fireside chats: radio talks where he talked directly to the American people -FDR increased the power of the presidency -His election and changes he brought renewed confidence in democracy (unlike, say, Germany…)

28. The NEW DEAL (echoes of the ___________ Deal… thinkTR!) The New Deal was an unprecedented federal program, with never-before-seen involvement by government in the private sector. 1st New Deal - 1933-1935: Relief, Recovery, Reform These were gov’t run enterprises – see p 258 in text! FDR believed in trying a program, and changing or eliminating if it was unsuccessful.

29. The NEW DEAL

30. 2nd NEW DEAL: Included the Social Security Act: government takes small amount from income, matched by employer, individual receives money at retirement 1936: FDR wins re-election in landslide* *FDR was the only POTUS in American history to win FOUR presidential elections (1932, 36, 40, 44) – yet he would not serve the full16 years…

31. New Deal Programs Still Around Today Social Security – national pension (retirement) system Oversight of labor practices – National Labor Relations Board Protection for savings (“Member” FDIC, $100,000) Regulation of Stock Market – Securities and Exchange Commission (SEC)

32. Footnote on FDR: Most presidents deal with one major crisis during their term; One crisis they are remembered for: Examples: Nixon had Vietnam. Bush had 9/11. Carter had American hostages in Iran. Kennedy had the Cuban Missile Crisis. …strangely, the Great Depression would be only the first of TWO major crises FDR handled. (more on this soon…)