Warm-Up Stock: Units of ownership in a company.

Companies sell “shares” of stock= ordinary people can pay a

certain amount of money to own a “share” or part of a larger

company

If the company does well, the people make money

If the company does poorly, the people can loose money

Answer in Notebook:

Would YOU buy stock today?? Why or why not?

Do you think the risk is worth it?

The Great DepressionCauses of the Depression

Underlying Problems from the 1920s

Agriculture Struggles

Farmers grew too much and prices dropped

New farm technologies, pesticides and bumper crops

Had produced extra food during the war, no longer

needed

Farmers had expensive equipment

and debts to pay, lived on credit

month to month

Underlying Problems from the 1920s

WWI Debts and Loans

The US loaned lots of

money to European

countries struggling after

the war

Many of these nations

could not pay the US

back anytime soon

Underlying Problems from the 1920s

Easy Credit hides money problems for awhile

Automobiles, appliances, radio and stock were

bought on credit

Installment buying

Every year Americans acquired more debt

Lived beyond their means

Spent money they did not actually have!

Underlying Problems from the 1920s

Unequal wealth distribution

Workers produced more but wages only increased a

little bit

Corporate profits skyrocketed

Rich became MUCH richer, the poor slightly less poor

60% of families made < $2000 every year, but the

24,000 wealthiest families made > $100,000

BUT wealthy families don’t eat 50x more food, cars, radios,

etc, so they kept and held on to extra money

Increase in wealth does NOT lead to more people

buying more things

Underlying Problems from the 1920s

The Stock Market

Buying stock on margins/on

credit

If stock costs $100, pay $10

now and the rest later

Buying and selling stocks to turn

quick profits

Risky gamble

Prosperity Hides Troubles

1928 Election full of

Optimism

Republican Presidents took

credit for prosperous economy

Herbert Hoover (Republican)

won huge victory

Known for running Food

Administration in WWI

Promised prosperity for all

Black TuesdayOctober 29, 1929

Stock Market Crash

16 million shares sold, billions of dollars lost

Peoples’ fortunes gone within hours

Stock cost $100, you paid $10 and would pay more later

Next day, stock cost $50. The stock you bought has less

value and you haven’t even been able to pay for it yet.

You try to sell it before the price goes lower

Everyone does this at the EXACT SAME TIME

From Crash to DepressionStock Market Crashed. Then, Banks collapsed

Bank runs: people ran to banks to withdraw all their $

Banks loan out people’s money to others, so if you have

$2000 in the bank there’s not actually $2000 cash sitting at

the bank

Banks did not have money to pay everyone back

Thousands of banks closed

So people with all their life savings in the bank now had NO

money

https://www.youtube.com/watch?v=iPkJH6BT7dM

From Crash to Depression

Businesses fold, Unemployment rises

People had no money, so they stopped buying

things

When people stopped buying things, workers

who made those products were laid off

People lost their jobs, so people bought less,

which made more people lose their jobs

VICIOUS CYCLE

Depression goes World-Wide

Hawley-Smoot Tariff raises price on

foreign imports

To protect US products but adds to the depression

International trade stopped

Now, US can’t sell things to other countries, and

nobody in the country is buying things

WWI Loans

US can’t loan any more money

Asks for loans to be repaid, so Germany,

France, Britain go broke trying to pay us back

The Great DepressionLife during the Depression

The American People Suffer

Unemployment

All-time unemployment

high in 1933, 25%

unemployment

Those who were still

employed had hours and

wages cut

Men waited in lines to find

jobs, or sold apples on the

street

The American

People Suffer

Hunger

Public soup kitchens and breadlines try to help

Homelessness

People could not afford to pay mortgages, so banks

foreclosed on many homes

Many had to live in shanties (Hoovervilles)

Hoovervilles appear in abandoned lots and parks

Named to insult President Hoover

Humiliation

Suicide Rate increases

Farmers and The Dust Bowl

Prices of crops went down

Many farms foreclosed (1

million btw 1930-1934)

Drought and windy storms

creates the Dust Bowl

On the Great Plains (TX, OK, KS,

NB, CO)

Killed animals, destroyed crops

Many migrate west and east to

escape conditions

Hoover Tries (and Fails)The people looked to their President to help

and he did nothing

Hands-off policy, this was the regular cycle of things

Hoover called for Volunteerism

Asked individuals, businessmen, and the

governments to work together to help everyone

Asked businesses to keep employment, wages, and prices

at current levels

Asked government to reduce taxes

Asked the wealthy to give to charity

Most Americans did what was best for THEM,

not for EVERYONE.

Hoover Tries (and Fails)Creates the Reconstruction

Finance Corporation to give loans

to businesses and banks

Hoped banks would lend to

businesses

Hoped businesses would hire workers

“Trickle-down economics”

But, banks did not lend and

businesses did not hire

Hoover Dam: Employs many in the

Southwest

The Bonus Army

In 1932, WWI vets marched in Washington, DC

A bill had been proposed that would give

soldiers the rest of their pay for the war early

(not supposed to happen until 1945)

Wanted bonuses early because of Depression

Hoover had vetoed this

Government called in US army to

remove the protesting veterans

Using extreme measures and violent tactics

Tear gas and bayonets

What would YOU do, Mr./Madam President?

Imagine that you are the President of the United States in 1929-

1930 as the economy and society begin a downward spiral.

What would you do?

What legislation would you propose to improve life for

Americans?

What message would you send to citizens to reassure them?

Respond in 3-5 sentences. You must address all three questions!

The Great DepressionThe 1932 Election and First Hundred Days

Franklin D. Roosevelt

Democratic Governor of NY

Born rich

Diagnosed with Polio in 1921,

paralyzed from the waist down

Covered the severity of it

Teddy Roosevelt’s 5th Cousin

Married to Eleanor Roosevelt,

Teddy Roosevelt’s Niece

The 1932 Election People incredibly unhappy with Hoover for his lack of response

During election, unemployment increased by 7 million and poor areas had 50%

of the population unemployed

Roosevelt wins in landslide victory

The New Deal

Roosevelt’s big idea that he ran the election on

Roosevelt supported a strong federal government who

would play an active role in fighting the Depression

Hoover had done nothing

Roosevelt wanted to use the government to fix the problem

Put together a “Brain Trust”

Group of professionals who advised FDR on what to do

The First Hundred DaysDuring his first 100 days in office, Roosevelt proposed

and Congress passed 15 bills

Three main goals

Relief from immediate

hardship

Recovery for the economy

Reform to prevent future

depressions

Roosevelt’s First Inaugural Address

https://www.americanrhetoric.com/s

peeches/fdrfirstinaugural.html

What is the tone of this speech?

What is the overall message

Roosevelt is trying to send?

The Great DepressionThe New Deal

The New Deal

Relief

Provide jobs for the unemployed

Protect farmers from foreclosure

Recovery

Get the economy back on its feet

Reform

Regulate banks and economy to prevent

future problems

Relief and Recovery ProgramsRural Aid

Agricultural Adjustment Act (AAA)

Paid farmers subsidies to not plant as much

Tennessee Valley Authority (TVA)

Built dams in Tennessee to control flooding

and bring electricity

Created jobs, benefitted the area

Relief and Recovery ProgramsJobs and Labor

Civilian Conservation Corps (CCC)

Jobs for young men

Planting forests, making trails, digging ditches,

firefighting

Public Works Administration (PWA)

Building bridges, dams, power plants, and

government buildings

National Recovery Administration (NRA)

Set minimum wages and prices to help labor

Later ruled unconstitutional by Supreme Court

Reform ProgramsFinancial Reform

Restoring confidence in the economy

Federal Deposit Insurance Corporation (FDIC)

Insured bank deposits

Money you have in the bank, you’re guaranteed (up to a certain amount)

Securities and Exchange Commission (SEC)

Regulation of the stock market

Social and Economic Reform

Works Progress Administration (WPA):

Solutions to ongoing problems

Built/improved highways, promoted soil

and water conservation, helped artists

Social Security Act

Pensions for retirees

Unemployment and injury insurance

Aid to mothers, children, and disabled

Originally did not apply to domestic or

farm workers (many African Americans)

Is the Government Overstepping?

People complained the government was too powerful

Democratic party founded on idea of limited government, this was the

opposite

Party realignment

Supreme Court started ruling New Deal programs

unconstitutional

Court Packing

FDR wanted to add 6 new justices to the 9 on the Supreme Court

Justices were “elderly and overworked”

Court then began to rule in his favor, 5-4

Some justices retired, allowing FDR to nominate new Justices who

accepted his plans

Women and Minorities Women

More active in politics but still treated unequally

Eleanor Roosevelt

1st female cabinet member, Francis Perkins

African Americans

Hit harder by Depression

Black Cabinet (unofficial advisors to FDR)

No new civil rights reform, as FDR was scared to lose support from southern

Democrats

Native Americans

Indian New Deal: Economic assistance, encourage traditions

Effects of the New Deal Did not end the Depression, but provided relief and reform

Changed how the government works

New Democratic coalition (people supporting the party)

Southern whites, northern workers, poor Midwestern farmers, African

Americans

Expanding role of government

End of “hands off” government

Environmental and Conservation efforts

Welfare state: government takes responsibility for the welfare of children, elderly, disabled, poor, and unemployed

Executive power grew (President more influential)

Roosevelt elected for 3rd and 4th terms, only to do so but provided stability

1930s Culture

Escapism: Americans tried to forget about

the Depression through entertainment

Movies took people’s minds off things

(Wizard of Oz, musicals)

Golden age of radio, 9/10 Americans had

one

Swing music

WPA’s Federal Art Program sponsored artists,

photographers and actors

Literature featured working class heroes

Fireside Chats

Series of Informal radio speeches given by FDR

Allowed the President to communicate directly to the

American people

Example: There was a bank run (everyone tried to go

take their money out of the banks).

FDR went on the radio to explain to Americans why not to rush

to banks to get their money out immediately

Americans listened!