The Great Depression & The New Deal

Vocabulary Economy: a society’s system of money related to all business and trade. Consumers: people who buy things Credit: borrowing money and paying it back with interest (the extra amount you pay for borrowing the money) The Stock Market: Where people buy and sell pieces (called shares) of companies. Bread Lines: A place were the poor were given food during the Great Depression Mortgage: Monthly housing payment for the house you will someday own.

What was the Great Depression? The Great Depression was a period of time in 1930s American when the economy was horrible and many people became homeless and unemployed. The New Deal is the name for the collection of President Franklin D. Roosevelt’s government programs that helped end the Great Depression

How did This Happen? In order to understand how the Great depression occurred we must take a closer look at the “roaring” 1920s. ON THE SURFACE… The 1920s was a time of economic prosperity. BUT BELOW THE SURFACE… There were serious economic issues that were neglected or not properly addresssed.

Causes of the Great Depression Industries in trouble Farmers in trouble Consumer problems Uneven distribution of income Tariffs and War Debt

Industries in trouble Railroads, textiles, steel and lumber industries barely made a profit in the 1920s Many industries faced competition from foreign countries like China, Japan and India Coal mining also decreased as other cleaner energy sources became more common

Farmers in trouble After WWI there was less demand for grain Farmers income went from $10 billion in 1919 to $4 billion 1921 and stayed low Farmers continued to struggle throughout the 20s A “Dust Bowl” of dry soil from overplanting and drought in the mid west also made it harder for farmers to survive

The Dust Bowl

Consumer Problems As farms and industries struggled, they fired many of their workers Consumers (the workers) had less money to spend Consumers were buying less and borrowing more money to spend on essentials People were using a lot of credit (spending more money than they had)

Uneven income distribution Rich people were getting richer and poor people were getting poorer Eventually there were not enough people to buy the stuff that was making the rich people rich… think about it.

Tariffs and War Debt The Hawley-Smoot Tariff Passed Congress and signed into Law by President Hoover in 1930 Raised Taxes on imports to protect American Businesses from foreign competition Americans did not enough money to buy all of the goods the factories were producing so this ended up hurting the economy rather than helping. Foreign countries owed the U.S. a lot of money after WWI and U.S. businessmen started to think we would never get it back!

Quick Quiz What is the Stock Market? What was the Great Depression? What was the New Deal? Causes of Depression Fact 1 Fact 2 Fact 3

Black Tuesday On October 29th, 1929 The stock market crashed All of the causes mentioned earlier (farmers in trouble, industries in trouble, consumer problems and uneven wealth distribution) combined to create a panic in the stock market and banks. Nobody wanted to buy stocks, everybody only wanted to sell them The value of peoples stocks became almost nothing and companies became valueless overnight. This became known as Black Tuesday, it was the beginning of the Great Depression.

The Stock Market (1927-1933)

President Hoover’s Response President Herbert Hoover was president during Black Tuesday He felt the economic slump would end by itself and did not need government help He believed in “Rugged Individualism” People should succeed through their own efforts

Hoover Takes (some) Action The Reconstruction Finance Corporation Approved by congress and President Hoover in 1932 This government agency loaned money to banks, insurance companies and other large businesses so they would not go out of business Hoover believed the money would “trickle down” and eventually help the average citizen It was not particularly effective and many economists believe it was too little too late

Effects of the Great Depression Many banks closed Loss of GDP (national income) Super High Unemployment (25%) Rapid homelessness increase (people could not pay mortgages or rents) Suicide and depression Shantytowns called “Hoovervilles” popped up around cities Unemployment was even higher for Blacks and Latinos Many people relied on soup kitchens and bread lines for their food.

Quick Quiz What are FOUR facts about black Tuesday? Why do you think it is called black Tuesday? Who was President during black Tuesday? What was his response to this event? WHY? What were SEVEN effects of the Great Depression?

Roosevelt to the Rescue Franklin D. Roosevelt became President in March of 1933 (Elected in 1932) The American people hoped that he would do more to help them than Herbert Hoover had done The New Deal was Roosevelt’s name for all of the ways he hoped to end the Great Depression. Roosevelt called for a “Hundred Days Congress” - congress would work for one hundred days to pass laws to help people in need

Major Parts of the New Deal Fireside Chats Reforming Banking and Finance Assisting Farmers Providing Work Projects Helping People with Housing Assisting the Elderly Improving Labor Conditions

Fireside Chats After his inauguration, President Roosevelt broadcast a message on the radio to calm peoples fears This was such a success he continued to communicate important messages to the American people These broadcasts became known as fireside chats and were used to let people know what the government was doing to help them

Reforming Banking & Finance Roosevelt closed all banks while government officials inspected them Only quality banks were allowed to Reopen Congress passed the Glass-Steagall Act creating the Federal Insurance Deposit Corporation (FDIC) – If a bank goes out of business people do not lose their money

Assisting Farmers The Agricultural Adjustment Act (AAA) This law helped raise crop prices by regulating & reducing the amount of land crops were grown on. Therefore it reduced the supply of crops which raised prices

Providing Work Projects The Civilian Conservation Corps (CCC) was an organization started by Pres. Roosevelt The CCC put young men to work building bridges and roads, Other work programs started by Roosevelt included the Federal Emergency Relief Administration (FERA) & the Works Progress Administration (WPA)

Helping People with Housing Many people became homeless because they couldn’t afford their rent or mortgage The Home Owners Loan Corporation (HOLC) was part of the New Deal It helped people pay mortgages so they wouldn’t become homeless or provided cheaper housing for the poor

Assisting the Elderly Social Security Act Passed by Congress in 1935 This is one of the longest lasting New Deal programs It still exists today It pays retired individuals (over age 65) a monthly check. When you’re young and working your paycheck is taxed so when you retire you can have a check monthly.

Improving Labor Conditions The Wagner Act Passed by congress in 1935 It made it so workers were better protected by the government when they were trying to form union. Fair Labor Standards Act Passed in 1938 Set maximum hours of work per week at 44 hours. Set minimum wage at 25 cents and hour.

In Conclusion… The Great Depression was a sad time in U.S. History. It began to get a little better because of programs from the New Deal, HOWEVER… The Great Depression REALLY started to wind down in 1939 when the United States began trading military supplies (weapons, food, medical supplies) to Europe for WORLD WAR II This put even more people back to work building, shipping and farming and was great for the U.S. Economy!

Quick Quiz Who became President after Herbert Hoover? (In two words) What was this man’s plan for helping end the Great Depression? Explain THREE facts about each of the following parts of Roosevelt’s Plan for ending the Depression Fireside Chats Reforming Banking and Finance Assisting Farmers Providing Work Projects Helping People with Housing Assisting the Elderly Improving Labor Conditions When did the Great Depression begin ending? WHY?