The Great Depression Begins Mr. Fisher United States History

 Causes:  Calvin Coolidge  Kept taxes down  Helped to increase credit  Moved to the left, more free market economy  Little government interference  private enterprise to flourish  Results:  Increase in Standard of Living  Increase in wages (35%)  Productivity increase  businesses expanded  Farm production – produced more than what was needed  Growing gap between upper/lower class  Buying Goods on Credit  Installment plan – buy goods over an extended period of time  Banks provided low interest loans  Advertisement pushed these plans  Video – with handout Video Roaring Twenties

 (1) Industries in trouble  Many weren’t obtaining any profit  Railroads  automobile  Mining and lumber  less expansion because of no war  Housing market began to fall  (2) Farmers  During war – high prices = more loans for production  After war – prices declined by 40%  Poor farming practices (crop rotation and over production)  Leads to the Dust BowlDust Bowl  (3) Consumers  Lived on credit (superficial life style)  Buying “stuff” that they did not have the money for up front  Lose your job  can’t pay back loans/credit  declare bankruptcy The Nation’s Sick Economy

 (4) Stock Market CrashStock Market Crash  Speculation – throwing all savings into stock to make quick profit  Buying on margin - putting a down payment on a stock and borrowing the rest  Black Thursday: (End of the Roaring 20s)  Beginning of the stock market crash  Investors panicked and began to sell stocks  Bank runs  People trying to get out whatever money they had left  (5) Trade barriers  Hawley-Smooth Tariff Act Hawley-Smooth Tariff Act  Raise in tariffs – Aimed at “protecting” American businesses Issues  Business depended on cheap imports  Other countries reciprocated

 (1) Emergence of shantytowns (A.K.A Hoovervilles)(A.K.A Hoovervilles)  Places for people without homes to live  (2) Stock Market and banking regulations  Securities Exchange Commission (SEC)(SEC)  Regulate the Stock Market  Federal Deposit Insurance Corporation (FDIC)(FDIC)  Insure people’s deposits  Put trust back into the banks  (3) FDR’s “New Deal” Program (Franklin Delano Roosevelt)  Expanded role of fed. gov’t = movement toward more command eco.  Increase gov’t spending  create prog’s  create jobs  production  (4) Mass Migration  Results of the Dust Bowl (rural areas  urban areas)Dust Bowl  (5) Societal change  Wary of banks, suspicious of stock market, hoard food… etc. Effects

 Hoover: (Picture analysis)(Picture analysis)  Viewed depressions as “normal”  “Any lack of confidence in the economic future… is foolish.”  Encouraged not to cut wages, and not to lay off workers  Favored a “laissez-faire” policy (Beginning of presidency)  Moved to “command” like economy (Toward end of presidency)  Government ATTEMPTS to aid/stimulate economic growth  Federal Farm Board:  Hold supply off market to drive up price  National Credit Corporation:  Loan money to smaller banks to stave off bankruptcy  Reconstruction Finance Corporation:  Emergency monies for large industries (banks, railroad, insurance companies)  TRIED TO ALLOW MONEY TO “TRICKLE” DOWN TO THE PEOPLE TRIED TO ALLOW MONEY TO “TRICKLE” DOWN TO THE PEOPLE  Hoover: Too little, too late  Bonus Army (further tarnishes Hoover ) Bonus Army  Group of veterans who were promised money to be paid out in 1945  Put down by the military (right thing to do or not?) Hoover Struggles with the Depression

 End of Republican rule – beginning of Democrat rule  Election of Franklin Delano Roosevelt (FDR)  Promised a “New Deal for the American people”  New Deal goals: (LARGE MOVEMENT TOWARD COMMAND ECONOMY) New Deal  (1) Relief for needy  Federal Emergency Relief Administration (FERA)  Provided direct relief to individual states (money to tickle down to the people)  (2) Economic recovery  Agricultural Adjustment Act (AAA)  Raise crop prices by limiting production (set aside land or plow under crops)  Civilian Conservation Corp (CCC)  Increased jobs (roads, bridges, planted trees, soil-erosion… etc)  Public Works Administration (PWA)  Construction of community buildings and schools  National Youth Administration (NYA)  Helped out young people with work related training (Tech Center)  (3) Financial reform  Bank Holiday – prevent anyone from withdrawing money  Investigated in sound banks – closed others  Federal Deposit Insurance Corporation (FDIC)  Insured deposited monies up to $5,000 (now $250,000)  Creation of Securities Exchange Commission (SEC)  Helped to regulate the Wall Street from fraud and corruption (misleading information) New Deal Fights the Depression