THE GREAT DEPRESSION

Transcription

1 THE GREAT DEPRESSION

2 PROBLEMS ARE BREWING! Uneven distribution of wealth- huge gap between rich and poor- rich incredibly wealthy while poor saw only minor growth Rising prices swallow up any increase in pay No saving money Credit!- people were able to purchase goods but maxed out credit Warehouses filled with goods that no one could afford

3 CAUSES OF DEPRESSION Dust Bowl Stock Market Crash Banking Crisis Overproduction in the face of declining markets in farming and Business Global trade problems

4 STOCK MARKET During this period of time, stocks and shares rose at a phenomenal rate. Stocks rose by 65%. Wages increased by 25%. People began borrowing money to invest. In 1929, Wall Street crashed - America went into debt.

5 WHY BUY STOCKS?? Invest- People buy stocks and shares to earn money. They believed money would multiply Company is successful and makes money, makes you money! Company unsuccessful, loses money, loses your money. This makes stock markets risky- almost like gambling. Buying stocks at LOW, and selling at HIGH- low cost for you, high earnings for you

6 MISS V IS BAD AT MATH- SO HERE IS A SIMPLE EXAMPLE Buy 100 shares of Ratatouille $ x $5.00= $500 invested Ratatouille Stock goes up to $20 a share 100 x $20.00= $2000 stock now worth $2000-$500= $1,500 profit made 100 x $5.00= $500 invested Ratatouille Stock decreases by $ x -$20.00= -$2000 now worthless $500- $2000= -$1500 you now have less than no money

7 STOCK MARKET Companies invest huge amounts of money in the stock market 1920 s the stock market, a Bull Market: one with rising stock prices To take advantage, people began buying on margin- Buying stocks on credit with a loan from their broker This means they are not using their own money- borrowing money

8 STOCK MARKET Later, they would sell the stocks at a higher price, pay back the loan, keep the profits Only profitable if stock prices continually rose Say the stock costs $150 and I only have $50- I borrow the $100. I sell the stocks when it gets to $250. I pay back the $100 I owed leaving me with $150. Since I initially paid $50, this means I just made $100. Bear Market- Market where stock prices generally decline September Economists warned that sooner or later a crash is coming! - no one listened

9 STOCK MARKET CRASHES October In 1 day the market lost a full year s profit, 30 Billion in 1930s value The loss from the crash was unbelievable: 12 million people went out of work 12,000 people was made unemployed everyday 20,000 companies and 1616 banks had gone bankrupt, and 23,000 people committed suicide in one year the highest ever. The total loss by the end of the next week amounted to $30 million dollars, ten times more than the annual budget of the federal government, far more than the U.S. had spent in all of World War 1.

10 THE ECONOMY COLLAPSES Banking Crisis- the crash hurts banks in two ways Banks had invested heavily in stocks, suffered huge losses Their customers suffered huge losses, unable to repay loans At this time, deposits were not insured People rushed to withdraw their money =Banks ran out of money 1931 = 2,294 banks closed Americans lost $1.7 BILLION

11 THE ECONOMY COLLAPSES By 1933 the banking system in the United States was near collapse. Some banks had made speculative investments in the stock market and were hurt by the crash of Others failed when depositors, fearing that their bank would go bankrupt, rushed to withdraw their savings. Here, depositors besiege Merchants Bank in Passaic, New Jersey.

12 THE ECONOMY COLLAPSES When the banks closed many businesses lost their money, many had to close down 1930 = 26,000 businesses fail 1931 = 28,285 businesses go under

13 THE ECONOMY COLLAPSES By million workers were unemployed Unemployment Lines, 1930s The Wall Street stock-market crash of 1929 precipitated the Great Depression, the worst economic downturn in the history of the United States. The depression lasted over a decade, with hundreds of thousands of Americans losing their jobs, businesses failing, and financial institutions collapsing. Of the 6000 people hoping to get jobs on this day in New York, 135 were hired

14 THE ECONOMY COLLAPSES Breadline during the Depression The Great Depression forced many Americans to go hungry or depend on charities for food, clothing, and other necessities. Here, people wait in a breadline to receive free food.

15 THE DUST BOWL

16 THE DUST BOWL They produced too much food Profits and prices dropped Farmers plant more crops Farmers overworked their fields, eroding the top soil All of which occurred during a 100yr drought

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18 CAUSES Overgrazing by cattle and plowing by farmers destroyed the grasses that once held down the soil.

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20 DORTHEA LANGE Photographer that captured the hardships of the Dust Bowl

21 UNEMPLOYMENT Unemployment = 25%-60% People could barely feed & house themselves with 50% of homes foreclosed upon

22 PRESIDENT HOOVER Came to the presidency with a core set of beliefs he had formed over a long career in business and government service. Favored as little government intervention as possible. Believed unnecessary government threatened prosperity and the spirit of the American people. A key part of this spirit was something he called rugged individualism - individuals should be able to help themselves out, government should not be involved in economics Hoover didn t reject government oversight or regulation of certain businesses or think businesses should do exactly as they pleased, but he thought it was important not to destroy people s belief in their own responsibility and power.

23 HOOVERVILLES Homeless families build shacks out of wooden crates and scrap metal. Seattle Washington Shantytowns formed in cities across the United States in the 1930s, built by people made homeless by the Great Depression. The areas, like this one in Seattle, were nicknamed Hoovervilles because their inhabitants blamed President Herbert Hoover for their plight

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25 BONUS ARMY MAY 1932 Unemployed WWI veterans march to Washington D.C. Wanted payment of their government war bonuses Many brought their families Pres. Hoover orders Federal troops to remove the Bonus Army with bayonets & tear gas

26 BONUS ARMY Main camp of bonus army The United States Army burned this and similar camps to the ground after routing the many thousands of protestors that were camped out in the national capital with tanks, tear gas, and troops of armed soldiers. (July 28, 1932)

27 THE NEW DEAL

28 ROOSEVELTS NEW DEAL, HUNDRED DAYS Brain trust- Advisors from outside government (professors, economists, lawyers, and others) who came to Washington to advise Roosevelt President Roosevelt calls for a special Session of Congress = the Hundred Days Roosevelt s numerous programs to battle the depression immediately Pragmatic solution to solve the various issues of the Depression Followed the 3R s: Relief- to help those immediately in need Recovery- to aide in restoring the economy Reform- measures to prevent such mistakes from occurring again

29 IMPACT OF THE NEW DEAL Relief Millions of Americans enjoyed some form of help. Direct relief or jobs that provided a steady paycheck Programs such as Social Security and unemployment insurance became a fixture of government. Recovery Not as successful at economic recovery Unemployment remained high. Some critics argued that Roosevelt needed the support of big business. Other critics said that the New Deal didn t spend enough money.

30 FIRE SIDE CHATS Radio addresses to the American public to comfort, inform, & explain aspects of the New Deal.

31 NEW DEAL PROGRAMS Emergency Banking Act. Government would inspect each bank,only healthy banks allowed to reopen FDIC- Federal Deposit Insurance Corporation (Reform) Insured deposits up to $5,000 (today is $250,000) SEC- Securities & Exchange Commission (Reform) Regulates companies that sell stock or bonds FERA- Federal Emergency Relief Administration (Relief) Gave money to states to help the poor and 13 million unemployed

32 NEW DEAL PROGRAMS CWA- Civil Works Administration (recovery) Temporary public works jobs WPA- Works Progress Administration (recovery) largest peacetime jobs program in U.S. history Gave 4.2 million workers jobs building public projects Built 255,000 miles of roads. 11 million feet of sewer pipe. 400 airports PWA- Public Works Administration (Recovery) spent billions of dollars to build government buildings, military bases, and highways

33 WPA Workers The Works Progress Administration (WPA) was created in 1935 to help relieve the enormous unemployment sustained during the Depression. The agency hired workers to build public works projects such as roads, bridges, and airports. It also supported various educational and arts projects. An executive order issued by President Franklin D. Roosevelt prevented discrimination in hiring. These WPA employees are being watched by both a supervisor and an artist.

34 SECOND NEW DEAL Further programs to continue the ideals of the New Deal

35 NEW DEAL PROGRAMS CCC- Civilian Conservation Corps (Recovery) Hired young men, from families on relief Lived in camps Planted trees, improved national parks, fought forest fires $ 30 a month (sent some of that home)

36 NEW DEAL PROGRAMS TVA-Tennessee Valley Authority (reform) built dams and created programs for flood control. Provided Hydroelectric Power AAA- Agricultural Adjustment Act (relief & recovery) Paid Farmers to reduce their production of certain crops

37 RECOVERY AND REFORM FOR BUSINESS NRA- National Recovery Administration (reform)- helped businesses create codes of fair competition to prevent further business failures NYA- The National Youth Administration (relief) gave parttime jobs to youths & college students. The Social Security Act (reform) was created to help the elderly, the unemployed, and the disabled

38 NEW DEAL CRITICS The Right: believed it went too far The Left: thought it did not go far enough

39 NEW DEAL CRITICS Senator Huey Long- heavy taxes on the rich and use the money to give every American family a house, a car, and a decent income. Father Coughlin- criticized FDR on his radio show for not taking stronger action against bankers and rich investors. Francis Townsend- proposed giving every American over age 60 a pension of $200 per month. However, people receiving the pension would have to retire, freeing up the job for a younger American. In addition, every person that receives the pension would be required to spend it immediately in order to spur the economy.

40 FDR AND SUPREME COURT The Supreme Court ruled that many New Deal laws were unconstitutional. Example AAA After winning the 1936 presidential election, FDR proposed increasing the number of Supreme Court Justices from 9 to 15. This would allow FDR to appoint 6 new pro-new Deal Justices to the Supreme Court. Many Americans, including New Deal supporters, felt that FDR was unfairly trying to control the Supreme Court. FDR withdrew his plan six months later. Court Packing- add more justices to the Supreme Court- since the President gets to appoint Judges, they would be people that agree with him politically

41 EVALUATION OF THE NEW DEAL Harmful Results: Increased federal debt Increased social awareness and conflict Interferes with capitalism Not sure it fixed anything because WWII ultimately ended the Great Depression

42 EVALUATION OF THE NEW DEAL Benefits: Survived America s worst Economic time Brought management and labor into better balance Better distributed wealth Government had moral obligation to its citizens