Unit 7: The Great Depression 2.7.18

Entry Task Free Write: America is a country in which…

The Plan Lecture & video clips Notes in your notebook Answer the questions for the video Objectives today: Have a clear understanding of the causes of the Great Depression Analyze and evaluate the response to the Great Depression of two Presidents

The 1920s Stock Market surges In 1925, the value of all stocks was $27 billion By October of 1929, stock values were $87 billion Many people thought everyone would become rich Think back to the simulation: If people thought the stock market would continue to go up forever, what would that lead them to do? Graph of stock market in 1920s

But underneath the wealth… there were warning signs that all was not well.

Warning Signs 1. Wealth Inequality The Rich: Huge corporations – not small businesses – were succeeding In 1929, 0.1% of the population had 34% of the country’s total savings Secretary of the Treasury, Andrew Mellon, gave the largest tax cuts to the wealthiest Americans

Warning Signs 1. Wealth Inequality The Poor: 71% of individuals and families earned less than $2,500 a year 80% of families had no savings

Warning Signs 2. PERSONAL DEBT People believed that America was becoming more and more prosperous They started buying more, and going into debt

Warning Signs 3. SPECULATION Speculation: Making high-risk investments, hoping to get a huge return Buying on margin: Investors could purchase a stock for a fraction of the price (10-50%) and borrow the rest. If the stock went up, people could make lots of money.

Warning Signs 4. FARMERS AND WORKERS STRUGGLE Farms struggled Farms couldn’t repay money to banks 6,000 rural banks failed during the 1920s Factory workers also struggled Many worked many hours for little pay

In the Stock Market… In 1929, prices in the Stock Market reach an all-time high But a few worried investors started to sell This led many people to follow their example Think back to the simulation… Why might stock owners want to sell when they saw others selling? What were they afraid of?

BLACK TUESDAY October 29, 1929 16.4 million shares traded Market collapses

Effects of the Crash 1. Risky loans hurt banks 2. Consumer borrowing bankrupted people 3. Bank runs bank failures >People all ran to the bank to withdraw their money >Banks collapsed, people lost everything Ultimately… The Stock Market Crash leads to the Great Depression Risky loans: Banks lost money b/c business and personal loans defaulted (couldn’t be paid back) Borrowing: Borrowers couldn’t pay back banks Bank runs: People withdrew all their money from banks, this led to failures of banks Savings: 9 million savings accounts vanished

The Century: Decades of Change 0:00-9:11 14:28-16:00 Episode 4: Stormy Weather

After the crash… Industrial production fell by 50% 12 million people were unemployed Businesses closed, people had no money, families starved or scraped by

The Century: Decades of Change 24:55-41:19 Episode 4: Stormy Weather

Hoover’s Response Hoover believed charity & government programs would just make people dependent He believed that government shouldn’t intervene to help businesses either Instead, he predicted that things would get better if everyone worked hard and pitched in

Play speech (2 min): http://www. history

When FDR came into office… ¼ of the nation’s workforce was unemployed ¼ million families had defaulted on their mortgages 1.2 million Americans were homeless FDR elected in 1932 Promised to help people

FDR Enacted The New Deal FDR demanded "broad executive power to wage a war against the emergency, as great as the power that would be given me if we were in fact invaded by a foreign foe."

Hoover Presidency FDR’s Presidency 1929-1933 1933-1945

FDR’s Fireside Chats FDR began weekly radio addresses called “fireside chats” In these addresses he tried to reassure and unite the nation He explained parts of the New Deal and his policies to the American pe0ple Play video: http://www.history.com/topics/us-presidents/franklin-d-roosevelt/videos/franklin-d-roosevelts-first-fireside-chat

The First 100 Days In FDR’s first 100 days in office, he pushed 15 major bills through Congress Reshaped every aspect of the economy – from banking and industry to agriculture and social welfare He called his approach “The New Deal”