 The Great Depression was the worst economic crisis in the
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history of America
Several flawed economic and political policies contributed
to the stock market crash
The Depression affected Americans of all classes
The New Deal demanded significant spending on the
federal level to combat the Depression
The New Deal sought to solve the problems of the
Depression by providing public work projects
The New Deal changed the role of government in American
life
The impact of the New Deal affects American life today
 What underlying issues and conditions led to the
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Great Depression?
Why were the policies of the Hoover Administration
ineffective in dealing with the problems of the
Depression?
How did the Great Depression impact American
society and the American dream?
How did President Franklin D. Roosevelt change the
role of the presidency in American History?
How successful was the New Deal in solving the
problems of the Great Depression and restoring
American prosperity?
1.Massive uneven
distribution of
income
2.Stock
Speculation“Get rich quick
scheme”
3.Agriculture
Problems
4.Overextension
of Credit
Depression
Causes
5.Surplus of
goods
 October 29, 1929-Black Tuesday marks the start of the
Great Depression
 Panic selling-causes
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prices to drop
By the last week in Oct.
the bottom fell out of
the stock market.
Black Tuesday16 million shares sold,
nearly worthless
30 billion lost in all
 Speculation- was a way of gambling with short-term
investments.(buying on the margin)
 Speculators would buy stocks they thought would
quickly rise in price. After the price of their stocks
went up, they would sell the stock for a profit.
 A person who bought stock in Hershey Chocolate in
August 1928, for example sold it in September 1929 ,
and made a 100% profit.
 Banks commonly paid an interest rate of 5-7%, making
profit from stock much more attractive.
 People would buy on
margin
 “pay only a fraction of a
stock’s $ value”
 Borrowing the rest of the
money from a stockbroker,
 Paying the broker back
(plus commission) when
the stock went up and the
investor sold it.
Buying on Margin
Normal
Start = $500
$500 / $100 (per share)=
5 shares of stock
Shares cost $100/Share
$500 = down payment (5%) =
$10,000 / $100 (per share) = 100
Shares of stock
Normal
Buying on Margin
5 Shares x $200 = $1,000
100 Shares x $200 = $20,000
$20,000 -$9,500 = $10,500
$10,500 – $2,100 (20%
Commission) = $8,400
Using above amounts = Stock value increases to $200 per share
Buying Normal
Buying on Margin
Using the above amounts: Stocks worth $0
5 shares x $0 = $0
Loss of $500
100 shares x $0 = $0
Loss of $10,000
BIG PROBLEM= Still owe
$9,500
 During the Roaring 20’s margin buyers made fortunes.
 As long as stock prices kept going up, brokers were
happy to lend money to speculators.
 As soon as prices began to decline, brokers asked
investors to put more money down. (Margin Call)
 When the investor did not have more money to put
down, the broker sold the stock and kept the proceeds
as repayment for the loan.
 By summer of 1929, brokers
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had lent out more than $6
billion in margin loans to
their customers.
Saturated the market.
Brokers started calling for
there margins.
Investors did not have cash
to pay for the margin.
Brokers were forces to sell
the stocks.
Panic
 Banks lent their cash reserves to
stockbrokers.
 The brokers lost the money when their
customers failed to repay the loan.
 Saving deposits were not federally
insured
 Bank Runs- massive withdrawals,
money not insured, bank closes-no
money
 Thus resulting in millions of innocent
people losing their savings in the
financial crunch.
 By 1933, over 20% of banks
had closed over, 10,000 across
the U.S. since 1929
Keynesian
Monetarist
 Fall in Demand was the
 Fed caused the
cause
 Federal government
must spend to stimulate
 Fed should print more
money, lower interest
rates, cut taxes
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Depression
Raised interest rates
Didn’t help banks
Discouraged unsafe
loans
Return to the gold
standard
 Tax increases in 1932
 Fed Policy
 Easy money of the 20’s- low interest rates
 In 1928, the Fed raises interest rates and cut the money
supply
 Tariffs
 1931, Congress passed high tariffs
 Closes foreign trade
In Cities
On Farms
 Mass unemployment
 Falling prices
 Wage cuts
 Foreclosures
 Evictions
 Dust Bowl-worst environmental
 Bread lines-soup kitchens
 Hoovervilles
disaster
 Sharecroppers/Migrant workers
 Migration
 Okies, west for jobs
The Great Depression shatters many people’s life. The most popular song
of the era sums up the disillusionment felt by many.
Crime and kidnappings increase, birth rates drop, families are separated,
malnutrition grows, # of orphans grows, # of homeless grows.
Hoover doesn’t cause the
Depression, but he is
blamed.
Hoover opposes
direct federal aid
 Encourages
Volunteerism
 Maintain jobs, wages,
prices
 Wealthy to give to
charity
 Local and state
governments to provide
jobs and relief
Volunteerism Fails
 By 1932, Hoover begins a new plan-
more direct Federal aid
 Government will loan money to
banks and big businesses , farm
cooperatives, creates public works
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Farm Board
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Revenue Act
 Increase taxes on wealthy
 Raises estate, corporate taxes
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RFC- aid to states
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Emergency Relief Act-July 32- $300
million in unemployment benefits
 WWI veterans camped out
in D.C. demanding their
bonus pay($1,000 by 45)
 17,000+veterans march on
D.C., camp in tents
 Congress did not pass the
bill to give them their
bonus early.
 Army Chief of Staff
Douglas MacArthur
ignores orders and
violently removes the
‘Army’
Hoover
Franklin D. Roosevelt
Franklin D. Roosevelt won by a landslide. Hoover with
all of his optimism and organizational skill, was defeated by the
Depression and its crushing economic problems.
 What: Worst
environmental disaster
in American History
 When: 1931-1939
 Where:
 Use the textbook pages
438-439, and the
handout.
 Identify the following
about the Dust Bowl
 Causes:
 Effect/Results:
 Responses:
Causes
Effects/Results
Responses
-Over farming
-Drought
-Removal of
Grasslands
-High Winds
-Dust Pneumonia
-Migration
-Loss of topsoil,
crops, livestock
-Plagues
-Static electricity
-Soil Conservation
Service
-Forest Serviceshelter belts
-People attempt
many things to bring
rain
 Form a small group and
list everything you know
or have heard about FDR
and the New Deal
 Governor of New York
 Polio in 1921
 Democrat
 Easily defeated Hoover in 1932
 First President to embrace radio
 New Deal
 Broad Executive Power
 Increased Power of Federal
Government
 Longest President
 Love-Hate Relationship
“The only thing we have
to fear is fear itself….”
 “A New Deal for the American people.”
 Relief- for the unemployed
 Recovery- to stimulate the economy
 Reform- laws to help lessen the threat of another
economic disaster
 The Hundred Days- Enacted 15 major bills(March 9June 16 1933)
Reform
Relief
The New
Deal
Recovery
 FDR declares a temporary bank shut down
 FDR assured the people their money would be safe in
the bank- only reopens banks in sound financial shape
 Creates FDIC
 Fireside Chats- Radio address to people about the
issues and promote the “New Deal” legislation.
 Restored their confidence
 Advisors with varied view points
 “Brain Trust”
 1st female cabinet member, Frances Perkins.
 Truth-in-Securities Act:
 designed to eliminate fraud in the stock market. Honest
info. to investors
 The Glass-Steagall Banking Act:
 prohibited banks from investing savings deposits in the
stock market, which was too unpredictable to assure the
safety of these funds.
 SEC is created to regulate the stock market and prevent
fraud.
 Indian Reorganization Act of 1934- prevented
government from selling unclaimed reservations land
and selling it to people who were not Native American.
 Native Americans could determined how their lands
would be used and managed.
 Encouraged Native Americans to establish their own
government’s on reservations.
 For the unemployed
 Federal Emergency Relief Administration (FERA):
 Would distribute $ to state and local relief agencies.
 With days of the bill being passed $5 million dollars was
handed out.
 Dole- Government Charity, opposed want work
programs
 Civilian Conservations Corps (CCC):
 Put thousands of unemployed men and women to work
each season on environmental projects.
 County, State and National parks, local projects,
restoring forests
 Home Owners’ Loan Corporation (HOLC)- Loans to
people behind on mortgage payments
 10% of home owners use
 Farm Credit Administration (FCA)- Loans to farmers
to keep farms and land
 Public Works
Administration (PWA):
 Helped provide jobs for
the unemployed. 4
million
 $3.3 billion to carry out
public projects.
 Schools, dams,
refurbishing government
buildings, planning
sewage systems,
improving highways
 Stimulate the economy
 Goals was to increase the productivity of the economy
 National Industrial Recovery Act (NIRA):
 To help factories recovery faster
 Called for business leaders to confer and establish codes
to set quality standards, production levels, prices,
maximum work hours, minimum wages.
 Also declared that workers should be allowed to
organize labor unions and bargain collectively. ---->
 Shorten work hours, which forced business to hire more
people.
 Declared unconstitutional
 Recovery
 Established to help farmers that were hit hard by the
Great Depression
 Paid farmers Subsidy, or financial assistance, to
reduce the production of crops and the number of
animals they raised.
 This would bring supply of agricultural products more
in line with the demand for them, causing prices to
rise.
 Declared unconstitutional
 Recovery
 Built dams in the Tennessee River to turn the river’s
water power into electricity.
 Would also enrich the land, create fish-filled lakes that
would in turn increase tourism, and provide jobs.
 Huge success
 $4.8 billion Relief Program
 Building projects including hospitals, schools, airports
and playgrounds.
 Put unemployed teachers, painters, and writers back
to work
 Improved the quality of life in communities across the
nations
 8 million jobs
 When the Supreme Court declared the NIRA was
unconstitutional, workers lost the right to join a union
and collectively bargain.
 Wagner act- restored those rights. It also set up the
National Labor Relations Board, which was created to
ensure that employer followed the new law.
 Soil Conservation Act- required farmers to reduce the
acreage of the same crops the AAA had previously paid
them not to plant, new farming techniques(Dust
Bowl)
 Fair Labor and Standards Act: outlawed child labor,
established a federal minimum wage, 40 hour work
week, overtime pay
 Social Security Act: Old age pension system, survivors,
unemployment insurance, aid for dependent mothers
and children, disabled
 Expanded the Role of Government
 Federal Regulation
 Under the New Deal for the first time the federal
government assumed responsibility for the economic
welfare of individuals as well as for the health of the
national economy at large.
 Deficit Spending
 Stock Market monitored
 FDR’s New Deal proved to be the turning point in the
country’s history.