1. Unit 7: The Great Depression

2. Entry Task You need to be ready to take notes (notebooks out)
As we go through this information, please ask questions

3. 1920s: High Hopes Journalist Lincoln Steffens:
“Big business in America, is producing what the Socialists held up as their goal: food, shelter and clothing for all. You will see it during the Hoover administration.”
Business was booming.
Photo of lincoln steffens

4. The 1920s Stock Market surges
In 1925, the value of all stocks was $27 billion
By October of 1929, stock values were $87 billion
Many people thought everyone would become rich
Think back to the simulation:
If people thought the stock market would continue to go up forever, what would that lead them to do?
Graph of stock market in 1920s

5. But underneath the wealth…
there were warning signs that all was not well.

6. Warning Signs 1. Wealth Inequality The Rich:
Huge corporations – not small businesses – were succeeding
In 1929, 0.1% of the population had 34% of the country’s total savings
Secretary of the Treasury, Andrew Mellon, gave the largest tax cuts to the wealthiest Americans

7. Warning Signs 1. Wealth Inequality The Poor:
71% of individuals and families earned less than $2,500 a year
80% of families had no savings

8. Warning Signs 2. PERSONAL DEBT
People believed that America was becoming more and more prosperous
They started buying more, and going into debt

9. Warning Signs 3. SPECULATION
Speculation: Making high-risk investments, hoping to get a huge return
Buying on margin: Investors could purchase a stock for a fraction of the price (10-50%) and borrow the rest. If the stock went up, people could make lots of money.

10. Warning Signs 4. FARMERS AND WORKERS STRUGGLE Farms struggled
Farms couldn’t repay money to banks
6,000 rural banks failed during the 1920s
Factory workers also struggled
Many worked many
hours for little pay

11. In the Stock Market…
In 1929, prices in the Stock Market reach an all-time high
But a few worried investors started to sell
This led many people to follow their example
Think back to yesterday’s simulation…
Why might stock owners want to sell when they saw others selling? What were they afraid of?

12. BLACK TUESDAY October 29, 1929 16.4 million shares traded
Market collapses

13. Effects of the Crash 1. Risky loans hurt banks
2. Consumer borrowing bankrupted people
3. Bank runs bank failures
>People all ran to the bank to withdraw their money
>Banks collapsed, people lost everything
Ultimately…
The Stock Market Crash leads to the Great Depression
Risky loans: Banks lost money b/c business and personal loans defaulted (couldn’t be paid back)
Borrowing: Borrowers couldn’t pay back banks
Bank runs: People withdrew all their money from banks, this led to failures of banks
Savings: 9 million savings accounts vanished

15. After the crash… Industrial production fell by 50%
12 million people were unemployed
Businesses closed, people had no money, families starved or scraped by

16. Hoover’s Response
Hoover believed charity & government programs would just make people dependent
He believed that government shouldn’t intervene to help businesses either
Instead, he predicted that things would get better if everyone worked hard and pitched in

17. When FDR came into office…
¼ of the nation’s workforce was unemployed
¼ million families had defaulted on their mortgages
1.2 million Americans were homeless
FDR elected in 1932
Promised to help people

18. Hoover Presidency FDR’s Presidency 1929-1933 1933-1945

19. FDR Enacted The New Deal
FDR demanded "broad executive power to wage a war against the emergency, as great as the power that would be given me if we were in fact invaded by a foreign foe."

20. FDR’s Fireside Chats
FDR began weekly radio addresses called “fireside chats”
In these addresses he tried to reassure and unite the nation
He explained parts of the New Deal and his policies to the American pe0ple

21. The First 100 Days
In FDR’s first 100 days in office, he pushed 15 major bills through Congress
Reshaped every aspect of the economy – from banking and industry to agriculture and social welfare
He called his approach “The New Deal”

22. The New Deal Goals: Relief – Stop the pain Recovery – Fix the problems
Reform – Make sure it never happens again

23. Relief for the people Federal Emergency Relief Administration (FERA)
Sent funds to local relief agencies
$500 million for those organizations
Created public works programs

24. Public Works Tennessee Valley Authority (TVA) Helped farmers
Created jobs in underdeveloped rural areas
Provided electricity and flood control
Often seen as the key precursor to the Civil Rights Movement

25. Jobs Programs Public Works Administration (PWA)
In 6 years, spent $6 billion
Built dams, ports, Chicago’s sewer system
Civilian Conservation Corps (CCC)
Men between were hired to restore the nation’s parks and forests
Civil Works Administration (CWA)
Put 2.6 million men to work in its first month

26. Helping Homeowners & Farmers
Home Owners Loan Corporation (HOLC)
Refinanced mortgages
Agricultural Adjustment Administration (AAA)
Gave farm subsidies

27. Recovery: Fixing Banks
Declared a bank holiday
Glass-Stegall Banking Act of 1933
Created the FDIC to insure banks
Guaranteed all bank deposits under $5,000

28. Recovery: Regulating the Market
Federal Securities Act
Required companies to provide info about their finances if they sold their stock
Securities and Exchange Commission (SEC)
Regulated the stock market

29. Reform: Social Security
Aimed to help America’s poor – the elderly, dependent children, the handicapped
Provided monthly stipends
Legacy:
Still America’s largest and most important safety net
Most Americans depend on Social Security to retire

30. Reform: Rural Electrification
Rural Electrification Administration (REA)
By the 1930s, 90% of people in urban areas had electricity, while only 10% in rural areas did
REA provided electricity: eventually 98% of U.S. farms had it

31. Reform: Helping Labor Wagner Act: Legalized union practices
Collective bargaining
Closed shops – some workplaces only open to union members

32. Ultimately…
What finally ended the Great Depression was WWII, which provided millions of jobs and boosted the economy
1940-
America selling arms
1941-
America enters WWII

33. Next Up:
You will examine whether the New Deal was a success or failure
This is something historians still debate today