1. The Great Depression

2. Main Causes of the Great Depression
Production exceeds demand
Wealth inequality
Collapse of the farm industry
Limited Government Regulation
Stock Market Speculation

3. Federal Reserve (Fed) Worsens Depression
Fed in charge of monetary policy-policies or actions that affect the supply of money
During 1920s, Fed has “expansionary monetary policy”
Low interest rates-easy to borrow money
Helps Fuel stock market speculation – people “buy on the margin”
After Black Tuesday, Fed tightens money supply
Raises interest rates, harder to borrow money
When America needed an economic boost, the Fed slowed down the economy more.

4. Federal Gov’t Worsens Depression
1930 Hawley-Smoot tariff passed
Shuts down international trade
President Hoover does nothing
Asks companies to voluntarily maintain employment/wages (they don’t)
“Prosperity is just around the corner”

6. Effects of the Great Depression
Worst economic crisis in United States
Unemployment 25% (1 out of 4 people unemployed)
No unemployment insurance
Hundreds of Thousands loose homes

7. When a large amount of people try to withdraw savings from a bank, causing it to close.
People lose confidence in banks
People attempt to withdraw savings from Banks
Causes more banks to collapse
People lose even more confidence in Banks
People withdraw savings from more banks
Some banks collapse due to Black Tuesday
Bank Runs

8. Bank Runs

9. Economic Death Spiral Workers fired/wages cut Demand decreases
Prices lower
Workers fired/wages cut
Demand decreases further
Prices lowered further
More workers fired/wages cut
Demand decreases
Economic Death Spiral

10. Critical thinking question
What possible solution is there for this economic death spiral???

11. Soup Kitchen and Bread Lines
First started by churches/private charities
Local/state gov’ts begin to open them as well.
Only real form of government assistance under President Hoover.

12. Dust Bowl Great Plains damaged by overgrazing
Demand for grain in WWI causes over plowing
Top soil becomes very fragile
Severe drought + Strong winds beginning in 1931, blow away top soil
Soil becomes useless
“Okies” move West

14. Significance: People again demand support from federal government
The Bonus Army
After WWI, veterans promised a bonus payment in 1945
In 1932, veterans march on D.C. demand bonus be paid early
Crowd 40,000+ on Pennsylvania Avenue
Hoover uses army to disband protest
Political Revolution ?????????
Significance: People again demand support from federal government

15. Franklin Delano Roosevelt (FDR)
Herbert Hoover
Election of 1932
Franklin Delano Roosevelt (FDR)
Main Issue:
-> The Depression
-Party: Republican
-Opposed gov’t intervention in the economy/gov’t aid for poor
Believes FDR’s program will prolong Depression.
-Party: Democrat
-Plans to use federal gov’t resources to end Depression -“I pledge you, I pledge myself, to a New Deal for the American people”
Wins by landslide

16. FDR Innaguration What did FDR mean by the quote above?
“The only thing we have to fear is fear itself.”
What did FDR mean by the quote above?

17. FDR and New Deal FDR has mandate to fix economy
Mandate-> political authority to solve an issue(s) based off of popular support from voters.
New Deal: FDR’s policies from , to reform and rebuild the American economy.
-> vastly increases the powers of federal government.
-> provides direct federal aid to suffering people
-> rejects llaissez fair capitalism, promotes gov’t regulation of economy.

18. Significance of New Deal
DOES NOT END THE GREAT DEPRESSION: ends with WWII.
Restores people’s faith in American gov’t
Does alleviate some economic suffering: puts people to work
Reforms help prevent future economic depressions

20. FDR Solves Banking Crisis
Implements Banking Holiday, March 6-10
Launches nationwide “Fireside chats”,
-> Roosevelt speaks directly with Americans over radio
-> explains banking crisis
Creates FDIC (Federal Deposit Insurance Corporation 1933): insures deposits up to a certain amount,
Confidence restored in banking system

21. FDR’s Court Packing Scheme
Several pieces of New Deal legislation struck down by SCOTUS
FDR proposes plan to pack court with sympathetic judges
Introduces bill to add a new justice every time an existing justice turned 70.
Never passed, but Court takes notice and stops declaring New Deal laws unconstitutional

23. Criticisms of the New Deal
Criticisms from Democrats (The Left)
Argue that the New Deal did not go far enough to help the poor and reform the nation’s economic system
Father Charles Coughlin
Radio priest from Detroit
Wants to nationalize banking system (FDR disagrees)
Blames Great Depression on a Jewish conspiracy
Huey “Kingfish” Long
Louisiana politician, rival to Roosevelt
“Share our Wealth” plan to place huge taxes on the rich
Assassinated in 1935

24. Criticisms of the New Deal
Criticisms from Republicans (the right)
Critics: Wealthy/Business owners
Believed FDR had become too powerful-> dictator-> leader with no limits on power
Programs gave federal government too much control over the economy
Creates an unbalanced budget