Download Great_Depression - Miami Beach Senior High School

TIME-LINE of The Great Depression 1929-1939
1920’s WARNING SIGNS that almost everyone ignored.
During WW-1 Federal spending grows 3 times larger than tax’s collected
600 banks fail every year, farmland value drops 40% from 1920-1929
Technological Unemployment: 2,000,000 workers (Including farmers.) are replaced by automatic and
semi-automatic machinery, 1,200 business mergers and 6,000 independent companies are bought up.
By 1929 200 companies control more than half of all USA biz.
1929 17% of the richest people owned 40% of the USA $$$. The middle class is reduced to 20%
1923: President Warring Harding dies in office thus ending one of the most corrupt
Administrations in US history, there would be three republican Presidents in a row.
Most people would blame the Republicans for the Great Depression in 1929.
A Republican will not be President again until 1953.
1924: The stock market begins an incredible rise. More people spend more money on stocks and
bonds than any time in the USA history.
1925: Republican President Calvin Coolidge lowers top tax rate to 25%.
1928: Construction building boom is over, more difficult to borrow money at higher interest rate.
Farm income drops from 15% to 9% May to September 1929: price of stock rises 40% trading of
stock will double from 2.5 million to 5 million shares a day.
1929: Herbert Hoover becomes 31st US president in November.
Half of all Americans are living below the poverty level.
Companies manufacture 3 times as much as is sold consumption-buying & selling by individuals in the
US business begins to drop sharply.
Automobiles sales fall 33% in 9 months before the crash.
Construction falls $ 2 billion since 1929 serious financial recession begins in August, production falls
to 20% and prices went down to $7.52.
October 24, 1929 “Black Tuesday” market closes 80% of value plummets down in 16 hours.
Time line: effects of the crash of 1929
1930: GNP falls to 9.4% unemployment up to 300% to 8.7%.
1931: No major legislation is passed by Herbert Hoover to stop the Great Depression, Bank panic
occurs: millions of people attempt to withdraw $ from banks….but find that their bank has closed, their
$$ is gone forever. GNP falls again 9.4% unemployment rate up to 100% to 15.9%.
1932: GNP falls a record 13.4% unemployment up to 23.6% to 35% 10,000 banks have now failed
$2 trillion in deposits are lost, 1,300,000 Americans have lost their jobs affecting 3,500,000 more, farm
prices fall 53% since 1929. Toledo, Ohio were Mr. Simon went to High School has 80% of it’s work
force unemployed
Hatred for President Hoover grows.
1932 Nov. Franklin D. Roosevelt wins Election as 33rd US President.
The Great Depression of 1929 A Financial PANIC
CAUSES
1. American industry over-expands its production facilities.
2. Consumers lacked enough incomes to continue buying the total output of industry because
workers wages did not rise.
3. Farmers had low incomes after WW-1 because of depressed prices less than $300.00 per year.
4. Bankers made bad loans were and not paid back and so ho to close.
These bank failures wiped out the savings of millions of investors.
5. “Get-Rich-Quick” speculators bid up the price & value of stocks & real estate to
unrealistic levels. Money was loaned by stock brokers to buy stocks.
6. World-Wide trade declined sharply because WW-1 had hurt Europe’s economy severely
and greatly lessoned Europe’s Ability to buy us products & pay back $$ owned to USA.
7. High tariff taxes on trade hurt the flow of goods between nations.
8. The MOST IMPORTANT and IMMEDIATE cause was the catastrophic stock market
CRASH that starts in October 29, 1929.
Differences from other Depressions.
The Great Depression was the most severe in history because of the following
1. The USA no longer had an unsettled frontier with its unlimited economic opportunities as
an escape valve from “bad times.”
2. The USA had become primarily industrial & thus more Americans were profoundly
Affected by business and banking failures.
3. Although the depression of 1929 started in the USA, it quickly spread through out the
World. (Lasted for 10 years.)
Depth of the Great Depression economic figures
By 1932 production & prices were greatly reduced stocks lost 90% of their value. Business
Failure= 32,000, Bank closures = 5000. 12,000,000 workers 25-35% had no jobs.
What did Roosevelt do when he got elected?
1. Inauguration Speech: He told America "We have nothing to fear but fear itself!" He wanted to
inspire optimism and hope. He did not want America paralyzed by fear. He was a man of action.
2. First Hundred Days - For the first hundred days of his administration Roosevelt and his Brain Trust
where a whirlwind of activity. Legislation was introduced and passed at a furious pace as Congress
mostly acted as a rubber stamp. Roosevelt called Congress into session and asked for executive power
to wage war against poverty and pessimism. He said he wanted a power "as great as the power that
would be given me if we were in fact invaded by a foreign foe." At first he ordered a bank holiday,
which closed every bank in the nation and stopped people from withdrawing all of their money. This
ended the panic. He then signed legislation called the Emergency Banking Act. This closed all of the
insolvent lending institution and only reopened the solvent ones. While many lost money at least the
panic was eased.
What was Roosevelt's underlying philosophy?
1. Keynesian or "pump priming" economics. Based on the beliefs of economist John Maynard Keynes
it held that money should be invested in the people, the working class. Then spending would increase
with new money in circulation. As spending increased it was expected that businesses would expand to
meet the new demand and hire new workers. This would spur on more spending and more growth.
This plan was the opposite of the Republican plan ascribed to by Hoover and earlier leaders. They had
believed in supply side or "trickle down" economics. In this philosophy money was to be invested at
top, in business. Then businesses would expand, hire new workers and this in turn would spur on
spending and further economic growth.
What did Roosevelt mean by relief, recovery and reform?
1. Relief - Immediate action taken to halt the economies deterioration.
2. Recovery - "Pump - Priming" Temporary programs to restart the flow of consumer demand.
3. Reform - Permanent programs to avoid another depression and insure citizens against economic
disasters.
Relief
Recovery
Reform
Immediate action taken to
"Pump - Priming" Temporary
Permanent programs to avoid
halt the economies
programs to restart the flow of
another depression insure citizens
deterioration.
consumer demand.
against economic disasters.
Bank Holiday
Declared so that the panic
would be stopped.
Agricultural Adjustment Act
Securities & Exchange
(AAA)
Commission (SEC)
Taxed food processors, gave the
Permanent Agency set up to
money directly to farmers as a
monitor stock market activity and
payment for not growing food. This ensure that no fraud or insider
decreased supply so price would go
trading was taking place.
up.
Emergency Banking Act National Industrial Recovery Act
Federal Deposit Insurance
Closed the insolvent banks
(NIRA)
Corporation (FDIC)
and only reopened the solvent Created the (National Recovery
Permanent Agency designed to
ones.
Administration) a consortium of
insure depositors money in
businesses organized by the
savings banks. Originally insured
government given the power to set up to $5,000 per depositor today
rules/regulations for the economy.
it has increased to $100,000.
Members of the NRA displayed a
blue eagle.
Federal Emergency Relief
Home Owners Loan Corp.
Social Security Administration
Gave loans to home owners so they Permanent agency designed to
Act (FERA)
Gave immediate help to those could pay their mortgages. This
ensure the older segment of
that needed it in the form of
prevented people from going
society would have enough
cash payments.
homeless and prevented banks from money to survive. The key is that
going under.
they would then abe able to spend
throughout their lives.
Civil Works Administration Works Progress Administration National Labor Relations Act
(CWA)
(WPA)
and National Labor Relations
Provided temporary jobs Provided long term government jobs
Board (NLRA/NLRB)
repairing roads and bridges.
building schools and other public
Known as the Wagner Act it
works projects.
helped unions and workers. By
creating the (National Labor
Relations Board) which enforced
labor law, made sure that fair
business practices where upheld.
Civilian Conservation
Tennessee Valley Authority
Soil Conservation Act
Laws mandating proper soil
Corps (CCC)
(TVA)
Temporary jobs to unmarried Agency created to build dams in the maintenance to make sure that
single adults filling sand bags Tennessee river valley. These dams another dust bowl was avoided.
and helping out at disaster provided more stable irrigation and
type situations. Participants
cheap hydroelectric power.
lived in barracks type
housing.
EARLY NEW DEAL MEASURES
FAIR LABOR STANDARDS ACT: provided minimum wage for workers.
CIVILIAN CONSERVATION CORPS: provided work for jobless males between 18 & 25 in
reforestation, road construction, and prevention of forest erosion. Ended in 1941.
AGRICULTURAL ADJUSTMENT ACT: established principle of government price support for
farmers and guaranteed farm purchasing power.
TENNESSEE VALLEY AUTHORITY ACT: federal construction and ownership of power plants
regional development of Tennessee Valley (7 State Area)
FEDERAL SECURITIES ACT: required full disclosure of information related to new stock issues.
NATIONAL EMPLOYMENT SYSTEM ACT: created US employment service.
HOME OWNERS REFINANCING ACT: use of government bonds to guarantee mortgages.
BANKING ACT OF 1933: created the FDIC, guaranteeing the safety of bank deposits.
NATIONAL INDUSTRIAL RECOVERY ACT: minimum wages & self-regulation of industry-1935
PUBLIC WORKS ADMINISTRATION: appropriated funds to construct roads and federal projects.
SECURITY AND EXCHANGE ACT: federal regulation of the operation of stock exchange.
NATIONAL HOUSING ACT: federal housing administration insured loans of private banks and trust
companies for construction of homes.
COMMUNICATIONS ACT: federal housing administration insured loans of private banks and trust
companies for construction of homes.
HOME OWNERS LOAN ACT: government financing of home mortgages.
NATIONAL HOUSING ACT -- construction of low cost public housing and slum clearance.
SOIL CONSERVATION ACT: established federal soil conservation services.
RESETTLEMENT ADMINISTRATION: built model communities for low income city workers
RURAL ELECTRIFICATION ADMINISTRATION: program brought electricity to rural areas.
NATIONAL YOUTH ADMINISTRATION: federal work relief and employment for young people.
NATIONAL LABOR RELATIONS ACT: collective bargaining, unions supervised by the NLRB.
SOCIAL SECURITY ACT: created Social Security System, old age and survivors insurance; aid to
dependent children etc.