1929-1939
The Great Depression
Impacts of Depression
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Prices of stock dropped 40%
86,000 business failed
9,000 banks went out of business
9 million saving accounts
Wages were decreased by at least 60%
Unemployment from 9% to 25%
15 million people unemployed
The 6 Causes
1. Unequal distribution of Wealth
- 2% owned 3/5 (60%) of wealth…
- … 98% shared the remaining 2/5 (40%)
- ½ population living
below poverty level
- unequal balance
between production
and consumption
The 6 Causes
2. Unequal distribution of
corporate power
- mergers reduced competition
- when company fell = loss of jobs & stock
- 200 corporations controlled 50% of all
products being made
The 6 Causes
3. Poor banking structure
- no regulations
- small banks “owed” to larger banks
- unequal loan to deposit ratio (esp. small towns)
“It’s A Wonderful Life” movie clip
** List at least three actions taken by George that would
not be permitted in banks today.
The 6 Causes
4. High Tariffs and War Debts
- Hawley-Smoot Tariff = tax on imports
- What was the goal?
- Led to unbalanced foreign trade & …
- economic warfare = other countries did same
- war debt: U.S. as creditor; E. couldn’t repay
The 6 Causes
5. Overproduction in
Industry & Agriculture
- farmers bought machinery
on credit…
- …to increase production
- >> overproduction
- >> no jobs = no $ to buy
- >> couldn’t pay off debt...
- … foreclosures on farms
The 6 Causes
6. Stock Market Crash
- Reasons for investing in market
- had $ already to invest
- “buying on margin”:
borrow $ to invest
hoping to get rich quick
- October 24th: Black Thursday
- JP Morgan: financer
- October 29th: Black Tuesday ($16 mil)
Buying on Margin
Want to buy 100 shares of a stock that costs $50 per share
You would need $5,000 (plus commission) to buy
Buy stock on margin: borrow up to $2,500 (50%) of the
purchase price and pay remaining $2,500 yourself
If the stock goes up to $75 and you sell it, you would be
able to pay the $2,500 (plus interest) and keep roughly
$5,000 (a 100% gain).
Buying on margin can greatly enhance investing returns…
But, if stock falls – you are in trouble.
The Effects
Widespread unemployment >
poverty > hunger
- national income:
1929 = $81 billion
1932 = $41 billion
- 15 million jobless
The Effects
Breakdown of Families
1. personal suffering >> suicide
2. high school drop out rate >>
- kids working in sweatshops
3. runaways (Hobos riding the rails)
The Effects
Organized Protests
- farmers marching on banks
with pitchforks and guns
- tried to prevent foreclosures
The Bonus Army
Who were they?
What did they want?
What did they do?
What happened to them?
The Effects
The Bonus Army
- WWI soldiers promised $1 per day extra served
- To be paid in 1945
- Allowed to borrow
against it in 1931
- 1932 asked for full
amount = denied
-Thousands from all
over U.S. marched
with their families
on Capitol Building in
D.C. to protest
-Calvary, tanks
-Used tear gas
and bayonets
- Sent home with
money from their
bonus pay
Rugged Individualism
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No direct relief given by federal government
Money would be given to businesses
 Local government should give
 Was nothing new – up until this time,
this was the norm…
 … but this was not what people wanted
aid
Resulted in: Hoovervilles –
shantytowns of cardboard
Hoover Blankets & Hoover Flags
Hoover’s Policies
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Boulder (Hoover) Dam

Hydroelectric power
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Federal Farm
Marketing Board
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Arizona/Nevada
Limited production
Helped market crops
Hoover’s Policies
 Reconstruction
Finance Corporation
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Loans to banks,
railroads, businesses
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Home Loan Bank Act
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Prevented foreclosures
on farms and homes
3 Characteristics:
1.Over-cultivated land
2.Severe drought
3.High Winds
1932 Election:
Hoover vs. FDR
“This campaign is more than a contest
between two men. It is more than a contest
between two parties. It is a contest between
two philosophies of government.”
- What is this saying about Hoover & FDR?
- Their political ideologies?
- How was the federal government’s role
going to change?
FDR vs. Hoover
FDR: Keynesian or "pump priming" economics
- Based on beliefs of economist John Maynard Keynes
- Money should be invested in people, the working class
- Then, spending would increase with new money in
circulation, then businesses would expand to meet the
new demand and hire new workers
Hoover: supply side or "trickle down" economics
- Money was to be invested at top, in business
- Then, businesses would expand, hire new workers and in
turn, spur on spending and further economic growth
http://www.socialstudieshelp.com/USRA_New_Deal.htm
Escapism
“We’re the first nation to go to the
poorhouse in an automobile.”
- Actor Will Rogers
Movies
 Car rides
 Smoking
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The Arts in the 1930s
Painting
American Gothic
Grant Wood
The Arts in the 1930s
Literature
The Arts in the 1930s
Literature
Of Mice
and Men
The Arts in the 1930s
Literature/Cinema
Margaret Mitchell
The Arts in the 1930s
Literature
“Citizen Kane”
Orson Welles
Getting out of
the Depression
Frances Perkins
Sec. of Labor
Eleanor Roosevelt
A woman is like a tea bag- you
never know how strong she is
until she gets in hot water.
Great minds
discuss ideas;
Average minds
discuss events;
Small minds
discuss people.
It is not fair to ask of others what
you are unwilling to do yourself.
I could not at any age be content to
take my place in a corner by the
fireside and simply look on.
No one can make you feel inferior without your consent.
Fireside Chats
The
First
1. Relief
Immediate action to halt economy’s deterioration
2. Recovery
"Pump - Priming" Temporary programs to restart
flow of consumer demand
3. Reform
Permanent programs to avoid another depression &
insure citizens against economic disasters
RELIEF
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Bank Holiday
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Federal Emergency Relief Act (FERA)
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Direct loans to people to prevent foreclosures
Civilian Conservation Corps (CCC)
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Closed all banks for inspection
Reopened “safe” banks (some with loans)
Jobs building roads, plants trees, soil erosion
Civilian Works Administration (CWA)
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Jobs building bridges, causeways, hospitals
Recovery
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Tennessee Valley Authority (TVA)
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Works Progress Administration (WPA)
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Work for artists & build roads, libraries, schl.
National Recovery Act (NIRA)
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Jobs building factories & dams (elec. to farms)
Priced products, set min. wage, work condit.
Agricultural Adjustment Act (AAA)
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Paid to reduce crops, unseeded acres, plow
under crops/kill animals
Reform
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Security & Exchange Commission (SEC)
 Watch stock market – no fraud / insider trading
Federal Deposit Insurance Corporation (FDIC)
 Insured all bank accounts to $5,000
National Labor Relations Act / Board (NLRA/B)
 Wagner Act – fair business (no monopolies)
Social Security (SS)
 Today’s workers pay for today’s retirees
Senator Huey Long
“Share the Wealth”
- Socialist
- Guaranteed $5,000 to all
- Take millionaire’s $ and divide
- Everyone gets car, house, radio
- “Every man a king”
- Shot and killed in 1935
Father Charles Coughlin
- More economic & political
talks on radio than religious
- Supported FDR in 1932
- Economic reform =
anti-comm. & anti-capit.
- Supported fascism
- Anti-semitic (nickname)
- Isolationist
- Silenced
Unconstitutional
Congress
Can’t
Regulate
agr
State
Gov’t to
Regulate
Intrastate
BuSineSS…
Hurt small
business
Court Packing
Changing the Supreme Court…. WHY???
FDr’S leGaCy
PROS
CONS
- Unemploy. decreased
- National debt increased
- Increased income
- Doubled fed.
Bureaucracy
- Preserved resources
- Cushion for elderly/sick - Didn’t increase small
business
activity
- Supported unions
- Ensured bank safety
FDr’S leGaCy
Set a precedent that
the federal government is
responsible for the
economic welfare
of the people
F. D. Roosevelt:
“you have nothinG
to fear, except
Fear itSelF”
IN AT LEAST A ONE
PARAGRAPH RESPONSE:

Evaluate the effectiveness of FDR’s
NEW DEAL legislation. Look at: impact
both short and long term. What should
have been done differently? Are there
any lessons that Barack Obama
should specifically learn from FDR, in
your opinion? How has this recession
impacted or how will impact you in the
long run?