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The Great Depression and The New Deal

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  1. The Great Depression and The New Deal

  2. Herbert Hoover: President 1928

  3. BLACK Tuesday • October 29, 1929 STOCK PRICES PLUNGED • STOCK MARKET CRASHED- start of the great depression • Buying on Margin- borrowing money from a broker to buy a stock • Bull Market 1920s vs Bear Market 1930s

  4. BANKING CRISIS • Banks loaned money to stock brokers • Stock Market Crashed- People could not pay brokers from buying on Margin, Brokers could not pay banks, Banks collapsed, peoples savings were wiped out. • Bank Runs- People lined up to withdraw their money, 3,800 banks failed 1931-32, 1/5 of the nations banks failed

  5. Overproduction and Underconsumption • Overproduction- making too many goods • Assembly line • Underconsumption- people not buying as much • Farming industry hit hard • Wealth Gap • Wealthiest 5% received 1/3 of the money

  6. Government worsens Great Depression • Federal Reserve System- Central Bank of the US, controls the money supply • Discount Rate: Rate of interest banks can borrow money from the federal reserve • Fed increases Discount Rate (Interest Rates)----- decreases the Money Supply---- business fail---- unemployment increases • Hawley Smoot Tariff Act- law raising taxes on imported goods • Tariff war--- halted trade--- worsening the great depression

  7. CAUSES OF THE GREAT DEPRESSION • Bank failures • Overproduction • Underconsumption • Stock Market Collapse • Tariffs B—O—U—S—T

  8. Bonus Army • WWI Veterans requested early retirement payment and marched on Washington • President Hoover ordered the National guard to regain control, loosing support from the veterans • VIDEO

  9. Ideology- beliefs and values

  10. Hoover’s Response • No Government intervention • Hoovervilles- shantytowns that homeless people built out of cardboard and tarpaper • Relied on Optimism • RFC- Reconstruction Finance Corporation • Trickle Down Theory

  11. FRANKLIN DELANORE ROOSEVELT • President elected in 1932 • NEW DEAL- program of relief, recovery, and reform • First Hundred Days- Congress passed a record number of bills implementing the New Deal

  12. Human Impact • 25% unemployed- few could earn a living wage (wage high enough to provide an acceptable standard of living) • Farmers lost their land- property values depleting • Foreclosure- legal process of a lender (bank) taking over a property

  13. Human Impact • Unemployment led to psychological problems • Marriage rate down • Birth rates down • Divorce Rates down (too expensive) • Suicide rate up • Teenagers left home • Eviction- legal process where landlords remove tenets, Eviction rates rose • Malnutrition- psychological condition from lack of adequate diet

  14. Human Impact • Soup Kitchens • Breadlines • Sprang up around the country, 82 in NYC

  15. DUST BOWL • Dust Bowl- area of the Great Plains that suffered from a drought, wind erosion, and poor farming • Black Blizzards- dust storms • Desertification- land becoming desert like • Depopulation- loss of residents from an area • Grapes of Wrath- novel by John Steinbeck about a family leaving the great plains during the dustbowl • Okies- people who followed Route 66 toward California, 300,000 left the Plains

  16. Great Flood • 1936: Great Flood- Devastating flood in New England that resulted form a series of record- breaking storms in March 1936

  17. Americans survival • Americans sold anything they cold for money, cut corners financially, and did whatever they could to avoid receiving public relief • Public Assistance- aid in the form of money, goods, or services that government provides to those in need

  18. NEW DEAL and it LEGACY • The First New Deal • Fireside Chat with 60 Million radio listeners • Emergency Banking Act- Closed all banks • FDIC (Federal Deposit Insurance Corporation) $5000 • Securities and Exchange Commission- Stock Market Reform

  19. NIRA • National Industrial Recovery Act (NIRA)- Centerpice of New Deal, goal: increase production, boost wages and prices. Aimed at Businesses, labor unions, and the Unemployed

  20. NEW DEAL ACTS • AAA (Agricultural Adjustment Act) • Aid farmers by reducing crop production and raising prices, also helped farmers pay their mortgage • Parity: Price that gives farmer purchasing power • TVA (Tennessee Valley Authority) • Built series of dams in the Tennessee River Valley to create jobs, controlled floods, stopped erosion and provided hydroelectric power to 7 Southern States

  21. NEW DEAL ACTS • Home Owners Loan Corporation- provided loans for mortgages • FHA(Federal Housing Administration) • Boosted banking by insuring mortgage loans to 80% of the homes value • CCC (Civilian Conservation Corps) • Employed young men planting trees and working on conservation projects • FERA (Federal Emergency Relief Administration) • Sent money to the state governments to distribute money to the needy

  22. Responses to the New Deal • Right Winged Response- Conservative critics of the New Deal, thought it went TOO FAR • Left Wing Responses- Liberal Critics who believed FDR needed to go further • Demagogues- Huey Long “Every Man a King”

  23. The Second New Deal • Electricity and Jobs- 1935 20% of farmers had electricity, new deal created power plants, power lines, and 90% had electricity by the end of the decade • WPA (Works Progress Administration)- Work relief program which put 3 million Americans to work. • Bridges, parks, public buildings, artists for murals, guidebooks and folk music

  24. Supreme Court Attacks New Deal • Wagner Act (National Labor Relations Act)- protected workers right to organize into unions, It continued the NIRA policies after it was considered unconstitutional

  25. Social Security Act • Created a social insurance program that provides two main types of benefits: • Retirement • disability

  26. FDR: Packing the Supreme Court • FDR attempted to add more justices to the supreme court due to their inability to keep up with the work-load (age), when obviously he just wanted liberal justices to back the New Deal

  27. New Deal: Good and bad for whom? Best to Worst: Workers, American Indians, Women, African Americans, and Mexican Americans

  28. New Deal Coalition • A political partnership formed during the 1930s among various social and political groups in support of the New Deal, democratic party, and FDR

  29. New Deal Legacy • Economic Security: New Deal promised people the right to a job, adequate wages, a decent home, medical care, and a good education • Welfare State- A social system in which government takes responsibility for the economic well-being of its citizens • The Federal Government is now actively involved in the economy • Deficit Spending: Spending more than the government receives in revenues. He Financed the deficit by borrowing money • Lasting Programs: Social Security, TVA, SEC, FDIC, etc…