Economic Disaster, the New Deal, and Transforming the National Economy. SOL REVIEW MATERIALS FOR UNIT SEVEN, PART II THE GREAT DEPRESSION,

Causes of the Great Depression  BUYING STOCKS “ON THE MARGIN” Speculators purchased stocks by BUYING "ON THE MARGIN" – or using borrowed money – money which banks lent out from hard-working Americans’ savings accounts – that they could not repay when stock prices crashed. For this reason, many BANKS FAILED during the Depression Era. THE STOCK MARKET CRASH of October of 1929 also caused banks to fail.

The Stock Market Crash of October, 1929, Caused the Great Depression! When the Stock Market crashed and thousands of businesses went under, unemployment skyrocketed, and many entrepreneurs lost everything. Because of the failure of the Federal Reserve System to protect the money people had invested in their banks, the Great Depression effected everyone, even depositors who kept a simple savings account at their bank. The FDIC – Federal Insurance Deposit Corporation – would help to solve this problem when it was created in but in 1929, it didn't exist.

Because of high, protective tariffs, international trade declined.

The Impact of the Great Depression on Americans…  After the Stock Market Crash of 1929, THOUSANDS OF BUSINESSES FAILED ACROSS THE US. This caused entrepreneurs to lose their investments, and workers to lose their jobs.  CLOSE TO 10,000 BANKS FAILED – The number of banks which closed during the Great Depression was close to 10,000. Anyone with savings account in those banks lost everything. And in the 1920s, bank deposits WERE NOT GUARANTEED by the government.

Unemployment Skyrocketed!  UNEMPLOYMENT REACHED CLOSE TO 25%!  The unemployment rate in the United States reached close to 25% in the year 1933 –the worst year of the Great Depression.  When Hoover was finally ousted from office, FDR made jobs programs his number one priority; yet, the unemployment rate would remain very high all the way until the bombing of Pearl Harbor on December 7, 1941.

Homeless Men and Women lived in “Hoovervilles” and Struggled to Survive. HOMELESSNESS and UNEMPLOYMENT Large numbers of people were hungry and homeless. With over 20% unemployment and very little hope of finding work, many decided to live in shantytowns on the edges of the cities. There, they might be able to construct a sturdy shelter, occasionally find odd jobs, and try to save some money. For the most part, however, these shantytowns were disease infested, cold, and foul smelling places.

Farmers Incomes Dropped to Low Levels During the Great Depression, most Americans continued to make their living as farmers – one way or another. During the 1920s, farmers were too productive for their own good. Because of OVERPRODUCTION, the supply of wheat and corn and other grains was so high that prices dropped dramatically. During the Great Depression, drought and poor soil erosion practices led to the Dust Bowl. THE DUST BOWL made it impossible to grow crops at all in some regions.

FDR and The New Deal

Major Programs of FDR’s New Deal THE SOCIAL SECURITY ACT – Social Security was a program which delivered a monthly pension to elderly and disabled people all across America. The act also provided payments for dependent children. The Social Security program is still in effect today, and continues to provide relief for the elderly, the disabled, and the children of dependent families. It also provided unemployment insurance for men and women actively seeking work, who are unable to find jobs.

The New Deal Featured Several Important Jobs Programs. MANY NEW DEAL PROGRAMS WERE CREATED TO HELP PEOPLE FIND JOBS:  The Works Progress Administration (WPA)  The Public Works Administration (PWA)  The Civilian Conservation Corps (CCC)  The Tennessee Valley Authority (TVA)  The Rural Electrification Administration (REA)

Environmental Improvement was Encouraged by New Deal Programs. Environmental improvement programs in the New Deal included:  The Civilian Conservation Corps  The Agricultural Adjustment Administration  The Tennessee Valley Authority  The Resettlement Administration Each of these agencies encouraged men and women either to practice soil conservation or to interact with nature differently. The TVA, for example, developed dam systems upon the flood plain of the Tennessee River. The Civilian Conservation Corps worked to reforest lumbered areas and create structures within the National Park System. Millions of young men were employed to protect the environment for future generations.

Farm Assistance Programs like the Agricultural Adjustment Act and the Resettlement Administration helped farmers. The Agricultural Adjustment Administration actually paid farmers NOT TO GROW crops. The idea was to decrease the supply of certain grains, and pump up the price of foodstuffs. The Resettlement Administration helped farmers displaced by the Dust Bowl to find work and start over somewhere else.

Labor Unions Benefitted from the Wagner Act and the Creation of the National Labor Relations Board. Increased rights for labor during the Great Depression were main goals for FDR and his administration. The National Labor Relations Board required major companies to negotiate with unions through collective bargaining. During the Great Depression, groups like the Congress of Industrial Organizations (CIO) formed in order to demand higher wages for unskilled laborers. John Lewis was the group’s leader.