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The Great Depression. Causes – Stock Market Over speculation in the stock market caused the collapse of stock prices Over speculation in the stock market

Presentation on theme: “The Great Depression. Causes – Stock Market Over speculation in the stock market caused the collapse of stock prices Over speculation in the stock market.”— Presentation transcript:

1 The Great Depression

2 Causes – Stock Market Over speculation in the stock market caused the collapse of stock prices Over speculation in the stock market caused the collapse of stock prices Speculation – people invested in the stock market with credit (they bought MORE than they could afford) Speculation – people invested in the stock market with credit (they bought MORE than they could afford)

3 Causes – Overproduction Overproduction – companies were producing more than consumers were buying Overproduction – companies were producing more than consumers were buying Led to inflation – dramatic increase in prices Led to inflation – dramatic increase in prices Summer 1929 – companies began producing less, therefore needed less employees Summer 1929 – companies began producing less, therefore needed less employees Without jobs consumers bough less and production decreased even more Without jobs consumers bough less and production decreased even more

4 Causes – Federal Reserve Federal Reserve Board – responsible for managing interest rates and distributing emergency funds to banks Federal Reserve Board – responsible for managing interest rates and distributing emergency funds to banks FRB raised prices of loan interest rates FRB raised prices of loan interest rates EFFECT: People could not pay back loans EFFECT: People could not pay back loans RESULT: Companies failed and could not meet expenses RESULT: Companies failed and could not meet expenses IMPACT: People lost their jobs IMPACT: People lost their jobs

5 Stock Market Crash October 29, 1929 October 29, 1929 Prices of stocks dramatically dropped to a tenth of their value Prices of stocks dramatically dropped to a tenth of their value Over speculation – banks received stocks of little or no value in place of payment of loan debt Over speculation – banks received stocks of little or no value in place of payment of loan debt Banks failed and the credit system collapsed Banks failed and the credit system collapsed

6 Federal Reserve Board Could have loaned banks government money Could have loaned banks government money Chose to follow laissez-faire policy (did not interfere) Chose to follow laissez-faire policy (did not interfere) Inaction led to a severe contraction in the nation’s money supply Inaction led to a severe contraction in the nation’s money supply There was NO MONEY in the economy There was NO MONEY in the economy

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15 Hawley Smoot Tariff 1930 Purpose was to save American jobs Purpose was to save American jobs Congress increased the price of European imports, so Americans would buy American raw goods Congress increased the price of European imports, so Americans would buy American raw goods

16 European Reaction European countries set their own tariffs higher European countries set their own tariffs higher Shutting their doors to American made goods Shutting their doors to American made goods International trade came to a standstill International trade came to a standstill

17 The Great Depression turned into a World Depression

18 Impact of the Great Depression

19 Urban Life High unemployment and homelessness High unemployment and homelessness Soup kitchens sponsored by businesses and charity organizations Soup kitchens sponsored by businesses and charity organizations Political and social unrest as labor union’s began striking for reform (minimum wage, health and retirement) Political and social unrest as labor union’s began striking for reform (minimum wage, health and retirement)

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21 Unemployment

22 Rural Life Soil erosion from cash crop farming Soil erosion from cash crop farming Series of droughts led to massive crop failures Series of droughts led to massive crop failures “Dust Bowl Days” – dust storms swallowed whole towns, fields became deserts “Dust Bowl Days” – dust storms swallowed whole towns, fields became deserts Thousands of farm foreclosures Thousands of farm foreclosures Rural population migrated throughout the U.S. in search of jobs Rural population migrated throughout the U.S. in search of jobs

23 The Economy Collapsed financial system Collapsed financial system Bank closings Bank closings Failed credit system Failed credit system Limited economic recovery Limited economic recovery The American public looked to the White House and President Herbert Hoover for help The American public looked to the White House and President Herbert Hoover for help

24 Herbert Hoover President 1928-1932 President 1928-1932 The “Do Nothing President” The “Do Nothing President” Limited Reforms Limited Reforms Construction of Boulder Dam Construction of Boulder Dam Reconstruction Finance Corporation provided government loans to banks & large industries Reconstruction Finance Corporation provided government loans to banks & large industries Reforms were ineffective because they were not comprehensive Reforms were ineffective because they were not comprehensive

25 Election of 1932 Franklin Delano Roosevelt Franklin Delano Roosevelt “a New Deal for the American People” “a New Deal for the American People” THREE GOALS: THREE GOALS: Relief Relief Recovery Recovery Reform Reform

26 FDR First Democratic president since the Civil War First Democratic president since the Civil War When FDR was inaugurated one out of four (25%) workers in the U.S. was unemployed When FDR was inaugurated one out of four (25%) workers in the U.S. was unemployed FDR gave hope – “We have nothing to fear, but fear itself.” FDR gave hope – “We have nothing to fear, but fear itself.”

27 The New Deal Bank Holiday – closed banks Bank Holiday – closed banks Government expected and allowed financially secure banks to reopen Government expected and allowed financially secure banks to reopen EFFECT: boosted American’s confidence in banks EFFECT: boosted American’s confidence in banks Government offered loans to those banks that needed help Government offered loans to those banks that needed help

28 Fireside Chats PURPOSE: calm the fears of American citizens PURPOSE: calm the fears of American citizens METHOD: FDR addressed the nation using the radio METHOD: FDR addressed the nation using the radio CONTENT: Explained in clear and simple language how the New Deal programs were going to fix the economy CONTENT: Explained in clear and simple language how the New Deal programs were going to fix the economy

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30 Relief Programs PURPOSE: help those in immediate need PURPOSE: help those in immediate need Alphabet Organizations Alphabet Organizations Peopled referred to them by the letters of their titles Peopled referred to them by the letters of their titles

31 Alphabet Organizations Civilian Conservation Corps (CCC) Provided work and payment to men 18- 25 Civilian Conservation Corps (CCC) Provided work and payment to men 18- 25 Built roads, planted trees, helped flood control projects Built roads, planted trees, helped flood control projects Works Progress Administration (WPA) Works Progress Administration (WPA) Employed skilled and unskilled workers Employed skilled and unskilled workers Construction works built airports, roads, and schools Construction works built airports, roads, and schools Teachers, artist, writer musicians hired for education and entertainment Teachers, artist, writer musicians hired for education and entertainment

32 Recovery Programs PURPOSE: bring the nation out of depression over time through long- term projects PURPOSE: bring the nation out of depression over time through long- term projects

33 Tennessee Valley Authority (TVA) Fixed and built over 25 dams along the TN River Fixed and built over 25 dams along the TN River Created thousands of jobs Created thousands of jobs Provided flood control Provided flood control Hydroelectric power Hydroelectric power

34 Agricultural Adjustment Administration (AAA) PURPOSE: aid farmers who were suffering from the collapse of prices on agricultural produce PURPOSE: aid farmers who were suffering from the collapse of prices on agricultural produce AAA paid farmers NOT to grow crops AAA paid farmers NOT to grow crops EX: 10 million acres of cotton were plowed under and 6 million pigs were slaughtered EX: 10 million acres of cotton were plowed under and 6 million pigs were slaughtered Saved farmers from losing their land Saved farmers from losing their land

35 Reform Programs PURPOSE: correct unsound banking and investment practices PURPOSE: correct unsound banking and investment practices WRITE THIS IN YOUR NOTES!

36 Federal Deposit Insurance Corporation (FDIC) Provided federal insurance to people who had bank accounts Provided federal insurance to people who had bank accounts Assuring their money was safe Assuring their money was safe

37 Social Security Limited federal retirement plan to citizens once they turned 65 Limited federal retirement plan to citizens once they turned 65 Unemployment compensation plan for people fire or laid off their jobs Unemployment compensation plan for people fire or laid off their jobs Provided funds to disabled citizens Provided funds to disabled citizens

38 Legacy of the New Deal the New Deal led to the public’s belief that it was the responsibility of government to… the New Deal led to the public’s belief that it was the responsibility of government to… deliver public services deliver public services intervene in the economy intervene in the economy act in ways that promote the general welfare. act in ways that promote the general welfare. WRITE THIS IN YOUR NOTES!

39 CausesImpactSolutions  Overspeculation on stocks using borrowed money that could not be repaid when the stock market crashed in 1929 and stock prices collapsed  Federal Reserve’s failure to prevent widespread collapse of the nation’s banking system in the late 1920s and early 1930s, leading to severe contraction in the nation’s supply of money in circulation  High protective tariffs that produced retaliatory tariffs in other countries, strangling world trade (Tariff Act of 1930, popularly called the Hawley-Smoot Act) UNEMPLOYMENT HOMELESSNESS COLLAPSE OF THE FINANCIAL SYSTEM (bank closings) POLITICAL UNREST (growing militancy of labor unions) FARM FORECLOSES MIGRATION New Deal (Franklin Roosevelt)  This program changed the role of the government to a more active participant in solving problems.  Roosevelt rallied a frightened nation in which one in four workers was unemployed. (“We have nothing to fear, but fear itself.”)  Relief measures provided direct payment to people for immediate help (Works Progress Administration—WPA).  Recovery programs were designed to bring nation out of depression over time (Agricultural Adjustment Administration—AAA).  Reform measures corrected unsound banking and investment practices (Federal Deposit Insurance Corporation—FDIC).  Social Security Act offered safeguards for workers.

40 What are three causes that led to the Stock Market crash in 1929? What are three causes that led to the Stock Market crash in 1929? How could the Federal Reserve have prevented the Great Depression? How could the Federal Reserve have prevented the Great Depression? What did the Hawley Smoot Tariff of 1930 do and why did Congress create it? What did the Hawley Smoot Tariff of 1930 do and why did Congress create it? How did the European reaction to the Hawley Smoot Tariff assist in creating a world wide depression? How did the European reaction to the Hawley Smoot Tariff assist in creating a world wide depression? How did the Great Depression impact urban life? How did the Great Depression impact urban life? How did the Great Depression impact rural life? How did the Great Depression impact rural life? Why was Herbert Hoover known as the “Do Nothing President”? Why was Herbert Hoover known as the “Do Nothing President”? Identify the three parts and specific examples that made up FDR’s New Deal. Identify the three parts and specific examples that made up FDR’s New Deal.

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