1. Essential Questions  What were the causes of the Great Depression?  What were the effects of the Great Depression?  How did Presidents Hoover and Roosevelt attempt to solve the problems caused by the Great Depression?  How did President Roosevelt Change the role of government?  How successful was the New Deal in solving the problems of the Great Depression?

2.  Stock Market – The place where stocks and bonds are bought and sold.  Bull Market – A period of growth for the stock market, stock prices are rising  Bear Market – A period of decline for the stock market, stock prices are falling.  Buying on Margin – Borrowing money to buy stock, usually 90% of the cost.  Margin Call – A call from the broker that all loans must be paid right away.  Speculation – Buying and selling stock in the hopes of getting rich quick.  Stock Market Crash – Stocks were overvalued, investors sensed danger and began selling their stocks. This caused prices to fall which caused other investors to sell their stocks and prices fell even further.  Black Tuesday – 10/29/1929 biggest one day drop of the stock market. 16 million shares sold. 10-15 billion lost in 1 day.

3.  Drop in farm prices  Massively uneven distribution of wealth  Stock and real estate speculation  The Stock Market Crash  Drop in consumer confidence  Overproduction of goods  Overextension of credit  The Banking Crisis  Bad economic policies

4.  1920's had been a period of good economic times  Tues. Oct. 29th, 1929 - NYC Stock market crashed, causing a depression that would last until 1942

5.  During World War I, farmers were encouraged to grow more food. As a result, farmers took out loans to buy land and supplies to increase production.  After the war ended, demand for food went down (as did prices) but farmers continued to produce more food, causing prices to drop even further.  As prices dropped, farmer income dropped, so farmers produced more food to increase their income, and the cycle continued…  As farm income dropped, farmers weren’t able to make their loan payments, and banks foreclosed on their farms.

6.  0.1% at top owned as much as bottom 42% of American families (42% below poverty line )  of the 58% above the poverty line, most fell into the middle class category - they were not wealthy; they had jobs b/c of the industrialization & consumerization of the American market place  this middle class depended on their salaries and when consumption declined they lost their jobs  and b/c of low savings, they had to cut back on their purchases  this decline in consumption among the middle class ruined the whole country

7.  the public invests in companies by purchasing stocks; in return for this they expect a profit  b/c of booming 1920's economy, $ were plentiful, so banks were quick to make loans to investors  also investors only had to pay for 10% of the stock's actual value at time of purchase › this was known as BUYING ON MARGIN, and the balance was paid at a later date

8.  this encouraged STOCK SPECULATION - people would buy and sell stocks quickly to make a quick buck  b/c of all this buying & selling, stock value increased (Ex: G.E stock $130  $396/share)  this quick turnover didn't aid cos.  they needed long term investments so they could pay bills (stock value was like an illusion)  unscrupulous traders would buy and sell shares intentionally to inflate a given co.'s stock value  all of this gave a false sense of security/confidence in the American market

9.  beginning in Oct. 1929, investors’ confidence dropped, leading to a market collapse  all tried to sell at once and bottom fell out of market = panic selling… (many bankruptcies as banks called in loans)  only a tiny minority of people traded on the stock exchange, but they possessed vast wealth, and the crash had a ripple effect on the economy

10.  For the poor.......  mass consumption was already low (poor could afford to buy little)  unemployment rose  no gov't assistance at first  Unemployment means people cut back on consumption = oversupply of goods  so w/ additional unemployment  purchasing power declined again  reduced productivity yet again (= ECONOMIC CYCLE) Unemployment Production Consumption

11.  between 1924-1927, U.S. productive capacity doubled but it was because of technological innovation  electricity and mechanical advances made for better production, but no new jobs were added to the economy  so more consumer goods were available, but there weren't necessarily more people to buy them (OVERPRODUCTION)  Consumers purchased goods throughout the 1920’s using the instalment plan, and simply couldn’t afford to buy anything else (OVEREXTENSTION OF CREDIT)

12.  Investors borrowed money to buy stocks (on margin) but now couldn’t pay off their loans  Banks too had invested depositor’s money in the stock market, and with the crash, they lost most of the money  Having lost money, banks cut back on loans to individuals and business at a time when they (and the economy) needed it most  Bank Closures: By 1932, 3500 banks had closed

13.  Bank Runs : Deposits were not insured by the government at this time so when a bank closed, all the money that had been deposited is gone.  When rumors of bank closings began, people rushed to banks to withdraw their money, thereby causing even good banks to collapse.

14.  TARIFF WARS  Democrats in Congress passed a high tariff ( SMOOT HAWLEY ) to protect U.S. industry (hoped to stimulate purchasing of U.S. goods)  this turned out to be a fatal error...  Congress did not understand that the world had become a GLOBAL ECONOMY  in retaliation other countries passed high tariffs and no foreign markets purchased American goods, so U.S. productivity decreased again  Federal Reserve keeps credit tight so banks less likely to make loans

15.  Pres. Hoover Responds he didn't believe that the gov't should play an active role in the economy  he persuaded bankers/business to follow his policy of VOLUNTARY NON - COERCIVE COOPERATION where he gave tax breaks in return for private sector economic investment  Hoover also organized some private relief agencies for the unemployed  he worked out a system with European powers that owed U.S. money as a result of WWI debts = HOOVER MORATORIUM - put a temporary stop to war debt & reparations payments  Euro. countries were to purchase American goods instead to stimulate American economy

16. HHoover was increasingly unpopular, but he continued to try...  he persuaded Congress to establish the RECONSTRUCTION FINANCE CORPORATION hhad power to make emergency loans to banks bbut it was too little too late… aand Hoover wouldn't involve himself in any programs of direct govt. aid to individuals -didn't want to erode Americans sense of "RUGGED INDIVIDUALISM"

17.  Business & Bank Failures  Unemployment (25%) › Underemployment › Wage Cuts  Home and Farm Foreclosures  Divorce, Abandonment, Suicide, etc.  Homelessness & Hunger  Protests & Marches  Bonus Army  Dust Bowl  A New Direction

19. › Side by side material fits more naturally. › Widescreen adds drama to graphics and images.

22.  people were frustrated - isolated protest movements  EX: Dairy farmers frustrated w/low price of milk refuse to sell (dump it)  EX: WW1 veterans (pensions discontinued by congress) march on Washington = BONUS MARCH (by BONUS ARMY)  they reached Washington by 1931, set up shantytowns = HOOVERVILLES (food scraps = HOOVER-MEALS, hitchhiking journeys = HOOVER RIDES)  after one year they were forcibly dispersed by the Army (MacArthur/Eisenhower)

23.  1932 ELECTION  1 out of 4 was unemployed…  nat'l income was 50% of what it had been in 1929  Repubs. nominated Hoover  no hope  winner by a landslide = FRANKLIN DELANO ROOSEVELT (Dem - N.Y. governor)