THE GREAT DEPRESSION
MAJOR CAUSES
Stock Market Crash (1929)
Bank Failures
Reduction in Purchases
THE STOCK MARKET
CRASH
The Days Before
•High trading volumes (buying/selling)
•Steadily rising prices
•Peaked on Sept. 3, 1929, then fell into decline
The Crash
•Decline Accelerated into “Black Thursday”(Oct. 24, 1929)
•Panic on the trading floor
•Record number of trades due to rapidly falling prices
Failed Attempt at Recovery
•Wall Street’s leading bankers met to find a solution
•Elected Richard Whitney (then Vice President of NYSE) to place a
massive bid on many “blue chip” stocks in the hopes of boosting
recovery
•Only succeeded in stalling the decline for the remainder of the day
BANK FAILURES
Poor Infrastructure
Very little government involvement in the American banking
system at the time/non-exsistent regulations
On average, 70 banks would fail, nationally, during the 1920’s
Bad Loans
Giving out loans for “buying on margin”
When, the stock market crashed, the banks couldn’t collect
Panic
People saw what was happening in the stock market, and rushed
to withdraw their savings in what’s known as a “bank-run”
Banks had no money to give back due to the inability to collect
on the loans used for buying stock
REDUCTION IN PURCHASING
With the economic decline,
people were afraid to spend
any money, and instead
held onto whatever money
they had
This led to less production,
which led to massive job
cuts, leaving much of the
country unemployed
With no income, spending
came to an almost
complete halt, and the
economy slumped even
deeper into the depression
Because of President
Hoover’s lack of
action resulting in
progress during the
early stages of the
Depression, it was an
easy victory for
Franklin D. Roosevelt,
who promised action
against the failed
economy.
New President, New
Policies
The stock market
crash occurred after
only 8 months of
President Hoover’s
term. Hoover’s
policies toward the
depression were
based on
volunteerism. He also
believed that the
private sector would
recover on its own,
without the
governments help.
Presidential Election
1932
President Herbert Hoover
THE TURNING POINT TO RECOVERY
As soon as FDR took
office, he began
building the
foundation for the
rebuilding of the
American Economy.
He called his plan for
the future “The New
Deal”
FDR’S NEW DEAL
“FIRST ONE HUNDRED DAYS”
Closed all banks nationwide for a three day “cool down”
FDIC was created (insures money placed into the banking system, up to $5000,
at the time)
The Gold Reserve Act was passed, taking the U.S. away from a gold-backed
currency system
The Economy Act was passed, cutting government salaries and saving
$500,000,000
The Agricultural adjustment Act (AAA), Resettlement Administration (RA), Farm
Security Administration (FSA), Rural Electrification Administration (REA), and
Tennessee Valley Authority (TVA) were all used to address the rural problems in
America, as well as create jobs
Repealed Prohibition, creating large revenue for cities
FDR’S NEW DEAL
“THE SECOND NEW DEAL 1934-35”
The Wagner Act was
passed in order to
promote labor unions
and their growth
The Works Progress
Administration (WPA)
was organized and gave
millions of people jobs
doing various projects
(construction of
buildings and roads,
distribution of
clothes/food)
The Social Security Act
was put in place (still
functioning today)
BRIEF RECESSION
The economy dipped low again in
late 1937, and lasted through most
of 1938
FDR solved this issue by again
increasing government spending,
and therefore giving the people
more “buying power”
THE END OF THE DEPRESSION
The effects of the
depression continued to
decline up to the U.S.
entering World War II
Do to the massive
mobilization efforts, the
GNP doubled (due largely
to government spending),
and signaled the end of
the Great Depression
REFERENCES








Cole, Harold L., and Ohandi, Lee E., New Deal Policies and the Persistence of the
Great Depression: A General Equilibrium Analysis. UCLA and Federal Reserve Bank
of Minneapolis, February 2003.
“Franklin D. Roosevelt: Inaugural Speech of Franklin Delano Roosevelt.” Retrieved
from http://literaturepage.com/read/fdr_inaugural_speech-1.html, February 2007.
Hamilton, David. “The Causes of the Banking Panic of 1930: Another View.” The
Journal of Southern History, 1985.
Kangas, Steve. “What Role Did the Smoot-Hawley Tariff Play?” Retrieved from
www.huppi.com/kangaroo/SmootHawley.htm.
McJimsey, George. “Agricultural Adjustment Act.” Retrieved from
www.spartacus.schoolnet.co.uk/USARagriculture.htm, February 2007.
Samuelson, Robert J. “Great Depression.” Library of Economics and Liberty: The
Concise Encyclopedia of Economics. Retrieved from
www.econlib.org/LIBRARY/Enc/GreatDepression.html, February 2007.
Wheeler, Mark. The Economics of the Great Depression. W.E. Upjohn Institute for
Employment Research, Western
Michigan University, 1998.
REFERENCES (PICTURES)











"Stock Market Crash." Web. 2 Dec 2009. <http://re3035.k12.sd.us/Event/stockcrash.htm>.
"Unpredicted Stock." Web. 2 Dec 2009. <http://stocks-online.us/tag/the-stock-market-crash>.
"bank-run." Web. 2 Dec 2009. <http://www.wavepacket.net/blog/cgi-bin/readposts.cgi?post_id=seize>.
"The Great Depression." Web. 2 Dec 2009. <http://techbuddha.wordpress.com/2009/09/09/thelong-it-security-industry-winter/nobody_knows_you/>.
"Franklin Delano Roosevelt Receives a Standing Ovation." Web. 2 Dec 2009.
<http://pro.corbis.com/Enlargement/Enlargement.aspx?id=BE003067&ext=1>.
"FDR's New Deal." Web. 2 Dec 2009. <http://morewhat.com/wordpress/category/democrats/>.
"Wagner act." Web. 2 Dec 2009. <http://www.classbrain.com/artteenst/publish/article_122.shtml>.
"wpa image." Web. 2 Dec 2009. <http://open.salon.com/blog/david_cox>.
"Signing the act." Web. 2 Dec 2009. <http://riverdaughter.wordpress.com/2009/02/22/obamasfiscal-responsbilitity-summit-and-the-week-ahead/>.
"blacks in the recession." Web. 2 Dec 2009.
<http://www.flickr.com/photos/blackheritage/1767110554/>.
"united we stand." Web. 2 Dec 2009.
<http://www.archives.gov/exhibits/powers_of_persuasion/united_we_win/images_html/united_we_
win.html>.