The Great Depression

What were the causes of the Great Depression? How did the depression affect the lives of Americans?

The “Roaring” 20’s  Economic Boom – Americans earning more than ever before National income rose from $61-$87 billion (43% increase) – More money to spend on luxury goods By mid 1920s Americans owned over 23 million cars – ¾ of all the cars in the world

Popular Culture Reflected the Prosperity of the Era  Radio – Broadcasted Jazz  Newspapers and Magazines – Shaped cultural norms – Sparked fads –Flappers

Challenged Traditional Values  Traditional Religion: – Darwin’s theory – Scopes Trial

“Inherit The Wind”

Challenged Traditional Values  Prohibition (18 th amend): Prohibiting the manufacturing, sale, etc. of alcohol – Smuggling of alcohol – Speakeasies

Business Cycle

Election of 1928  Herbert Hoover (R) wins  Only in office 6 months when Great Depression Begins  Believed the economy is best if left alone – Laissez Faire – This helped fuel the economic boom of the 1920s

Causes of the Great Depression

THE CRASH!

Black Tuesday, Oct. 29

The Crash  Over 16 million shares sold in selling frenzy  Average price dropped 40 points  Paper loss exceeded $26 billion  Stock losses exceeded the total cost of U.S. involvement in World War I!

Stock Market Crash of Business was booming, but investments were made up borrowed money (known as over speculation) 2.There was an excessive expansion of credit 3.Business failures led to bankruptcies 4.Banks were also invested in the market 5.When the market collapsed, banks had no money

THE GREAT DEPRESSION WAS CAUSED BY MORE THAN JUST THE STOCK MARKET…

Federal Reserve Policies  Federal Reserve FAILED to prevent the widespread collapse of the US banking system  led to a contraction (less) money in circulation – Citizens withdrew their savings (bank runs) which caused more banks to close

A BANK RUN

It’s A Wonderful Life

High Protective Tariffs  Tariff Act of 1930 (Hawley-Smoot Tariff) put a high tax on imported goods – People thought it would promote productivity from American Industries and decrease unemployment  Unintended Effect  – Other countries put tariffs on US goods creating a trade problem for the whole world – strangled world trade!

Unemployment Less Money to Spend Buy Fewer Goods Companies have less profits Fire Workers

Impact of Great Depression

Unemployment and Homelessness  Many people lost their jobs – By 1932, 25-30% of workforce unemployed – million Americans jobless Cleveland, Ohio – 50% Toledo, Ohio – 80% unemployment

An Al Capone-sponsored soup kitchen

Skid Row, Looking for Rooms

MOVIES  People looked to movies to provide an escape from the realities of the Depression

Demand for Goods Declines

Political Unrest  Workers were angry and labor unions became more militant – In 1934 alone, 1.5 million workers went on strike.

Farm Foreclosures and Migration  Farmers had another problem: DUST BOWL  Many farmers lost their farms and became migrant workers – People who move from place to place working on other peoples’ farms

The Actual “Dust Bowl”

Between one million families lost their farms

4. Farm Foreclosures and Migration Many people left the Great Plains and moved to CA

Collapse of Financial System  Many banks closed – people lost their savings  collapse of the financial system  11,000 of 25,000 banks fail

People cannot repay loans Banks run out of money People take money out of banks – bank runs occur People lose savings/ no longer buy goods

The New Deal

New Deal  Changed Gov’t Role  The New Deal altered permanently the role of American government in the economy.  It also fostered changes in people’s attitudes toward government’s responsibilities.

1. President Herbert Hoover ( ) a.Thought that the economy would fix itself and that the government should not get involved (laissez-faire) b.Provided little direct assistance to the people suffering from the Depression c.People blamed him for the continuation of the Depression

2. Election of 1932 VS Franklin D. Roosevelt Herbert Hoover

FDR handily defeats Hoover – elected to fix the Great Depression

3. New Deal Plan Add $$ to the economy (welfare, jobs) More $$ to spend Buy more goods Companies have more profit More jobs created. Workers hired.

4. Goals of the New Deal R R R elief ecovery eform for the unemployed for the economy of the economic systems

5. The New Deal At Work a.Roosevelt rallied the nation with his inaugural address …. “WE HAVE NOTHING TO FEAR BUT FEAR ITSELF” b.Used the Radio to deliver fireside chat c.Alphabet Agencies a. GOAL: Create jobs and stimulate the economy, while restoring worker’s self- esteem

Fireside Chat: Video

MissionProgramHow Did It Work? R elief -- Provided direct payment to people for immediate help Works Progress Administration (WPA) Employed men and women to do public works, research and artistic projects R ecovery-- Designed to bring nation out of depression over time AAA Increased government regulation of crop production and payments to farmers R eform-- Corrected unsound banking and investment practices Federal Deposit Insurance Corporation (FDIC) Insured all savings in banks, helped restore confidence in banks Social Security Act Offered safeguards for workers by providing unemployment benefits and retirement

Impact of the New Deal  Changed the role of Government (more active role)  The legacy of the New Deal influenced the public’s belief in the responsibility of government to: – Deliver public services – Intervene in the economy – Act in ways that promote the general welfare