The Great Depression & The New Deal

The Great Depression & The New Deal

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“What Would You Do?” It is 1929 and the U.S. economy has

collapsed. Farms, businesses, and banks nationwide are failing, causing massive unemployment and poverty. You are out of work with little prospect of finding a job.

• What would you do to feed your family?

• What can you do to find a paying job?• What can unemployed and

impoverished people do to help each other?

Complete the chart, describing the hardships faced during the Great Depression

HARDSHIP DESCRIPTIONLife in the CitiesThe Dust Bowl

Men in the StreetsWomen Struggle

Children Face Hardships

Social/Psychological

Effects

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Why did the coal mining industry suffer?

Why did the coal mining industry suffer?

New sources of energy were used, including hydroelectric power, fuel oil, and natural gas

Why did the farming industry grow weak?

Why did the farming industry grow weak?

• End of the war led to less demand for crops

• Farmers had taken out loans during the war; when demand fell and crop prices fell, farmers went in debt

• Farms were lost, and they defaulted on their loan

•Why did more Americans start living on credit?

Why did more Americans start living on credit?

• People were buying less due to high prices, stagnant wages, an uneven distribution of income, and overbuying on credit

• People lived on credit so they could have new items.

• When you purchased items on credit, you would have to pay interest charges

• People went into debt.

Why did the uneven distribution of income affect producers of goods?

Why did the uneven distribution of income affect producers of goods?

Many people could not afford expensive goods, such as refrigerators, and other new appliances.

What is meant by a “bull market”?

What is meant by a “bull market”?

A period of rising stock prices.Americans were rushing to buy

stocks during a “bull market”.

Explain what is meant by buying stocks on “speculation” and “buying on margin”.

Explain what is meant by buying stocks on “speculation” and “buying on margin”.

Speculation: Buying a stock/bond on the hopes of a quick return (profit) on your investment

Buying on Margin: paying only a small percentage of what the stock is worth, or only putting a down payment on the stock & borrowing the rest

• Very little regulation of the stock market existed & the government did not interfere.

What did shareowners do with their stocks in September/October of 1929?

What did shareowners do with their stocks in September/October of 1929?

They sold them as quickly as they could because they suspected the stock market would crash.

What was Black Tuesday?

What was Black Tuesday?

• The day (October 29, 1929) the stock market crashed.

• 16.4 million shares were dropped that day, & many could not find buyers.

• People who had bought stocks were either left in debt or their savings were gone.

• Within a few weeks, $30 billion was lost buy investors.

Why did banks fail after the stock market crash?

Why did banks fail after the stock market crash?

Many banks failed because they had no money… they had used people’s money to invest in the stock market as well!

At this time, the government had not started to protect & insure the money in the banks.

Why did the Great Depression impact Europe as well?

Why did the Great Depression impact Europe as well?

• Europe was still trying to recover from the war.• Many nations were trying to pay off war debts &

Germany was paying reparations.• America limited imports to protect its economy

(Hawley-Smoot Tariff).• In return, other nations did not buy our

products .

HARDSHIP

DESCRIPTION

Life in the Cities

Unemployment; Homelessness; Shantytowns created; Hunger led to soup kitchen & bread lines; Higher

unemployment for African Americans & Latinos (in addition to violence,

discrimination, deportation)

The Dust Bowl

Overproduction of crops & destroying of the prairie grass in the Plain;

Drought & winds led to dust flying 100s of miles; People (Okies) in the

Dust Bowl moved to California looking for work

Men in the

Streets

Men couldn’t support their families (some men abandoned their families); They took to the streets daily looking for work; Hobos; No direct relief was

available at this time

HARDSHIP DESCRIPTIONWomen Struggle

Canned food; Sewed clothes; Some worked outside the

home, but this caused resentment because there were so many men without

jobsChildren

Face Hardships

Poor health; School closings; Worked in factories; teens became “Hoover tourists”

Social/Psycho-logical Effects

Suicides; Mental hospitals; Sacrifices made; People

became determined not to be poor again; Kindness shown

to strangers

What did Hoover believe was the government’s chief function during the Depression?

What did Hoover believe was the government’s chief function during the Depression?

• To foster cooperation between conflicting groups and interests

• The government should step in to solve problems, but not force cooperation.

Why did Hoover oppose federal welfare?

Why did Hoover oppose federal welfare?

• He believed hand-outs would weaken people’s self-respect & “moral fiber”.

• He believed America was based on “individualism” and it was not the job of the government to take care of individuals and their families.

• Individuals (people, charities, local organizations) should pitch in to help, not the government.

Name three ways Americans protested Hoover’s efforts to get the nation out of the Depression?

Name three ways Americans protested Hoover’s efforts to get the nation out of the Depression?

1. The Republicans (Hoover’s party) were voted out of Congress in the 1930 elections.

2. Farmers burned and dumped their crops rather than sell them at a loss.

3. Farmers blocked roads to prevent food from getting to market.

4. Shantytowns were called “Hoovervilles”; Newspapers were called “Hoover blankets”; Empty pockets (inside out) were called “Hoover flags”.

What were some of the projects Hoover proposed to get the nation out of the Depression? How effective were they?

What were some of the projects Hoover proposed to get the nation out of the Depression? How effective were they?

1. Boulder Dam- successful in getting power and water to California; aided in agricultural production

2. Federal Home Loan Bank Act- lowered mortgage rates & allowed farmers to refinance their loans

3. Reconstruction Finance Corporation- offered financing to businesses, believing this would help average people; this was unsuccessful and was seen a “too little, too late”

What did Hoover ultimately do about the Bonus Army?

What did Hoover ultimately do about the Bonus Army?

• Tear gassed, troops moved in with bayonets, fires were started, people were shot.

• People were stunned at the government’s response to these veterans.

Franklin Roosevelt’s New DealIdentify the following important aspects of the New Deal

• New Deal• Fireside Chats• Glass-Steagall Act (especially the FDIC)• Federal Securities Act• Agricultural Adjustment Act (AAA)• Civilian Conservation Corps (CCC)• Works Progress Administration (WPA)• Social Security Act

New Deal

New Deal• Roosevelt’s program for getting the

nation out of the Great Depression• He wanted to give the American

people a “New Deal”• Three goals:

– Relief for the needy– Economic Recovery– Financial Reform

Fireside Chats

Fireside Chats• Roosevelt gave

“fireside chats” to keep the nation informed on issues of public concern.

• He gave these national addresses of the radio & Americans felt he was speaking directly to them!

Glass-Steagall Act (FDIC)

Glass-Steagall Act (especially the FDIC)• Glass-Steagall Act established the FDIC.• The FDIC (Federal Deposit Insurance

Corporation) provided government insurance for individual bank accounts up to 5,000.

• This made people feel their money was safe.• Banks also had to act cautiously with their

customer’s money.

Federal Securities Act

Federal Securities Act

• This law provided regulation of the stock market.

• Corporations are required to provide complete information regarding their stock offerings.

Agricultural Adjustment Act

Agricultural Adjustment Act (AAA)

• The government regulated the amount of crops produced.

• By doing this, crop prices rose because production was lowered.

• The government paid farmers NOT to cultivate all of their land.

• This did help farmers have more money because prices increased.

• This law was found unconstitutional by the Supreme Court (they stated that agriculture was a local matter, not a federal matter).

Civilian Conservation Corps

Civilian Conservation Corps (CCC)

• A work relief program that put young men (18-25) to work building roads, developing parks, planting trees, and helping in soil erosion and flood control

• They helped plant trees in the Great Plains to prevent another Dust Bowl.

• Workers were paid in cash; they ate and lived for free.

Our greatest task is to put people to work. This is no unsolveable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the Government itself, treating the task as we would threat the emergency of war, but at the same time, through this employment, accomplishing greatly needed projects to stimulate and reorganize the use of our national resources.

—Franklin D. Roosevelt 4 March 1933

National Industrial Recovery Act

National Industrial Recovery Act (NIRA)

• Law that established fair practices in industry (ex. Set prices of many products and established standards)

• Law that established jobs to construct schools and other community buildings

• This law was found unconstitutional by the Supreme Court (it gave the executive branch legislative power).

Works Progress Administration

Works Progress Administration (WPA)

• A series of programs to help youths, professionals and others find employment

• Worked in construction, collected historical material, & gave aid to students to go to school

Social Security Act

Social Security Act

• Probably one of the most important achievements of the New Deal.

• Provides the following

– Retirement– Unemployment compensation– Aid to families with dependent

children & the disabled

The Legacy of the New Deal

• The government actively participated in regulating the economy.

• People were given direct relief from the government.

• The government went into debt from all of the government spending.

• What really ended the Great Depression was…

World War II startedThe economy got a massive boost from the production of war supplies!

Test Review• Causes of the Great Depression

(condition of farmers, investing in the stock market, buying on credit= people were in debt)

• Life during the Depression (Dust Bowl, shantytowns, women, men in streets, charity)

• Hoover’s administration (leave the econ. Alone, Bonus army, criticisms)

• New Deal programs• Significance of the New Deal