We have a QUIZ on Day 2 of the 1920s.

Look over your notes and pay special attention to economic policy and causes of the stock market crash.

Happy Friday

Hoover to Roosevelt

Great Depression

Cite and explain evidence that led to the transition of the U.S. economy from laissez- faire capitalism to an increasingly regulated economy.

Critique the government‘s use of tariffs and trade agreements.

Evaluate deficit spending as a means of financing government programs.

Objectives

Should government provide a safety net for people when the economy fails them, and they cannot survive?

What if there was no safety net for people at all?...

Food Stamps

Social Securit

y

What if there was no safety net for people at all?...

When the Stock Market crashed in 1929 and the Great Depression set in…many people had nobody to rely on but themselves. The government did not have any of the programs it has today (Food Stamps, Social Security, Welfare, Medicare, Medicaid). You only had yourself to look after you and your family.

1. Easy Credit/Rising Personal debt2. Speculation/Buying on Margin3. Overproduction4. Bank Runs

Causes of the Great Depression

They mention some causes we don’t, there were MANY…we’re hitting the main ones

Causes of the Depression Video

Easy Credit/Rising personal debt

People got easy credit to buy a lot of stuff (cars, appliances). When the market goes bad, they can’t repay their debts

People took big gambles on Wall Street hoping to get rich quick

People made investments on borrowed money (buying on margin)

Speculation/Buying on Margin

OverproductionAs supply goes up,

demand goes down. This means prices fall.

This happened to farmers with their crops, it happened to the auto industry and industries that depended on it (steel, rubber, glass, etc.)

Supply Demand/Price

Bank RunsBanks depend on people

putting their money into them…they use that money to loan out and make money

When the market started to fall, people panicked and withdrew their money…banks go broke.

By 1933 – 11,000 of the 25,000 banks nationwide had collapsed

Clip from “It’s a Wonderful Life”

Bank Run

Great Depression stats25% unemployment

(today we’re at around 9%)

The US lost a total of $30 billion the week of the stock market crash

Hawley-Smoot Tariff Act

Reconstruction Finance Corporation

Herbert Hoover did very little…

Hoover’s Response

Reconstruction Finance CorporationGave money to big

businesses, railroads, insurance companies

Purpose: prosperity at the top would “trickle down” to the rest of the population

Puts a tariff in place Taxes imported

goods (stuff from foreign countries) so that foreign goods are more expensive. Encourages people to buy American products.

Hoover’s responseHawley Smoot Tariff

Act

Reconstruction Finance and Hawley Smoot Tariff basically do nothing for

people…

“Trickle-downTheory” reallydoesn’t work…

People blame Hoover for their problems…

Election of 1932…FDR promises a “New Deal”

Says he will support people directly through relief, recovery and reform