The Great Depression & The New Deal Section 1- Hoover & the Stock Market Crash Section 2- Franklin Delana Roosevelt & the New Deal Section 3- Life in the Great Depression Section 4- Legacy of the New Deal

Hoover & the Stock Market Crash

Objectives Read about The U.S.’s economic problems during the 1920’s Understand how the great depression started Find out how the Great Depression affected U.S. citizens Discover president Hoover’s response to the Great Depression

Woodrow Wilson's presidency fulfilled the progressive reform agenda and laid the foundations of the modern activist presidency. Wilson's administration fundamentally altered the nature and character of the presidency by changing it from an equal or lesser partner with Congress to its superior—the dominant branch of government. (Obama Administration)

Wilson pushed for the Federal Reserve Act of 1913, which established twelve regional reserve banks controlled by the Federal Reserve Board, a new federal agency whose members were appointed by the President. This new federal system could adjust interest rates and the nation's money supply.

the amount of money in circulation would expand or contract with the business cycle. Additionally, the Federal Reserve was empowered to adjust the interest rates, or the discount rate, charged to its member banks for money deposited in the branch reserve banks, which would indirectly control the interest rates that banks charged their borrowers.

The Depression of 1920–21 was an extremely sharp deflationary recession in the United States and other countries, shortly after the end of World War I. It lasted from January 1920 to July 1921. The extent of the deflation was not only large, but large relative to the accompanying decline in real product. There was a brief post–World War I recession immediately following the end of the war which lasted for 2 years.

Here are the highlights to the importance of the 1920–1921 depression Here are the highlights to the importance of the 1920–1921 depression. Here the government and Fed did the exact opposite of what experts now recommend. We have just about the closest thing to a controlled experiment in macroeconomics that one could desire. The government slashed its budget tremendously, and the Fed hiked rates to record highs. We thus have a fairly clear-cut experiment to test Keynesian theory and monetarist remedies.

At the conclusion of World War I, U. S At the conclusion of World War I, U.S. officials found themselves in a bleak position. The federal debt had exploded because of wartime expenditures, and annual consumer price inflation rates had jumped well above 20% by the end of the war.

Under Wilson the top tax rate had reached 77 percent by 1918, just five years after Congress created its first, single-digit levy. World War I explains the rapid escalation in rates. These tax rates & handling of tariffs would lead to the depression of 1920-21.

During the last year of Woodrow Wilson’s presidency, the economy nosedived. GNP fell 17 percent; unemployment soared from 4 to almost 12 percent. This was the “Forgotten Depression” of 1920.

Wilson’s successor, Warren G Wilson’s successor, Warren G. Harding, came into office and immediately cut tax rates for all income brackets, slashed federal spending, and balanced the budget. Long before the world ever heard of Ronald Reagan, Harding practiced “Reaganomics.” In 1921 President Harding would reduce the top tax rate to 55%,

What we already know… We learned about the economy post World War I and the great prosperity in the 1920’s.

The Harding recovery was rapid, beginning just half a year into his presidency. Unemployment fell to 6.7% by 1922, and to 2.4 % by 1923. Harding’s successor, Calvin Coolidge, maintained Harding’s program of low tax rates (25%), balanced budgets, and limited government. The Harding-Coolidge era of prosperity became known as “the Roaring Twenties”—a time of soaring prosperity, stable prices, and boundless optimism.

Suppose that one day, no one had access to money, at all and everyone lost their jobs. What would people not be able to do?

Hoover & the Crash In 1928 President Herbert Hoover predicted that America would soon complete “final triumph over poverty.”

Hoover & the Crash In reality what we were heading for was the worst economic disaster in the history of this nation, other than today.

Signs of Weakness in the Economy Coal Mining was on the decline