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by ● the crash. ● 2. Too Much Debt People began buying many goods on credit, often more than they could afford 80% of all families had no savings ● • What happened when people couldn't pay back loans? 3. Over-speculation in Stocks ● A "Get Rich Quick" attitude caused many to speculate. ● People risked everything by buying "on the margin." When the market collapsed, these investors lost everything-banks collapsed because loans weren't repaid ● ● ● 4. Overproduction & Layoffs Industries were producing much more than could be sold. They were forced to lay off workers and lower prices. The cycle gets worse... ● ● 5. Farming Crisis Farmers suffered through droughts and low prices. With low prices, farmers were unable to repay their loans or purchase goods. More banks collapsed. 6. Government Mistakes ● • The government set low interest rates before the crash and raised them afterward. Stock market speculation was unregulated. • Bank deposits were not guaranteed. ● ● Part 2: The Effects of the Great Depression Join The Kariern C M. 37-St SAFE DEPOSIT VAULTS AMERICAN UNION ΒΑΝΚ PAID ON 4 % THEFT ACCOUNTS 419 AMERICAN UNION BANK Mana SALE OH UMBRELLES LANG BINAR FOR THE UNEMPLOYED ONLY SANDWICHES BEER FREE Sre 12 NO 2 THE FOLLOWIN JOHN F TROMM EDWARD DAVI ADOLF GOBEL Christmas Day Breadlines in New York City, 1931 ● ● ● Summary of effects Unemployment: 25% Homelessness Hunger Psychological depression • More Cooperation ● 130 125- 120 110 100 Percentage of Labor Force 90- 80- 70- 60- 50- 1929 1931 1933 1935 1937 1939 25 20- 15- GNP, 1929-1941 Unemployment, 1929-1941 1929 1931 1933 1935 1937 1939 1941 1941 Part 3: Solutions • At first, President ● Hoover favored the traditional government approach-do little and wait for things to get better. • Private charities were ● responsible for helping the poor Hoover's Attitude "I do not believe that the power and duty of the general government ought to be extended to the relief of individual suffering...though people support the government, the government should not support the people." --Herbert Hoover, 1930 Discussion: why do you think Hoover believed this? Desperate times call for desperate measures... ● ● ● ● Hoover himself began to change his views... Hoover started some huge projects (like the Hoover dam) Tariffs were raised, but this backfired Hoover supported programs to help banks extend loans to struggling businesses Election of 1932 ● ● By 1932, the American people wanted new leadership. Democrat Franklin Delano Roosevelt (FDR) easily defeated Hoover. Roosevelt promised the American people a New Deal. FDR's Inaugural address "The only thing we have to fear is fear itself" Part 4: The New Deal The New Deal was FDR's plan to help the nation get through the great depression by enacting many government programs designed to provide: Relief Recovery Reform Examples of New Deal programs include... • FERA helped fund local relief efforts. ● Federal Emergency Relief Association ● However, FDR wanted to avoid government "handouts" So... Public Works Programs USA WORK PROGRAM WPA ● ● ● Public Works Programs Public Works Administration (1933) allowed $3.3 billion to be spent on the construction of public works to provide employment. The Civilian Conservation Corps (1933) was a public work relief program for unemployed men, focused on natural resource conservation. Work Projects Administration (1935) was the largest New Deal agency, employing millions of people and spending $7 billion. Government jobs helped people get by... **USA** WORK PROGRAM WPA But who would pay their salaries? FDR endorsed deficit spending • The government has a deficit when it ● spends more than it collect in taxes. This money is borrowed to be paid back in the future. • When is it appropriate for the government to deficit spend? FDIC Created by Glass-Steagall Act of 1933 • The Federal Deposit ● Insurance Corporation guaranteed bank deposits-this helped restore confidence in banks. Syai 3279 460255 Agricultural Adjustment Act (1933) ● • The AAA restricted production during the New Deal by paying farmers to reduce crop area so as to effectively raise the value of crops, thereby helping farmers. The farmers were paid subsidies by the federal government for leaving some of their fields unused. 6 million piglets and 220,000 pregnant cows were slaughtered in the AAA's effort to raise prices. National Labor Relations Act aka Wagner Act (1935) Guaranteed the right of workers to join labor unions. Francis Perkins looks on as Franklin Roosevelt signs the National Labor Relations Act. ● Social Security Act (1935) Collects Social Security taxes from all workers. Pays government pensions to retired and disabled people. Also funds unemployment benefits. Ida May Fuller, the first recipient Results of the New Deal Helped people get by, eased suffering • Provided hope ● It did NOT end the depression (WWII did) Tradition of a more active and more expensive government ● ●