1. Great Depression
The Beginning

2. Great Depression
The United States economy seemed very strong by 1922, only four years after World War I, but by the beginning of the 1930s, the United States was in a deep economic depression.
Why do you think this happened?
As the worry of war decreased, people began buying many products.

3. Great Depression
For example, demand for home appliances increased, and many Americans bought such products on credit.
In addition, overseas orders for American products increased as war-ravaged countries purchased goods from the United States because their own factory systems were destroyed.

4. Great Depression
Factories in the United States went into full production to meet this increased postwar demand, both domestic and foreign.
As war-torn countries rebuilt their factories, they began cutting their orders to American factories, which in turn contributed to American factories’ laying off workers or shutting down when their inventories stopped selling.

5. Great Depression
A long period of rising stock prices is known as a bull market
Many investors bought stocks on margin, making small cash down payments (borrowed money)
Margin call, a demand by the broker for the investor to repay the loan immediately
Speculation, bet on the market climbing and selling whatever stock they could to make money

6. Amount Broker Must Borrow
Buying on Margin
Stock
Investor’s
initial cost
Amount Broker Must Borrow
Investor 1
10 Shares
$7.50
Investor 2
50 Shares
$212.50
Investor 3
100 Shares
$75.00
$42.50
$37.50
$425.00
Shares are being sold at $5.00 each. Initially, the investor owes 15%.

7. Roots of the Great Depression
Efficient machinery led to overproduction
Uneven distribution of wealth added to the country’s problems. (5% of households earned 30% of the county’s income)
Low consumption added to economic problems
As sales decreased, workers were laid off, resulting in a chain reaction

8. Roots of the Great Depression
Installment plan, paying a little at a time, left little money to purchase other goods
Hawley-Smoot Tariff intensified the Depression by raising the tax on imports
Americans purchased less from abroad, in return foreign corporations did not buy American exports.
Federal reserve lowered interest rates instead of raising them, encouraging banks to make risky loans and business thinking economy was growing

9. Causes of the Great Depression
Over speculation in the stock market
Over borrowing (investments made with borrowed money)
Over production in factories and farms
Uneven distribution of wealth
Failure by the Federal Reserve to monitor banks
High protective tariffs

10. Causes of the Depression
Overproduction and low demand leads to employee layoffs
Low wages reduce consumer buying power
High tariffs restrict foreign demand for American goods (Hawley-Smoot Tariff)
Unemployment reduces buying power further

11. Causes of Depression
Hawley-Smoot Tariff: A high import tariff that is considered the most destructive tariff in American history.

12. Depression
Black Tuesday, October 29, 1929, stock prices fell drastically (stocks lost $10-$15 billion in value)
This stock market crash did not cause the depression, but it weakened the nation’s banks
Because the government did not insure bank deposits, customers lost their money.
$30 billion was lost, (roughly equal to the total wages earned by Americans in 1929), as stock prices had dropped by over 1/3.

14. THE 1929 CRASH October 29, Black Tuesday, the bottom fell out
16 million shares were sold.
Prices plummeted
$30 billion was lost

15. Bank Closings Banks had invested in the Stock Market and lost money
By 1933 – 11,000 of the 25,000 banks nationwide had collapsed
Bank run 1929, Los Angeles

16. Effects of the Great Depression
Unemployment: By 1933, 1 out of every 3 American workers were unemployed. Bread lines / Soup Kitchens created to feed the poor

17. The Impact of The Great Depression
Unemployment increased
Homelessness increased
Workers became more militant
Farmers lost their farms
Workers migrated in search of jobs

18. The Depression Worsens
Bread lines – people waited for free food
Soup kitchens – private charities gave a free meal to the poor
Many homeless built shacks in shantytowns, which they referred to as “Hoovervilles” because they blamed the president who had been inaugurated in March 1929.
As crop prices fell, many farmers left their fields uncultivated

21. Hoovervilles
Hoover Blankets
Hoover Flags
Hoovervilles

22. Hoovervilles

23. Hoovervilles

24. Hoovervilles

25. Unemployment Lines

26. Unemployment Lines

27. Bread Lines

28. Bread Lines

29. Bread Lines

30. Soup Kitchens

31. Soup Kitchens

32. Soup Kitchens

33. THE DUST BOWL
A severe drought gripped the Great Plains in the early 1930s
Wind scattered the topsoil, exposing sand and grit
The resulting dust traveled hundreds of miles
Kansas Farmer, 1933

34. The Depression Worsens
A drought in the Great Plains, beginning in 1932, caused the region to become a “Dust Bowl”
Farmers lost their farms and many families moved to California hoping to find a better life
To escape these hardships Americans turned to movies and radio programs
These shows contained stories of triumph over adversity and visions of a better life

35. Dust storm approaching Stratford, Texas - 1934

36. Dust buried cars and wagons in South Dakota in 1936

38. Coping with the Depression
Movies and Radio: allowed people to temporarily forget the problems that they faced.
Stories tended to focus on people overcoming hardships to achieve success.
Snow White, Wizard of Oz

39. The Depression Worsens
Movies like The Wizard of Oz, Gone with the Wind, and Snow White became popular
Books were written about the depression, the most famous was The Grapes of Wrath by John Steinbeck.
It was about an Oklahoma family fleeing the Dust Bowl to find a new life in California.

40. Headlines of 1932 U.S STEEL LAYS OFF ANOTHER 10,000
GENERAL MOTORS STOCK DOWN FROM $500 A SHARE TO $10 A SHARE
CHICAGO TEACHERS FEED 11,000 HUNGRY CHILDREN
IOWA CORN WAY DOWN IN PRICE
KENTUCKY COAL MINERS FOUND LIVING ON DANDELIONS
110 CHILDREN IN N.Y.C. DIE FROM MALNUTRITION

41. Some Interesting statistics
National Income:
1929--$81 billion
1932--$41 billion
Business Failures: ,000
Banks: ,000 failures and 9,000,000 accounts wiped out
Per capita income:
$681
$495
Weekly income of a stenographer:
$45
$16

42. Promoting Recovery
Public Works – government-financed building projects
Hoover increased public works and asked the nation’s mayors and governors to do the same
Hoover tried to persuade the Federal Reserve to put more currency into circulation, but they refused
He set up the NCC (National Credit Corporation) creating a pool of money to rescue the banks, it was not enough to help

43. Promoting Recovery
He set up the Reconstruction Finance Corporation to make loans to banks, railroads, and agricultural institutions, but the economy continued to decline
He opposed the federal government’s participation in relief – money that went directly to very poor families
He felt that was the responsibility of state and local governments

44. TOO LITTLE TOO LATE public works projects
Reconstruction Finance Corporation – created to strengthen banks and businesses through government loans
prosperity would “trickle down” to the average citizen
Hoover’s flurry of activity came too late to save the economy or his job

45. The New Deal Franklin D. Roosevelt elected in 1932
“the only thing we have to fear is……”
Eleanor Roosevelt: Supporter of the little person
Radio talks with America: “Fireside Chats”

46. FDR created a program of relief and reform called the New Deal
Federal $ was granted to states to provide the needy w/clothes, food, shelter
Public works programs hired people to construct public buildings, roads, and other projects

47. Franklin Delano Roosevelt
“The only thing we have to fear is fear itself.”
What did Roosevelt mean by this statement?

48. Roosevelt’s Approach to Solving the Problems of the Great Depression
Relief: Programs such as the Works Progress Administration (WPA) provided direct payment to workers.
Recovery: Programs such as the Agricultural Adjustment Administration (AAA) were developed to bring the nation out of the Depression over time. The Tennessee Valley Authority (TVA) was also established.

49. Roosevelt’s Approach to Solving the Problem of the Great Depression
Reform: Programs such as the Federal Deposit Insurance Corporation (FDIC) were developed to prevent similar problems in the future.
The Social Security Act provided retirement protection.

50. Roosevelt’s Hundred Days
President FDR sent many bills to Congress
Congress passed 15 major acts to help the economy, these programs made up the First New Deal
The Securities and Exchange Commission (SEC) was created to regulate the stock market and prevent fraud
The Glass-Steagall Act prohibited commercial banks from speculating on the stock market. It created the Federal Deposit Insurance Corporation (FDIC)

51. Managing Farms and Industry
The FDIC provided government insurance for bank deposits up to a certain amount. It covered peoples savings in the banks from loss
Agricultural Adjustment Administration (AAA) helped some farmers but mostly just the large commercial farmers who raised one crop
The National Industrial Recovery Act suspended antitrust laws
PWA – broke down long standing racial barriers in the construction trades. (Public Works Administration)

52. Spending and Relief Programs
The Civilian Conservation Corps (CCC) gave unemployed men aged 18 to 25 the opportunity to work with the national forestry service
They planted trees, fought fires, and built reservoirs.
The most important aspect of Roosevelt’s New Deal was the change in the spirit of the American people. Their faith in America was restored.

53. Social Security Act
The Social Security Act provided security for the elderly, unemployed workers, and other needy people
It provided welfare payments to needy people, including those with disabilities and poor families with young dependent children
It provided a monthly retirement benefit for people when they stopped working at age 65

54. Long-Term impact of New Deal
The long term impact of Roosevelt's New Deal was an increased role of the federal government.
Federal government grew larger and gained more power which we are still dealing with today.
He used the government to try to solve economic problems which stemmed from the government interference in the free market system in past administrations. (Ex: T.R., Taft, and Wilson)