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The Great Depression & The New Deal

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Vocabulary1. Economy: a society’s system of money related to all

business and trade.2. Consumers: people who buy things3. Credit: borrowing money and paying it back with

interest (the extra amount you pay for borrowing the money)

4. The Stock Market: Where people buy and sell pieces (called shares) of companies.

5. Bread Lines: A place were the poor were given food during the Great Depression

6. Mortgage: Monthly housing payment for the house you will someday own.

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What was the Great Depression?

The Great Depression was a period of time in 1930s American when the economy was horrible and many people became homeless and unemployed.

The New Deal is the name for the collection of President Franklin D. Roosevelt’s government programs that helped end the Great Depression

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How did This Happen? In order to understand how

the Great depression occurred we must take a closer look at the “roaring” 1920s.

ON THE SURFACE… The 1920s was a time of economic prosperity.

BUT BELOW THE SURFACE… There were serious economic issues that were neglected or not properly addresssed.

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Causes of the Great Depression

1. Industries in trouble

2. Farmers in trouble

3. Consumer problems

4. Uneven distribution of income

5. Tariffs and War Debt

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Industries in trouble

Railroads, textiles, steel and lumber industries barely made a profit in the 1920s

Many industries faced competition from foreign countries like China, Japan and India

Coal mining also decreased as other cleaner energy sources became more common

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Farmers in trouble

After WWI there was less demand for grain

Farmers income went from $10 billion in 1919 to $4 billion 1921 and stayed low

Farmers continued to struggle throughout the 20s

A “Dust Bowl” of dry soil from overplanting and drought in the mid west also made it harder for farmers to survive

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The Dust Bowl

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Consumer Problems

As farms and industries struggled, they fired many of their workers

Consumers (the workers) had less money to spend

Consumers were buying less and borrowing more money to spend on essentials

People were using a lot of credit (spending more money than they had)

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Uneven income distribution

Rich people were getting richer and poor people were getting poorer

Eventually there were not enough people to buy the stuff that was making the rich people rich… think about it.

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Tariffs and War Debt

The Hawley-Smoot Tariff Passed Congress and signed into Law by President Hoover in

1930 Raised Taxes on imports to protect American Businesses from

foreign competition Americans did not enough money to buy all of the goods the

factories were producing so this ended up hurting the economy rather than helping.

Foreign countries owed the U.S. a lot of money after WWI and U.S. businessmen started to think we would never get it back!

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Quick Quiz

1. What is the Stock Market?

2. What was the Great Depression?

3. What was the New Deal?

Causes of Depression

Fact 1

Fact 2

Fact 3

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Black Tuesday

On October 29th, 1929 The stock market crashed All of the causes mentioned earlier (farmers in

trouble, industries in trouble, consumer problems and uneven wealth distribution) combined to create a panic in the stock market and banks.

Nobody wanted to buy stocks, everybody only wanted to sell them

The value of peoples stocks became almost nothing and companies became valueless overnight.

This became known as Black Tuesday, it was the beginning of the Great Depression.

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The Stock Market (1927-1933)The Stock Market (1927-1933)

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President Hoover’s Response

President Herbert Hoover was president during Black Tuesday

He felt the economic slump would end by itself and did not need government help

He believed in “Rugged Individualism” People should succeed

through their own efforts

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Hoover Takes (some) Action

The Reconstruction Finance Corporation Approved by congress and President Hoover in

1932 This government agency loaned money to banks,

insurance companies and other large businesses so they would not go out of business

Hoover believed the money would “trickle down” and eventually help the average citizen

It was not particularly effective and many economists believe it was too little too late

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Effects of the Great Depression

Many banks closed Loss of GDP (national

income) Super High

Unemployment (25%) Rapid homelessness

increase (people could not pay mortgages or rents)

Suicide and depression

Shantytowns called “Hoovervilles” popped up around cities

Unemployment was even higher for Blacks and Latinos

Many people relied on soup kitchens and bread lines for their food.

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Quick Quiz

1. What are FOUR facts about black Tuesday?

2. Why do you think it is called black Tuesday?

3. Who was President during black Tuesday?

4. What was his response to this event? WHY?

5. What were SEVEN effects of the Great Depression?

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Roosevelt to the Rescue

Franklin D. Roosevelt became President in March of 1933 (Elected in 1932)

The American people hoped that he would do more to help them than Herbert Hoover had done

The New Deal was Roosevelt’s name for all of the ways he hoped to end the Great Depression.

Roosevelt called for a “Hundred Days Congress” - congress would work for one hundred days to pass laws to help people in need

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Major Parts of the New Deal

1. Fireside Chats

2. Reforming Banking and Finance

3. Assisting Farmers

4. Providing Work Projects

5. Helping People with Housing

6. Assisting the Elderly

7. Improving Labor Conditions

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Fireside Chats After his inauguration, President

Roosevelt broadcast a message on the radio to calm peoples fears

This was such a success he continued to communicate important messages to the American people

These broadcasts became known as fireside chats and were used to let people know what the government was doing to help them

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Reforming Banking & Finance

Roosevelt closed all banks while government officials inspected them

Only quality banks were allowed to Reopen Congress passed the Glass-Steagall Act

creating the Federal Insurance Deposit Corporation (FDIC) – If a bank goes out of business people do not lose their money

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Assisting Farmers

The Agricultural Adjustment Act (AAA)

This law helped raise crop prices by regulating & reducing the amount of land crops were grown on.

Therefore it reduced the supply of crops which raised prices

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Providing Work Projects The Civilian Conservation Corps

(CCC) was an organization started by Pres. Roosevelt

The CCC put young men to work building bridges and roads,

Other work programs started by Roosevelt included the Federal Emergency Relief Administration (FERA) & the Works Progress Administration (WPA)

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Helping People with Housing

Many people became homeless because they couldn’t afford their rent or mortgage

The Home Owners Loan Corporation (HOLC) was part of the New Deal

It helped people pay mortgages so they wouldn’t become homeless or provided cheaper housing for the poor

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Assisting the Elderly

Social Security Act Passed by Congress in 1935 This is one of the longest lasting

New Deal programs It still exists today It pays retired individuals (over

age 65) a monthly check. When you’re young and working

your paycheck is taxed so when you retire you can have a check monthly.

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Improving Labor Conditions

The Wagner Act Passed by congress in 1935 It made it so workers were

better protected by the government when they were trying to form union.

Fair Labor Standards Act Passed in 1938 Set maximum hours of work

per week at 44 hours. Set minimum wage at 25

cents and hour.

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In Conclusion…

The Great Depression was a sad time in U.S. History. It began to get a little better because of programs from the New Deal, HOWEVER…

The Great Depression REALLY started to wind down in 1939 when the United States began trading military supplies (weapons, food, medical supplies) to Europe for WORLD WAR II

This put even more people back to work building, shipping and farming and was great for the U.S. Economy!

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Quick Quiz1. Who became President after Herbert Hoover?2. (In two words) What was this man’s plan for helping end the

Great Depression?3. Explain THREE facts about each of the following parts of

Roosevelt’s Plan for ending the Depressiona. Fireside Chatsb. Reforming Banking and Financec. Assisting Farmersd. Providing Work Projectse. Helping People with Housingf. Assisting the Elderlyg. Improving Labor Conditions

4. When did the Great Depression begin ending? WHY?