Transcript Unit 3 Chapter 4 The Great Depression and the New Deal Power Point

Unit 3
• Prosperity, Depression and the New Deal (1919-1941)
• The Post-World War I period was characterized by
economic, social and political turmoil. Post-war prosperity
brought about changes to American popular culture.
However, economic disruptions growing out the years led
to worldwide depression. The United States attempted to
deal with the Great Depression through economic
programs created by the federal government.
Chapter 4: Great Depression and the New Deal
• Content Statement: The Great Depression was caused, in part, by the
federal government’s monetary policies, stock market speculation and
increasing consumer debt. The role of the federal government expanded
as a result of the Great Depression.
• Expectations for Learning: Describe how the federal government’s
monetary policies, stock market speculation and increasing consumer
debt led to the Great Depression.
• Expectations for Learning: Explain how the efforts to combat the Great
Depression led to an expanded role for the federal government.
Section 1: Causes of the Great Depression
• Content Elaboration: One of several factors leading
to the Great Depression in the United States was the
excessive amount of lending by banks. This fueled
speculation and use of credit. The Federal Reserve
attempted to curb these practices by constricting the
money supply. The effect was to worsen economic
conditions by making it harder for people to repay
debts and for businesses, including banks, to
continue operations.
Section 1: Causes of the Great Depression
• Content Elaboration: Another factor leading to the
Depression was stock market speculation. Many
investors were buying on margin with the hope of
making huge profits. But the collapse of the stock
market led many to lose their investments and
fortunes. The closing of many factories led to the
rise of consumer debt as workers lost needed
income.
Stock Market Speculation and the
Crash of 1929
• a. Many people bought stock and made money
• b. People even borrowed to buy stock
• c. Many people got rich, so even more bought
stock
• d. On October 29, 1929 the stocks lost value.
• e. Everyone tried to sell their stocks, but
nobody would buy.
• f. People lost everything they had.
• g. This started the Great Depression.
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
Panic on Wall Street People crowd Wall Street after
the Stock Market Crash of 1929. Commissioner
Whalen dispatched an extra detail of 400 police
officers to guard the area.
• The stock market crash of 1929 ushered in a
decade called the Great Depression in which
millions of people suffered through
unemployment and poverty. The nation’s
leaders, who were once so optimistic, lost
their confidence and became stricken with
fear and doubt.
The Stock Market Boom
• A. People bought “shares” in large corporations
•
1. Each share was a part of the company
•
2. If company made money, price of each
•
share went up
•
B. Prices of stock went up beginning in 1921
•
C. By 1927, people would buy stock and sell it at a
higher price to make a profit
•
D. They would use that money to buy more stock,
•
then sell it at a higher price
•
E. GET RICH QUICK!
I. Causes of the Great Depression
• Reason #1: Stock market crash
• The price of stock declined a little, and this
led to a collapse. People lost all of their
money, and this led to the greatest
depression in the history of the United
States.
Reason #1, cont
• Black Thursday
•
A. October 24, 1929
•
1. Prices fell
•
2. Everyone sold their stock
•
B. J.P. Morgan and Co.
•
1. Bought $30 million in stocks
•
2. Bought stocks at higher prices
•
3. Prices went back up
•
4. Things stable again
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
Reason #1, cont.
The Great Crash
•
A. Tuesday, October 29, 1929
•
1. Worst day of all
•
2. Prices fell steeply
•
B. U.S. Steel stock
•
1. Sept. 3 = $262/share
•
2. Nov. 12 = $150/share
• ***Many stocks decreased to half of its value
Reason #2: The unequal distribution
of wealth
• The unequal distribution of wealth
•
A. A few people actually had money
•
1. They spent a lot during the 1920’s
•
B. The rest were barely getting by
•
C. When stock market crashed, the rich stopped
•
spending
•
D. Inventories piled up
•
1. cars
•
2. refrigerators
•
3. radios
•
E. People lost jobs
•
F. Downward spiral
Reason #3: Countries owed us money
for WWI
• Countries owed us money from the war
•
1. We lent them money
•
2. We were paying ourselves our
own money!
Reason #4: Credit and Margin Loans
• A. People got loans to buy stocks
•
B. THIS WAS A BIG GAMBLE!
•
C. Businesses used money to buy
stock instead of machines and
factories!
Effects of the Great Depression
•
1. U.S. Economic output decreased by 50% in just 3
years
•
2. farm income went down/crop prices decreased
•
3. farmers started destroying crops to try to force
prices up
•
4. railroads, mining, and lumber industries declined
Effects, continued
• 5. construction projects and auto purchases
declined
• 6. 1933: 1/4 unemployed
• 7. others had wages cut
• 8. soup kitchens and bread lines
• 9. Hoovervilles and Hoover flags
Effects, continued
• 10. Vicious cycle:
• Consumer spending decreased = demand for
goods decreased = production of goods
decreased = businesses laid off employees =
people had no money to spend
Effects, continued
• 11. Banking and credit
– a. people lost their money: could not pay bank loans
– b. many had borrowed to buy cars, equipment, and to
gamble in the stock market
– c. 1930-33: 9000 banks closed
Effects, continued
• 12. Too many bank runs--people lined up at
the banks to clear their accounts
•
a. Hundreds of banks failed
•
b. People lost their life savings
•
--lost retirement
•
--lost money saved for a house
•
--lost money saved for college
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
The Dust Bowl
• severe drought in Great Plains (Oklahoma, Kansas,
New Mexico, Texas, Colorado)
• began in 1931
• crops dried up and died
• “Black Blizzards”: dust storms
• this continued for several years
• tons of soil lost from the dust storms (Trees and grass
roots used to keep soil in place, but they had been
cut in order to make more farm land)
The Dust Bowl, cont.
• Oklahoma woman described the living conditions:
• “In the dust-covered desolation of our No Man’s Land
here, wearing our shade hats, with handkerchiefs tied
over our faces and Vaseline in our nostrils, we have
been trying to rescue our home from the wind-blown
dust, which penetrates wherever air can go. It is
almost a hopeless task, for there is rarely a day when
at some time, the dust clouds do not roll over.
Visibility approaches zero and everything is covered
again with a slit-like deposit, which may vary in depth
from a film to actual ripples on the kitchen floor.”
The Dust Bowl, cont.
--millions forced to leave homes
--By 1940: 2.5 million had left
--200,000 went to California
--One Kansan said:
“The land just blew away; we had to go somewhere”
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
Use the following list to answer this question
•
•
Key Developments for the
United States in the 1920’s
easy credit and a rise in consumer debt
growing unemployment in key industries such as construction
overproduction and declining farm income
buying stocks on margin and soaring stock prices
(2005 Practice Test) What was significant about the developments shown above
for the United States in the 1920’s?
•A. They were causes of World War II.
•B. They were signs of difficulties within the U.S. economy
C. They demonstrated the ability of the Federal Reserve to control the money
•supply
•D.
They
States.
led to legislation restricting immigration to the United
OGT Multiple Choice
• All of the following were causes of the Great
Depression except
• A. the stock market crash
• B. the uneven distribution of income
• C. the high unemployment of the 1920’s
• D. the fact that other countries did not pay us for
the costs of World War I
OGT Multiple Choice
• All of the following were effects of the
depression except
• A. millions of unemployed people
• B. malnutrition in children
• C. bank runs
• D. increased college enrollments
OGT Multiple Choice
• Putting down a small amount of cash to buy
shares of a stock is known as
• A. percentage buying
• B. mania buying
• C. buying on margin
• D. buying on time
OGT Multiple Choice
• What happened on Black Tuesday?
• A. the price of stocks dropped as many people
began selling their stock
• B. the price of stock stayed the same most of
the day
• C. the price of stocks went up as most people
wanted to buy stocks
• D. the price of stocks dropped as most people
wanted to sell their stock
OGT Multiple Choice
• Shantytowns of the suddenly poor were
known as
• A. Hoovervilles
• B. Bust Towns
• C. Dust Bowls
• D. Povertyvilles
OGT Multiple Choice
• As a result in stock market gambling,
• A. Americans borrowed heavily to bet on stocks.
• B. businesses put their cash into margin loans
rather than into new machines and factories.
• C. the connection between the real value of
companies and their stock prices was reduced.
• D. all of the above
OGT Multiple Choice
• The stock market “crash” refers to all of the
following EXCEPT:
• A. the failure of people to repay loans for stock
bought on credit
• B. the huge drop in the value of stocks
• C. the inflated value of many stocks
• D. millions of shares of stock being traded in
one day
OGT Multiple Choice
• The stock market crash was the beginning
of
• A. The Great Depression
• B. World War I
• C. The Roaring Twenties
• D. World War II
OGT Multiple Choice
• Which of the following was not a cause of the
Great Depression?
• A. too many stocks being bought on credit
• B. unequal distribution of wealth
• C. excessive stock speculation
• D. government overspending
OGT Multiple Choice
• Which man was President of the U.S.
when the stock market crashed?
• A. Calvin Coolidge
• B. Warren G. Harding
• C. Theodore Roosevelt
• D. Herbert Hoover
OGT Multiple Choice
• One of the causes of the Great Depression was
an uneven distribution of income in the United
States. What is the best explanation of “uneven
distribution of income?
• A. When a country has too many rich people.
• B. When a large percentage of people own
most of the money in a country.
• C. When everybody who lives in a country
pretty much has the same amount of money
• D. When a small percentage of people have a
large amount of the money in a country.
OGT Multiple Choice
• When the stock market crashed, there was a
mad rush to the banks as many people wanted
to get all of their money out of the bank. This
was done for fear the banks were running out of
money. This mad rush was called
• A. money runs
• B. bank hold ups
• C. bank runs
• D. margin runs
OGT Extended Response
(Practice Test Booklet 2005) During the 1920’s many people were gambling in
the stock market. Not only did people use their own money, they also
borrowed money to invest in the stock market. Many people made a lot of
money during the 1920’s by investing in the stock market.
•
A. Identify two ways in which people made money by playing the
stock market. (2 points).
•
B. Explain how buying stocks on margin may have led to the stock
market crash of 1929. (2 points)
OGT Extended Response
• October of 1929 marked the beginning of the
time period known as the Great Depression.
This depression was “great” because it lasted
so long and was so severe. There was not one
cause that led us into this terrible time.
• A. Explain two causes of the Great Depression.
(2 points)
• B. Explain two effects of the Great Depression?
(2 points)
Section 2: The New Deal
• Content Elaboration: During the 1930’s, the role of
the federal government was greatly expanded with
the New Deal. This occurred through its efforts to
help the economy recover, with programs such as the
National Recovery Administration, to provide relief to
the unemployed by creating jobs and to institute
reforms for the protection of the elderly, farmers,
investors and laborers.
Attempts to Alleviate the Depression
• A. Herbert is President from 1928-1932--he did not believe the
government should give hand outs
• B. At first, the government did nothing
•
“Let the slump liquidate itself.”
• C. Called for the cities and states to feed the hungry
• D. Brought in business owners
•
1. keep wages up
•
2. keep factories working
• E. Cut income tax (Similar to what George W. Bush did in 2003)
President Herbert Hoover
The Bonus Army
• F. The Bonus Army
– 1. 1924: Congress: all veterans will get a
bonus to be paid to all veterans in 1945
– 2. Veterans want money NOW!
– 3. They marched to Washington, D.C. to
protest
– 4. Pres. Hoover had the army remove the
protestors
– 5. Public infuriated: VETS were being kicked
out of D.C.!!!
Hoover’s Attempts to Help
•
A. The Great Depression did not end quickly. Hoover came up with a plan
to get us out of the depression:
•
1. Agricultural Marketing Act: The government would buy farm products so
the farmers could make some money. This plan failed, and farm prices
continued to decline.
•
2. Reconstruction Finance Corporation: loaned money to banks, railroads,
and insurance companies.
•
3. Federal works programs: The government paid people to build dams,
roads and buildings.
•
4. Moratorium: Told foreign countries they did not have to pay back war
debts to the U.S. They could then use this money to buy U.S. goods.
The New Deal
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
Election of 1932
• Herbert Hoover
•
• Republican
• “Prosperity is just •
around the corner.”•
• If FDR wins: end
of capitalism
•
FDR
“New Deal”
Increase federal
relief
“Happy Days are
Here Again”
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
Franklin D. Roosevelt
Election, continued
• 1. FDR wins in a landslide (57% of popular
vote)
• 2. Democrats win in both houses of Congress
• 3. This allowed FDR to pass a lot of bills---the
“NEW DEAL!”—This was FDR’s plan to get the
United States out of the depression
Election 0f 1932
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
FDR: President During the Great Depression
and World War II
• A. Franklin D. Roosevelt wins election in 1932. He
told Americans “the only thing we have to fear
is fear itself.”
• B. Roosevelt had a plan to get us out of the
Depression. He called it the New Deal.
• C. FDR was a winner with good character--smiled
•
a lot
• D. Had polio--was in a wheelchair
• E. Distant cousin of Teddy Roosevelt
• F. Only President to ever win 4 terms in office
FDR, continued
• ***Roosevelt was willing to try ANYTHING to get us out of the
depression. The following were all passed in the first 100
days of his presidency.
• The Brain Trust: A group of FDR’s closest advisors.
Together, they came up with many of the New Deal
Programs.
• “Fireside Chats”--FDR used the radio to speak with the
American people
• John Maynard Keynes--Felt the government should spend
money instead of cutting back. The government should
lower taxes, spend money, and purposely run up large
deficits. This would keep people working and put more
money into the economy. THIS WAS
DIFFERENT!!!!!!!!!!!!!!!!!!!!!!!!!!!
FDR Giving a Fireside Chat
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
The Hundred Days
• A. March 9 to June 16
• B. A lot of New Deal Legislation
passed
• C. 3 R’s
– 1. Relief: give people money and items NOW
– 2. Recovery: of American business and industry
– 3. Reform: the economic system
The Hundred Days, cont.
Emergency Banking
Relief Act (March 9)
Good banks could
reopen. President has a
lot powers over banks.
Civilian Conservation
hired young people to
Corps (CCC) (March 31) plant trees and build
roads.
US abandons gold
Causes a decline in the
standard (April 19)
exchange value of the
dollar abroad and an
increase in the prices of
stocks and silver in the
American exchanges
Agricultural Adjustment Paid farmers to grow
fewer crops in order to
Act (AAA) (May 12)
reduce the supply and
raise farm prices.
loaned millions of dollars
Federal Emergency
to families for food,
Relief Act (May 12)
shelter, and clothes.
Tennessee Valley
Built dams and power
Authority (TVA)
plants in the
Tennessee Valley
(May 18)
region to control
flooding and promote
the economic
development of the
Federal Securities Act
(May 27)
National Employment
System Act (June 6)
Home Owners
Refinancing Act (June
13)
Banking Act (June 16)
set rules about selling
stocks and bonds.
Established U.S.
Employment Service,
which provided
matching funding for
state employment
services
Set up refinancing for
mortgages
Set up the Federal
Deposit Insurance
Corporation (FDIC)
Gave workers right to form
National Industrial
Recover Act (NIRA) unions, set up minimum wage,
max work hours, prices,
(June 16)
***Later ruled
unconstitutional by
the Supreme Court
Emergency Railroad
Transportation Act
(June 16)
Farm Credit Act
(June 16)
production, and competition.
Est. the National Recovery
Administration (NRA) and the
Public Works Administration
(PWA), which paid people to
build roads and public
buildings.
Increased federal
regulation of the RRs.
Provided refinancing of
farm mortgages.
IV. Critics of the New Deal
A. Conservatives: Business felt this would end
capitalism. Felt New Deal did way too much to help
people--free handouts
B. Liberals: Felt New Deal not enough help
C. Huey Long: US Sen. from Louisiana.
1. “Share-the-Wealth”: increase tax on rich
2. have minimum yearly income for everyone
3. He took plan to people
4. wanted to run for President
5. assassinated in Sept. 1935
Huey Long
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
V. Second New Deal
A. 1st New Deal helped
B. Needed more
1. Works Progress Administration
a. gave jobs to 2 million Americans
b. construction jobs: airports, bridges,
highways, and public buildings
c. employed artists, writers, and musicians
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
C. Social Security
• 1. established income-support for
American workers and families
•
•
a. tax for workers and
employers
b. Provides pensions and
insurance
D. National Labor Relations Act
• Gave workers the right to start unions.
The government now was siding with
workers over business.
E. The Congress of Industrial
Organizations (CIO)
• started a union of skilled AND unskilled
workers
• CIO broke from the A F of L
• later in history these 2 reunited to form
AFL-CIO.
FDR and the Supreme Court
• A. The Supreme Court felt much of the New
Deal was unconstitutional. Most of the Supreme
Court justices were very old.
• B. When the old justices retired, Roosevelt
replaced them with younger men who liked the
New Deal.
FDR and SC, continued
• C. Feb. 1937: Court packing
•
1. FDR wants 15 S.C. justices
•
2. Reason: behind in work
• D. S.C. had continued to strike down New Deal
• E. FDR wants more justices
•
1. They would vote for his New Deal
programs
Did the New Deal Work?
• A. People still out of work
• B. Saved America
•
1. no civil war
•
2. no dictator
•
3. spirits stayed high
• ***New Deal got us through the toughest time in
American history (excluding wars).
• ***The U.S. did not get out of depression until
World War II, when all of the factories were
making war materials.
OGT Multiple Choice
•
•
•
•
•
Social Security provided for
A. old-age insurance
B. public assistance
C. unemployment insurance
D. all of the above
OGT Multiple Choice
• The purpose of the WPA was to
• A. help business
• B. reestablish confidence in the banking
system
• C. provide immediate financial aid to farmers
• D. provide work for the able-bodied
unemployed
OGT Multiple Choice
•
(Practice Test Booklet, 2005) The Great Depression has had a great
influence on the United States economy because it
• A. marked a return to laissez faire economic
policies
• B. reduced government involvement in the
nation’s economy
• C. shifted the nation’s wealth from the rich to the
poor
• D. increased the role of government in the
nation’s economy
OGT Multiple Choice
•
(Practice Test Booklet 2005) Franklin D. Roosevelt’s New Deal was
an example of
• A. using the government to try to solve the
problems caused by the Great Depression
• B. limiting the government so that the
economy could have a chance to improve on
its own
• C. using the government to overturn a
capitalist system that had failed
• D. providing assistance only to the very
wealthy in the hope that everyone would
benefit
OGT Multiple Choice
• FDR’s often spoke to the public over the radio.
These were commonly known as
• A. Fireside chats
• B. Burning talks
• C. Radio addresses
• D. Talk radio
OGT Multiple Choice
• The “hundred days” was the time period
• A. between FDR’s election and the first
inauguration
• B. immediately following FDR’s first
inauguration
• C. concluding FDR’s first term
• D. immediately following FDR’s second
inauguration
OGT Multiple Choice
• All of the following were part of Hoover’s
plan to get us out of the depression except
• A. Agricultural Marketing Act
• B. Reconstruction Finance Corporation
• C. Moratorium
• D. Social Security
OGT Multiple Choice
• Who said “The only thing we have to fear
is fear itself.”
• A. Herbert Hoover
• B. John Maynard Keynes
• C. Franklin D. Roosevelt
• D. Phil Hellmuth
OGT Extended Response
• The Great Depression and the New Deal are
two of the major themes of the 1930’s. (4
points).
•
Explain two causes of the New Deal.
•
Explain two effects of the New Deal.