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The Great Depression Begins

The Great Depression Begins. Mr. Fisher United States History. Roaring Twenties. Causes: Calvin Coolidge Kept taxes down Helped to increase credit Moved to the left, more free market economy Little government interference  private enterprise to flourish Results :

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The Great Depression Begins

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  1. The Great Depression Begins Mr. Fisher United States History

  2. Roaring Twenties • Causes: • Calvin Coolidge • Kept taxes down • Helped to increase credit • Moved to the left, more free market economy • Little government interference  private enterprise to flourish • Results: • Increase in Standard of Living • Increase in wages (35%) • Productivity increase  businesses expanded • Farm production – produced more than what was needed • Growing gap between upper/lower class • Buying Goods on Credit • Installment plan – buy goods over an extended period of time • Banks provided low interest loans • Advertisement pushed these plans • Video – with handout

  3. The Nation’s Sick Economy • (1) Industries in trouble • Many weren’t obtaining any profit • Railroads  automobile • Mining and lumber  less expansion because of no war • Housing market began to fall • (2) Farmers • During war – high prices = more loans for production • After war – prices declined by 40% • Poor farming practices (crop rotation and over production) • Leads to the Dust Bowl • (3) Consumers • Lived on credit (superficial life style) • Buying “stuff” that they did not have the money for up front • Lose your job  can’t pay back loans/credit  declare bankruptcy

  4. (4) Stock Market Crash • Speculation – throwing all savings into stock to make quick profit • Buying on margin - putting a down payment on a stock and borrowing the rest • Black Thursday: (End of the Roaring 20s) • Beginning of the stock market crash • Investors panicked and began to sell stocks • Bank runs • People trying to get out whatever money they had left • (5) Trade barriers • Hawley-Smooth Tariff Act • Raise in tariffs – Aimed at “protecting” American businesses Issues • Business depended on cheap imports • Other countries reciprocated

  5. Effects • (1) Emergence of shantytowns (A.K.A Hoovervilles) • Places for people without homes to live • (2) Stock Market and banking regulations • Securities Exchange Commission (SEC) • Regulate the Stock Market • Federal Deposit Insurance Corporation (FDIC) • Insure people’s deposits • Put trust back into the banks • (3) FDR’s “New Deal” Program (Franklin Delano Roosevelt) • Expanded role of fed. gov’t = movement toward more command eco. • Increase gov’t spending  create prog’s  create jobs  production • (4) Mass Migration • Results of the Dust Bowl (rural areas  urban areas) • (5) Societal change • Wary of banks, suspicious of stock market, hoard food… etc.

  6. Hoover Struggles with the Depression • Hoover: (Picture analysis) • Viewed depressions as “normal” • “Any lack of confidence in the economic future… is foolish.” • Encouraged not to cut wages, and not to lay off workers • Favored a “laissez-faire” policy (Beginning of presidency) • Moved to “command” like economy (Toward end of presidency) • Government ATTEMPTS to aid/stimulate economic growth • Federal Farm Board: • Hold supply off market to drive up price • National Credit Corporation: • Loan money to smaller banks to stave off bankruptcy • Reconstruction Finance Corporation: • Emergency monies for large industries (banks, railroad, insurance companies) • TRIED TO ALLOW MONEY TO “TRICKLE” DOWN TO THE PEOPLE • Hoover: Too little, too late • Bonus Army (further tarnishes Hoover - 1932) • Group of veterans who were promised money to be paid out in 1945 • Put down by the military (right thing to do or not?)

  7. New Deal Fights the Depression • End of Republican rule – beginning of Democrat rule • Election of Franklin Delano Roosevelt (FDR) • Promised a “New Deal for the American people” • New Deal goals: (LARGE MOVEMENT TOWARD COMMAND ECONOMY) • (1) Relief for needy • Federal Emergency Relief Administration (FERA) • Provided direct relief to individual states (money to tickle down to the people) • (2) Economic recovery • Agricultural Adjustment Act (AAA) • Raise crop prices by limiting production (set aside land or plow under crops) • Civilian Conservation Corp (CCC) • Increased jobs (roads, bridges, planted trees, soil-erosion… etc) • Public Works Administration (PWA) • Construction of community buildings and schools • National Youth Administration (NYA) • Helped out young people with work related training (Tech Center) • (3) Financial reform • Bank Holiday – prevent anyone from withdrawing money • Investigated in sound banks – closed others • Federal Deposit Insurance Corporation (FDIC) • Insured deposited monies up to $5,000 (now $250,000) • Creation of Securities Exchange Commission (SEC) • Helped to regulate the Wall Street from fraud and corruption (misleading information)

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