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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

The Great Depression Begins

Mr. Fisher

United States History

roaring twenties
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
the nation s sick economy
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) 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
  • (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.
hoover struggles with the depression
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)
      • 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?)
new deal fights the depression
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”
    • (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)