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Causes, Consequences, and New Deal SOL: VUS.9c. The Great Depression. Causes of the Stock-Market Crash of 1929. Overspeculation on stocks. Using borrowed money to invest in businesses and stock. Couldn’t pay back once stock market crashed on October 29, 1929. Bank failures
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Causes, Consequences, and New Deal SOL: VUS.9c The Great Depression
Causes of the Stock-Market Crash of 1929 • Overspeculation on stocks. • Using borrowed money to invest in businesses and stock. • Couldn’t pay back once stock market crashed on October 29, 1929. • Bank failures • 1930’s saw 9,000 banks close. • Surviving banks stopped giving out loans. • People made “runs” on the banks.
Causes of the Crash cont… • Reduction in purchases made by people. • Production slows • People lose jobs • Less money in circulation • Unemployment rose above 25%. • Smoot-Hawley Tariff 1930 • America taxed imports on trade from other countries. • Other countries began taxing our goods. Trade ceased. • We had a lot of supply but no market to sell to. Businesses closed.
Consequences of the Stock Market Crash • People rushed to the banks to take out their money in fear of losing their life savings. • People stopped investing money into the economy. • People stopped spending money. • Less money in circulation (hoarding money).
The Great Depression Sets In • Stock Market Crash of 1929 caused a ripple effect of the economy into a deep depression. • Federal Reserve couldn’t control the amount of money in circulation. (money in jars/under the mattress) • Economy couldn’t thrive without foreign trade. • (Hawley-Smoot Tariff 1930)
Impacts of the Great Depression • Unemployment and homelessness • “Hoovervilles” • Bank closings • People lose life savings • Public Issues • Labor Union violence • Foreclosures on farms which causes migrations. • Due to drought • Farmers of mid-west migrate west to California
Where did the people turn?? • Franklin Delano Roosevelt (FDR) • Cousin of Theodore Roosevelt • Became 32nd President in 1933 in the midst of the Great Depression. • Handed the task of getting the country out of the Great Depression.
FDR’s “Fireside Chats” • A series of 30 radio programs delivered directly to the homes of people from 1933-1944 by President Roosevelt. • Appealed to the people by speaking in language they could understand and comforted their fears. • Spoke as a normal member of society.
FDR’s “New Deal” • “We have nothing to fear but fear itself.” • The New Deal changed the role of government in the economy. • It also changed the attitudes of people towards the role of government. • Now citizens depend on the Federal Government to “fix” their problems and to take care of them in times of need.
Major Provisions of New Deal • WPA (Works Progress Administration) • Gave money directly to families to maintain homes and food. • AAA (Agricultural Adjustment Administration) • Idea to pay farmers to limit amount of crops harvested • FDIC (Federal Deposit Insurance Corporation) • Attempt to promote deposits in banks by insuring money deposited by customers. • Social Security Act • Payments made to retired and unemployed due to illness or injury.
Images of the Depression • Dorthea Lange • Famous photographer of this time period. • This picture is a representation of the Great Depression.
