The Great depression

1. The Great depression Ms. Ferrara Virginia and United States History

2. Day 1 Warm-Up • We will discuss our responses! On a separate sheet of paper, answer this question: How does money define a person?

3. http://www.youtube.com/watch?v=oj7rdDoJKng

4. 1920s Spending • For example, you could have bought a share in the Radio Corporation of America for $85 in 1928. One year later, in 1929, this share could sell for $549. For much of the 1920s, the Stock Market was a bull market, or one with rising stock values. The Stock Market works by people buying a percentage of a company, this is known as buying a share. As a company becomes more affluent, or wealthy, stock shares rise in value from what someone once bought them at which results in a gain in investment.

5. 1920s Spending • People who bought stock on margin planned to sell their stocks at a higher price and use the money they made to pay back the loan and keep what remained as profit. • This only works, however, if the stock prices continue to increase in value. A decrease, would mean a loss in investment and the inability to pay back the loan. • To protect their investments, a broker could issue a margin call, demanding the investor repay the loan at once. Because of the opportunity to make huge profits from small investments, many people were encouraged to buy stock. For those who could not afford to pay the full price of a stock share, buying on margin, or purchasing stocks on credit, or borrowed money, was available. You could borrow money for stocks from stockbrokers. These people would earn a commission on the sale and an interest on the loan.

6. Black TuesdayOctober 29th, 1929 • On Tuesday, October 29th, the Stock Market crashed. So many people wanted to sell their stocks and so few wanted to buy that stock prices collapsed. This day became known as Black Tuesday. Stock Market prices peaked in the late summer of 1929 Prices then began to drop Frightened investors who had bought stock on margin rushed to sell theirstocks in order to pay off their loans On Thursday, October 24th, panic hit the stock market and within 3 hours, the market lost $11 billion in value The trend continued with prices dropping on the following Monday.

7. Causes of The Great Depression • But the economy did not recover quickly from the downturn that began in 1929. Why? The business cycle refers to the up and down pattern the economy follows. When businesses produce more than they can sell, goods pile up. Businesses then cut back on their production and lay off workers. As time passes, an economy will tend to bounce backs. Consumers buy surplus goods, and companies increase production to meet the demand. More workers are hired and unemployment drops.

8. In 1929, only 5% of American households earned 30% of the nation’s income. • Meanwhile, 2/3rd of families earned less than $2,500 Causes of the Great Depression Uneven Distribution of Income Goods were being overproduced during the 1920s Many Americans had purchased high-cost items such as refrigerators and cars on installment plans Purchasers could make small down payments and pay the remainder of the item’s price in small monthly payments However, with these debts, many Americans aren’t spending money buying new items • Slumps in sales caused many Americans to be laid off

9. Causes of the Great Depression Loss of Export Sales Many other countries faced recessions after WWI and could not afford to buy American-manufactured goods or crops In 1929, Hoover tried to encourage international trade However, conservative republicans wanted to protect American industry from foreign competition by raisingtarrffs This resulted in the Hawley-Smoot Tariff Raised the tariffs rate to highest in American history Resulted in many countries also raising their tariffs and fewer American products being sold overseas

10. Causes of the Great Depression Mistakes by the Federal Reserve Instead of raising interest rates to curb excessive spending on the Stock Market, the Federal Reserve kept its rates very low during the 1920s Failure to raise interest rates resulted in the following By keeping rates low, member banks were encouraged to make risky loans Low interest rates led business leaders to think the economy was still expanding. As a result, they borrowed more money to expand production, leading to overproduction Once the Great Depression hit, the Federal Reserve raised interest rates which tightened credit.

11. Visual Literacy Who and what do you see? What message is this image trying to send?

12. The Bank Industry Collapse In December 1930, a merchant visits his local Bank of United States in the Bronx, New York. He asked the bank to dispose of his stock in the bank, or give him the cash value of his sold stocks. The bank’s reluctance to return the man’s money instills fear into the general public who fear banks do not have their money.

13. The Bank Industry Collapses By the next morning, Bank of United States has collapsed In the last 60 days on 1930, 600 banks shut down By 1933, there are 28 states without a single bank open Unemployment goes from 4 million in 1930 to 25 million in 1932

14. President Herbert Hoover’s Reaction • Those left homeless and unemployed by the Great Depression started forming and living in make-shifts cities known as Hoovervilles. Opposed direct government assistance to individuals affected by the Great Depression Did not believe the federal government should be involved in such matters However, he did implement some programs, such as the Reconstruction Finance Corporation which loaned $1.2 billion to 5,000 different financial institutions.

15. American Reaction to Herbert Hoover Many Americans were angry with President Hoover for not aiding the citizens of his country in a time of need Many homeless and unemployed Americans began to wander around the country and became known as hobos. In 1932, the Bonus Army built a new Hooverville in Washington, DC. More than 17,000 people lived there, mostly composed of WWI Veterans and their families

16. The Bonus Army The Bonus Army had come to the capital to demand early payment of a military bonus that was scheduled to be paid in 1945. The government denied their request and all but 2,000 people returned home.

17. The Bonus Army President Hoover authorized General Douglas MacArthur to use U.S. troops to evict the Bonus Army MacArthur used force, including tear gas and tanks, to scatter the veterans Several veterans were killed The American public was outraged and this tarnished Hoover’s reputation

18. The Dust Bowl Farmers did not share in the prosperity of the 1920s, and the Great Depression only worsened their situation A severe drought hit the Mid West in the 1930s and made making a living very difficult Oklahoma, Texas, Colorado, Kansas were hit hardest

19. Many farmers packed up whatever they could fit in the family car or truck and drove to California to look for any kind of work they could find. The Dust Bowl Top soil was plowed and used so repeatedly by generations of farmers, that the ground held no nutrients to sustain growth Accompanied by extended drought, static electricity caused high winds to pick top soil up and create great clouds of dust up to 10,000 feet high

20. Americans Face Hard Times 1/4th of workers were without jobs Large numbers of people were hungry and homeless.

21. Depression-Era Culture Entertainment became an escape for Americans to forget their worries. Moviesand radio became very popular. During the 1930s, more than 60million Americans went to the movies each week. During this time period, Shirley Temple and Walt Disney became popular movie figures. Movies such as Snow White and the Seven Dwarfs and The Wizard of Oz emerge during this time.

22. Depression-Era Culture Movies offered Americans an escape from reality See a movie for 25 center or less

23. Depression Era Culture While movies captured the imagination, radio brought information and entertainment to the home. Radio soap operas provided entertainment and radio adventures such as The Lone Ranger became popular.

24. Depression-Era Culture Writers and artists tried to portray life around them. John Steinbeck, author of The Grapes of Wrath tells the story of the Joad family fleeing the Dust Bowl to find a new life in California after leaving their farm. Photographers such as Dorthea Lange produced photographs that demonstrated how the Great Depression had affected average-Americans.

25. Visual Literacy On a separate sheet of paper, answer the following questions: Who and what do you see in this picture? What do you believe the message of this picture is? (What is going on?)

26. The Great Depression Miss Ferrara Virginia and United States History

27. Visual Literacy Who and what do you see? What message is this image trying to send?

28. 1932 Presidential Election The Republicans ran Herbert Hoover as their candidate in the election The Democrats put up New York Governor Franklin D. Roosevelt Many Americans had begun to blame Hoover for the Great Depression

29. 1932 Presidential Election Franklin D. Roosevelt was the Governor of New York Had previously served as a Senator and Assistant Secretary of the Navy Struck with Polio in 1921 and became wheelchair bound However, he hid this from public view by always standing behind podiums or using others to lean on to help support his weight

30. 1932 Presidential Election Americans saw in Roosevelt an energy and optimism that gave them hope despite the tough economic times Roosevelt wins the Presidential Election in 1932 by a landslide, receiving the electoral vote in all but 6 states

31. The Hundred Days Immediately after Franklin Roosevelt took the office of President, he called Congress into a special session. It lasted from March 9th to June 16th, and became known as the Hundred Days. Roosevelt and Congress immediately got to work to create The New Deal 15 programs were created to aid economic recovery

32. The New Deal The New Deal was created to battle the Great Depression and aid economic recovery. Roosevelt’s first goal was to restore American confidence in banks. The day after Roosevelt’s inauguration, banks were closed for a “bank holiday” Three days later, Congress’ special session began and the passage of the Emergency Banking Relief Act with President Roosevelt’s signature went into effect.

33. The New Deal That Sunday, President Roosevelt gave the first of many fireside chats. Roosevelt explained the EBRA The government would inspect the finances of every bank Only healthy banks would be permitted to reopen Prompted Americans to develop trust for banks again The next day, deposits into banks exceeded withdrawals

34. The New Deal Although Americans were again trusting the bank system, President Roosevelt wanted to ensure that banks and the stock market could be held accountable The Federal Deposit Insurance Corporation, (FDIC) provides government insurance for bank deposits up to $250,000 The Securities and Exchange Commission (SEC) was formed to regulate the stock market and prevent fraud

35. The New Deal To help homeowners make their mortgage payments, the Home Owners’ Loan Corporation, (HOLC) was created The HOLC bought the mortgages of many homeowners who were behind in their payments The mortgages were then restructured with longer terms of repayment and lower interest rates These loans were only given to homeowners who were not farm owners and were still employed If you were still unable to make payments, the HOLC foreclosed on your home just as a bank would have done

36. The New Deal The Farm Credit Administration, (FCA) helped farmers refinance their mortgages so they could keep their farms The FCA lent 4 times as much money to farmers as the entire banking system had the year before

37. The New Deal The Agricultural Adjustment Act, (AAA) helped stabilize agricultural prices Prices for farm goods were low because farmers grew too much food The government paid farmers to not raise certain livestock and not grow certain crops Farmers slaughtered 6 million piglets and plowed under 10 million acres of cotton The program worked and the farm surplus fell sharply by 1936

38. The New Deal The National Industrial Recovery Act, (NIRA) addressed business concerns by eliminating unfair competition among companies. This law was passed with help from Secretary of Labor, Frances Perkins, the nation’s first woman cabinet member. Required businesses to have minimum wage and allow collective bargaining. The National Recovery Administration, (NRA) ran the entire program However, the program ruled hard to administer and regulate and the Supreme Court ruled it unconstitutional in 1935

39. The New Deal Congress established the Federal Emergency Relief Act (FERA) to fund state and local agencies to fund relief projects The Public Works Administration, (PWA) helped the 1/3rd of unemployed Americans who were construction workers. Instead of hiring workers directly, the PWA awarded contracts to construction companies to build new highways, dams, sewer systems, and schools

40. The New Deal By the fall of 1933, neither FERA nor the PWA had reduced unemployment significantly The Civil Works Administration (CWA) employed more than 4 million Americans who built roads and airports Unlike the FERA or PWA that funneled money to state and local agencies, the CWA hired people directly

41. The New Deal The Civilian Conservation Corps (CCC) provided jobs for hundreds of thousands of people through projects such as planting trees and improving national parks The Tennessee Valley Authority (TVA) hired people to build dams and generators, bringing electricity and jobs to rural communities in the Tennessee River valley

42. Criticism of the New Deal Some felt that the New Deal went too far Expansion of Government Thought the President had too much authority Businesses concerned that the high cost of new government programs would lead to new taxes

43. Criticism of the New Deal Some felt that the New Deal did not do enough US Senator Huey Long from Louisiana thought that the distribution of wealth should be shared among all Proposed the rich be taxed and use the money to guarantee every family had an income of at least $5,000. Father Charles Edward Coughlin was a Priest who wanted the government to nationalize, or take over, all of the country’s wealth and natural resources.

44. The Second New Deal With Democrats winning more seats in Congress in the election of 1934, Roosevelt continued to introduce more New Deal legislation With the end of the CWA in 1934, Congress formed a new agency: Works Progress Administration, (WPA) in use from 1935 to 1943

45. The Second New Deal The WPA employed some 8.5 million people on tens of thousands of projects all over the country. More than 650,000 miles of roads 75,000 bridges built 8,000 parks created 800 airports founded

46. The Second New Deal President Roosevelt wanted to help those who were “unable…to maintain themselves independently, through no fault of their own.” The Social Security Act provided some financial security for the elderly, the disabled, children, and the unemployed To help pay for this, the law placed a new tax on workers and employers Marked first time the federal government took direct responsibility for many citizens

47. Labor Programs When the Supreme Court ruled the NRA unconstitutional, Congress passed the National Labor Relations Act, (NLRA) Allowed workers to join labor unions and take part in collective bargaining Established the National Labor Relations Board to oversee union activities.

48. Labor Programs Unskilled workers, such as those who worked on assembly lines lacked union representation In 1935, the Congress of Industrial Organizations, (CIO) organized workers into unions based on industry, not skill level Unions proved powerful against businesses The CIO went on strike against General Motors on New Year’s Eve 1936. It lasted for 44 days and instead of leaving the buildings as strikers usually do, they stayed in the factories so they could not be replaced by new workers. This became known as the sit-down-strike

49. The great Depression Miss Ferrara Virginia and United States History

50. The New Deal • http://www.youtube.com/watch?v=WvcWeNf9g6A