The Great Depression 11.6 Students analyze the different explanations for the Great Depression and how the New Deal fundamentally changed the role of the federal government. 11.6.1 Describe the monetary issues of the late nineteenth and early twentieth centuries that gave rise to the establishment of the Federal Reserve and the weaknesses in key sectors of the economy in the late 1920s 11.6.2 Understand the explanations of the principal causes of the Great Depression and the steps taken by the Federal Reserve, Congress, and Presidents Herbert Hoover and Franklin Delano Roosevelt to combat the economic crisis. 11.6.3 Discuss the human toll of the Depression, natural disasters, and unwise agricultural practices and their effects on the depopulation of rural regions and on political movements of the left and right, with particular attention to the Dust Bowl refugees and their social and economic impacts in California.

1920’s Prosperity Post WWI Economic Boom American were earning more money than ever before Americans were spending more money on luxury items Factories produced more goods, hired more people and gained more profits Americans were buying more stock in companies

Question 1 Which group was LEAST likely to enjoy the prosperity of the 1920s? A. manufacturers B. stock owners C. retailers D. farmers

The Depression Foreshadowed Causes of the Great Depression Republican domestic and international economic policy Laissez-Faire The trickle down effect Support big business and the wealth will go down to the people Unchecked stock speculation People bought real-estate trying to make a quick profit Often the land sold was a fraud People kept buying and reselling stock for a higher price than it was worth October 29th, 1929 – Black Tuesday – Stock Market crashes The price of all stock drops dramatically Millions of dollars were lost because the investment of stocks failed

Question 2 Which of the following caused investors to engage in panic selling in 1929? A. the fear of further investment losses B. government legislation to increase taxes C. inflated prices for agricultural goods D. An influx of foreign investments

The Depression Foreshadowed Weak and unregulated banking institutions Banks had over extended credit to stock investors Investors lost money in the stock market Banks lost money on people who could not pay their loan Regular bankers lost money because the bank lent out their savings to other people When to stock market crashes, people demanded the banks give them the money in the checking accounts and savings accounts The bank does not have the money supply because they had already invested it elsewhere

Question 3 At the beginning of the economic depression (1929) the Federal Reserve A. failed to assure an adequate money supply B. failed to print enough money C. took control of the failing banks D. made debt payments for U.S. industries

The Way Banks Work This is how it works A customer goes to the bank for a loan The bank loans them money and charges them interest (the interest is a profit for the bank) When the bank gets money back, they lend it to other people to buy property, start a business, buy a home, etc Banks also used the money in people’s savings accounts to invest in stock, other loans, etc to gain a profit When the stock market crashes, people can not pay back their loans, the banks loose money and go out of business The problem was that there was no government regulation of how much the banks loaned or how they ran their business

Prediction Question (4) Franklin Roosevelt’s immediate response to the banking crisis after becoming president was to A. declare a bank holiday that closed banks in the United States for several days. B. nationalize the banks to ensure they were following federal regulations C. borrow money from foreign banks to support the U.S. banking industry

The Depression Foreshadowed Overproduction of Goods Factories boomed after WWI More demand, jobs and profit But when people no longer had money to purchase goods, demand was gone along with the jobs and profit This resulted in millions of Americans out of jobs and factories being forced to close Americans in line for unemployment benefits during the Great Depression

Question 5 Perhaps the greatest effect of the Great Depression on average Americans was the loss of A. mobility B. Faith in President Roosevelt. C. government relief programs. D. self-worth

The Depression Foreshadowed Decline of the Farming Industry During the 1920’s Farmers borrowed money for equipment and mortgages After the crash, farmers could not pay their loans and lost their farms Drought – the Dust Bowl With the lack of rain in the mid west, the top soil was dry and nothing could be planted Then a huge wind storm swept through the Midwest, causing the dry top soil to blow in the air

Question 6 Which of the following was the primary cause of the natural disaster on the Great Plains knows as the Dust Bowl? A. dam building B. crop reduction C. black blizzards D. prolonged drought

The Depression Foreshadowed Unequal distribution of wealth Prior to the crash most of the wealth was in the hands of Big Business Think of the Robber Barons/Captains of Industry During the Depression, the rich get richer, and the poor get poorer

Question 7 Over Production Decline in Farm Prices Stock Market speculations The factors listed above led to the Federal Reserves easing of the money supply Structural weakness in the American economy Technology boom of the 1930s Rise of organized crime

The Impact of the Great Depression Hoover’s Reaction He was confidant in the American Industrial machine He believed that the US economy was efficient and would remain undamaged He believed in trickle down economics The Conservative Congress Congress wanted to help business, not the needy Government invested in building America Public Buildings Act, Hoover Dam, Reconstruction of Finance Corporations Ultimately the government did not help in the right way leading to the Great Depression

Question 8 President Hoover believed that the best way to end the Depression was to A. set up federal relief and job programs B. lower import duties and eliminate the tariff. C. ask congress to approve government spending programs D. ask the business sector to put in place voluntary controls.

Results of the Great Depression Banks Closed Many farmers and businessmen committed suicide Businesses failed Unemployment reached 25% by 1932 The public hated Hoover Franklin D. Roosevelt was elected in 1932 He pledged a New Deal for Americans

Question 9 An unemployment rate of 25% was a factor responsible for the election of A. Calvin Coolidge B. Herbert Hoover C. Franklin D. Roosevelt D. Harry Truman