The Great Depression and the New Deal

1. The Great Depression and the New Deal Unit 9

2. Causes of the Great Depression

3. Guiding Questions • What economic choices caused the economy to become unstable in the late 1920s? • How did the stock market crash trigger a chain of events that led to the Depression? • What were the underlying conditions that led to the collapse of the U.S. economy?

4. Terms to Know • Stock market • Bull market • Speculation • Margin • Margin call • Bank run • Installment

5. Election of 1928

6. Stock Market Soars • Bull market • Long period of rising stock prices • Convinced many people to invest in stocks • ~10% of Americans households held stock • Buyers began practicing speculation • Betting that prices would keep rising • Did not look carefully at company earnings or profits • Buyers began buying on margin • Making only a small cash down payment(10%) • Stockbroker loaned the other money to the buyer and charged interests • When prices began to fall, a broker could issue a margin call • Demand that the investor repay the loan at once

7. Stock Market Crashes • Monday, Oct. 2, 1929 • Stock market began to drop greatly • Stockbrokers made margin calls • Many customers sold stocks, making the market drop even more • Tuesday, Oct. 29, 1929 (Black Tuesday) • More than 16 million shares of stock were sold • Industrial index (value of leading industrial companies0 dropped by 10% • Mid-Nov. 1929 • Market price of stocks had dropped by more than 1/3 • Total loss of about $30 billion • People had loss their savings, others in huge debts

8. Bank Failures • Banks were hurt by stock market crash • Loaned billions of dollars to stock speculators • Invested depositor’s money in the stock market • Banks greatly reduced the number of loans made • People and businesses couldn’t get loans • Caused economy to enter recession • Banks failed (closed) • Government did not insure deposits • People stopped trusting banks • Bank runs became widespread • Depositors decided to take their money out of the bank at the same time • Most banks did not keep enough reserve to meet need’s of depositors if a run was made • By 1932, ~25% of U.S. banks had gone out of business

9. Underlying Causes of Great Depression

10. Discussion Questions • What do you think could have been done to prevent the financial crisis? • What do you think would be the correct response to such a crisis?

11. Life During the Great Depression

12. Guiding Questions • How did the economic changes affect everyday life during the 1930s?

13. Terms to Know • Hobo • Shantytown • Soup kitchen • Bread line

14. The Depression Worsens • In 1930, 1,352 banks suspended operations • 30,000 companies went out of business in 1932 alone • By 1933, the unemployment rate was 25%

15. People Struggle to Survive • May people lost their homes • Had to wait in breadlines or visit soup kitchens in order to have food • Many homeless built small shacks on unused or public lands • Shantytowns- small neighborhoods made up entirely of shacks • “Hoovervilles”- blamed Hoover for the hard times • Hoboes, mostly boys and young men, snuck into open boxcars or freight trains traveling trying to find jobs • Suicide rate rose more than 30% from 1928-1932 • Americans compromised and made sacrifices that would affect them the rest of their lives • Stopped going to dentist/doctpr • Young people put off going to college, getting married, having children

16. The Depression and Immigrants • Many immigrants returned to their home • Repatriation • Could not find jobs • Federal government sped up deportation of some immigrants • Sent back those immigrants that had broken the law

17. The Dust Bowl • Long period of dry weather, turned the Great Plains soil into dust • Dust storms were very common • 50 dust storms a year during the 1930’s • Dust made sky dark for hundreds of miles • People and animals caught in storms would often die because they could not breath • Many farmers moved to California in hopes of a better life • “Okies” • Life was just as hard

18. The Great Depression and American Culture

19. Discussion Questions • What effect did the Dust Bowl have on life in the Great Plains? • Why might people have enjoyed lighthearted entertainment during the Great Depression?

20. Hoover’s Response to the Depression

21. Guiding Questions • How did President Hoover’s governing philosophy influence his efforts to combat the Great Depression? • Why and how did citizens try to change government policy during the Depression’s early years?

22. Terms to Know • Public works • Relief

23. Promoting Recovery • Hoover believed “rugged individualism” would keep economy moving • American’s ability to rely on themselves, not the government • Hoover believed socialism was bad for economies • Hoover asked consumers and business leaders to be reasonable and not let fear guide their actions • Organized a series of talks including heads of backs, railroads, and other big businesses • Increased funding for public works • Building projects paid for by the government • Was not enough to increase employment • Did not want to raise taxes or run a budget deficit

24. Efforts to Rescue Banks • Asked the Federal Reserve Board to make more money available (allow banks to make more loans) • Federal Reserve refuse • Set up the National Credit Corporation(1931) • Set aside money for banks that were having financial problems • Was not effective • Reconstruction Finance Corporation (1932) • Purpose was to make loans to businesses • By 1932, more than $238 million of loans were made to banks, railroads, and building-and-loan associations • Did not increase lending enough

25. Direct Relief for Citizens • Hoover was opposed to federal government giving direct relief • Money given directly to poor families • Believed only state and local governments should give relief • Charities should fill other needs • Hoover reluctantly signed the Emergency Relief and Construction Act (1932) • Called for $1.5 billion for public works and for $300 million in emergency loans to states for direct relief • First time in U.S. history federal government was giving direct relief money

26. The Bonus Army • In May 1932, several hundred veterans began marching to Washington, D.C. • Tried to convince Congress to pass a bill authorizing a $1,000 bonus for each veteran of WWI • By time they arrived in Washington, there were about 15,000 • Lived in Hoovervilles outside Washington • Senate voted down bill • Some went home, but others remained in camps or moving into empty buildings downtown • Hoover ordered the police to make the veterans leave the buildings in late July • Police killed 2 veterans • General MacArthur sent soldiers and tanks to clear camps • Hoover told him to allow those in camps to stay • Soldiers burned shacks, threw tear gas at veterans who did not leave fast enough • Newspapers and radio reporters covered the incident and it greatly hurt Hoover’s image and his campaign for the 1932 presidency

27. Discussion Questions • Why do you think that Hoover’s efforts ultimately failed? • Could the soldiers of the Bonus Army have used a different method to get what they wanted?

28. The First New Deal

29. Guiding Questions • What qualities make an effective leader? • How did New Deal legislation differ from President Hoover’s attempts to combat the Depression? • Why are the first hundred days so important for a president? • Why did Roosevelt broadcast “fireside chats”? • How did New Deal legislation try to stabilize agriculture and industry?

30. Terms to know • Polio • Gold standard • Bank holiday • Fireside chats • Fundamental • Ideology

31. FDR Becomes President • Democratic governor of New York • Former assistant secretary of the navy under Woodrow Wilson • Oversaw the creation of the first state relief agency to help unemployed • Very popular • Energetic, hopeful, confident • Determined(paralyzed from waist down (polio)) • Won election of 1932 in a landslide • Won electoral vote in all but 6 states • Promised people a “New Deal”

32. Roosevelt’s Inauguration • By Roosevelt’s inauguration, most of nation’s banks had closed • 25% unemployment rate • Roosevelt had to get Americans to feel confident again • Nation needed to take action and stop being afraid • “The only thing we have to fear is fear itself”

33. The Hundred Days • Congress passed 15 major acts to try and fix the economy between March 9 and June 16, 1933 • These programs made up the First New Deal

34. Emergency Banking Act • Roosevelt knew that getting people to trust the banks was the most important issue • Banks had to be open for other programs to work • Enacted a national bank holiday • Closed all the banks in the United States • Stated that federal examiners would study the nation’s banks • When banks were deemed strong enough to open, they were issued a Treasury Dept. license and reopened • Roosevelt gave his first “fireside chat” on March 12 • Radio address to the American people • Ensured people the banks were safe and urged them to deposit their money back in the banks

35. Bank and Stock Market Legislation

36. Mortgage and Debt Relief

37. Farming and Industry Reform * Roosevelt and his advisers believed prices were too low and production was too high

38. Relief Programs (Employment)

39. First New Deal Success • Programs showed Roosevelt’s energy and willingness to experiment • New Deal programs did not pull country out of depression • Improved banking system • Increased availability of loans • Inspired hope and restored American’s faith in their nation

40. Discussion Questions • Roosevelt received almost 58 percent of the popular vote. Why do you think most people voted for him rather than Hoover? • Why did President Roosevelt take his message about the banks directly to the people? • Why do you think Roosevelt was concerned about people relying on the government to create jobs?

41. The Second New Deal

42. Guiding Questions • Why did President Roosevelt decide to introduce new legislation to fight the Depression? • How did the Wagner Act and Social Security Act affect Americans? • What led to the re-election of Roosevelt? • What impact has the New Deal legislation had on federal and state governments?

43. Terms to Know • Deficit spending • Binding arbitration • Sit-down strike • Court-packing • Broker state • Safety net • Mediate

44. Roosevelt Faces Criticism • Right-Wing (Republicans) • Believed New Deal regulated business to tightly • Gave federal government too much power over the states • Very opposed to deficit-spending • Spending more than you take in • Left-Wing (Democrats) • Believed New Deal hadn’t gone far enough • More government involvement in managing economy • Move money from rich to middle-income and poor Americans

45. Democratic Opposition

46. Second New Deal • Launched in 1935 • Purpose was to generate greater economic recovery • First New Deal did not alleviate problems from the Depression • More than 10 million still unemployed • Nation’s total income was about ½ of what it was inn 1929

47. Supreme Court’s Role • Schechter Poultry Corporation v. United States • Declared the authority of the National Recovery Administration was unconstitutional • Congress could not delegate its legislative powers to the executive branch • Roosevelt knew he needed a new series of programs to keep voter’s confidence • Told Congress they could not go home until they passed his new bills

48. Works Progress Administration • New Deal’s largest public works program (1935) • Employed 8.5 million workers from 1935-1941 • Spent more than $11 billion to build roads, airports, bridges, parks • WPA program, Federal Number One, financed artists, musicians, theater people, and writers • Federal Art Project • Created wall paintings and sculptures for public buildings • Federal Writers Project • Recorded the stories of formerly enslaved people and others whose voices had not often been heard • Federal Theatre Project • Wrote and staged plays • Federal Music Project • Set up orchestras and smaller musical groups

49. The Wagner Act (National Labor Relations Act) • Guaranteed the right to unionize and bargain as a group • Knew unions were vital to keeping them in power • Thought high union wages would help pull country out of depression • Established the National Labor Relations Board • Organized elections in factories with secret ballots to decide whether workers wanted to unionize • Investigated employers’ actions and stopped unfair practices • Set up binding arbitration • Union members could take their complaints about employers to a neutral party who would listen to both sides and decide on the issues

50. Wagner Act Leads to Labor Activity