Unit 7: The Great Depression 2.16.17

Entry Task Please take out your video questions from yesterday so we can finish up.

Great Depression Lecture You need to be ready to take notes (notebooks out) As we go through this information, please ask questions

Review – Types of Govts Communism: Democracy: govt. & econ system in which there are no economic classes, wealth and power are equally shared Democracy: form of govt. in which all eligible citizens are meant to participate equally by voting & making laws

Review – Types of Govts Republic: Socialism: system of govt. where people elect representatives to exercise power for them Socialism: govt. & econ system in which the people as a whole (rather than private individuals) own all property and operate all businesses, and everything is distributed according to their need

America What type of government do we have? Democratic-Republic: A simple majority vote by all the people (democracy) elects representatives to exercise the power (republic) What type of economic system do we have? Capitalism: a country's trade and industry are controlled by private owners for profit, rather than by the state

1920s: High Hopes Journalist Lincoln Steffens: “Big business in America, is producing what the Socialists held up as their goal: food, shelter, and clothing for all. You will see it during the Hoover administration.” Business was booming. Photo of lincoln steffens

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 Tuesday’s 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

Unit 7: The Great Depression 2.17.17

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

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/fireside-chats/videos/fdr-delivers-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”

The New Deal Goals: Relief – Stop the pain Recovery – Fix the problems Reform – Make sure it never happens again

The New Deal Relief

For the people Federal Emergency Relief Administration (FERA) Sent funds to local relief agencies $500 million for those organizations Created public works programs

Public Works Tennessee Valley Authority (TVA) Helped farmers Created jobs in underdeveloped rural areas Provided electricity and flood control Often seen as the key precursor to the Civil Rights Movement

Jobs Programs Public Works Administration (PWA) In 6 years, spent $6 billion Built dams, ports, Chicago’s sewer system Civilian Conservation Corps (CCC) Men between 18-25 were hired to restore the nation’s parks and forests Civil Works Administration (CWA) Put 2.6 million men to work in its first month

Helping Homeowners & Farmers Home Owners Loan Corporation (HOLC) Refinanced mortgages Agricultural Adjustment Administration (AAA) Gave farm subsidies

The New Deal Recovery

Fixing Banks Declared a bank holiday Glass-Stegall Banking Act of 1933 Created the FDIC to insure banks Guaranteed all bank deposits under $5,000

Regulating the Market Federal Securities Act Required companies to provide info about their finances if they sold their stock Securities and Exchange Commission (SEC) Regulated the stock market

The New Deal Reform

Social Security Aimed to help America’s poor – the elderly, dependent children, the handicapped Provided monthly stipends Legacy: Still America’s largest and most important safety net Most Americans depend on Social Security to retire

Rural Electrification Rural Electrification Administration (REA) By the 1930s, 90% of people in urban areas had electricity, while only 10% in rural areas did REA provided electricity: eventually 98% of U.S. farms had it

Helping Labor Wagner Act: Legalized union practices Collective bargaining Closed shops – some workplaces only open to union members

Ultimately… What finally ended the Great Depression was WWII, which provided millions of jobs and boosted the economy 1940- America selling arms 1941- America enters WWII

FDR: How He Affects Your Life Today Social Security not only pays retiree benefits, it also… What is the primary function of the Federal Deposit Insurance Corporation? The Securities and Exchange Act requires companies selling stocks to the public to… Which one of FDR’s actions have following Presidents apologized for?