MT 5The Great Depression

& The New DealLearning Target: #1

What caused the Great Depression?What steps were taken by the federal

government (congress, president Hoover and FD Roosevelt) to fight the economic crisis?

Answer the questions at the end of this power point and turn them in with handout #1

The Great Depression was a time in USA history when many people, companies and nations lost large amounts of money.

Stock market crash- Buying on Margin and Over speculation

Banks collapse (run on banks) Overproduction of expensive goods Employees wages decrease or Layoff workers = Extremely high unemployment High tariffs caused low demand for goods Federal reserve keeps interest rates low

Causes of the Great Depression

Stock Market Crashes

The rise before the fall The 1920’s create a lot of success for

USA New inventions led to new companies

which resulted in new stock for purchase From 1920 to 1929 stock prices

soared = Bull Market(long period of time were the stock prices rise) Investors began buying stocks on

MARGIN (payment plan for buying stocks) Problem: People bought stocks but didn’t

have the money to pay it back if the stocks fell

Investors also began over speculating on stock prices (buying stocks on a guess that the price of the stock would increase)

The fall

October 29, 1929 Black Tuesday

Stock prices drop People lost

millions

More issues with the

economyBanks collapse

Banks had lent money to stock investors When the stock market crashed

the investors couldn’t pay their loans = banks lost money

Banks had invested depositor’s (people’s) $$ in the stock market When the stock market crashed

the bank lost all those peoples money

Banks closed People afraid their bank might

close made “bank runs”- lots of people withdraw their money from a bank at the same time

Over production causes wage cuts and unemployment

Factories were able to produce a lot of stuff in the 1920’s Factory owners did not

increase wages People bought expensive

things on installment plans When people could not pay

all bills they cut back on stuff When people cut back on

stuff and companies have an overproduction of stuff This caused factories to cut

wages and lay off workers (high unemployment)

More issues with the

economyHigh Tariffs = High Taxes

Foreign countries stopped buying American made goods because of high tariffs

Effect Slowed USA

production of goods down even more = more lay offs= more unemployment = less people spending money

Federal Reserve mistake The federal reserve

is the main USA bank

When the economy began to slow the Federal Reserve kept loan rates low

Effect People/companies

kept borrowing money = banks lost more money

USA has the Great

Depression http://

www.youtube.com/watch?v=RJpLMvgUXe8&feature=player_detailpage

What steps were taken by the federal government

(congress, president Hoover and FD Roosevelt) to fight

the economic crisis?

He hoped to down play the depression. He was against

giving government money to the poor families. He called business leaders (factory, railroad,

other owners) to voluntary act – not lay off people The business owners did this for 1 month

Hoovers next step was to increase public works (government funded building projects) He hoped this would replace some jobs lost in the

private sector (factory jobs) Hoover set up the National Credit Corporation to

help troubled banks loans money (1931) Hoover set up Reconstruction Finance Corporation

so the government could loan money to business, banks, railroads and agricultural (1932)

President Hoover’s Actions

The depression hurts

Farmers revolt- stop growing crops, burn

crops, destroy crops (corn, wheat, milk) People protest, march, broke into grocery

stores, join communist rallies to overthrow government

WW1 veterans march to get $1,000 bonus from government Congress failed to approve Protesters camped out and the government

sent in the National guard to forcefully remove Hoover failed to be reelected.

Americans angry

Franklin Delano Roosevelt

The New Deal

Roosevelt & New

Deal In his inaugural

speech, “First of all let me assert my firm belief that the only thing we have to fear is fear itself.”

First 100 days as president Roosevelt & congress pass 35 laws = The New Deal

1st- Bank holiday = close banks Said banks were safe

2nd – Securities and Exchange Commission Watch stock market Get involved in private

investing Provide insurance to

banks to protect individuals bank accounts

The following programs put people to work or provided other

assistance Tennessee Valley Authority – built dams for flood control and

electrical power Civilian conservation corps – gave jobs to men 18-25 in the

forest Agricultural Adjustment Act – paid farmers to not grow certain

crops to increase prices so farmers could make money Federal Emergency Relief Agency – let the federal government

give state governments money to help the unemployed Public works and Civil works administration – gave people

constructions jobs (schools, roads, airports, parks, bridges)http://www.youtube.com/watch?v=wF80co_Y_Bc&feature=player_detailpage

Roosevelt creates many programs to help the poor

1. What was the great depression?2. What was going on with the stock market in the 1920’s?3. Why were buying on margin and over speculation a problem?4. What was black Thursday?5. Why did the banks fail? What events happened to cause the

banks to fail?6. Why were installment plans a problem?7. Why did other countries stop buying USA made products?

And why was this bad?8. List three things President Hoover did that he thought would

help the USA during the great depression.9. Why were the American people angry?10. What was the new deal?11. List three things President Roosevelt did to help the USA

during the great depression.

Questions