The Great Depression (1929-1939)

Bull Market: Bear Market:

- Stock Prices ↑ - Stock Prices ↓
- Good for business! - People (and businesses) lose
- People begin to Buy on Margin: new-found wealth.
Purchase stocks on credit with a - People want to sell their
loan from their broker. Goal: Sell stocks.
later at a higher price, pay the - May lead to a depression
loan back and keep the profit. (steep drop in economic
activity).

1. Is it normal to have periods of surplus/recovery? Yes

2. Is it normal to have periods of recession? Yes

3. Why do you think a recession might become a depression? Something in the business
cycle is way off. There might be a rapid decrease in demand or an overly large supply.

Business Cycle: An economic pattern of production and consumption.

Production > Consumption ► ↑ Surplus Products ►Businesses ↓ Production & Lay Off
Workers (THIS CAUSES A RECESSION) ►Consumers Eventually Buy Surpluses ►
Consumption > Production ► Businesses ↑ Production and Hire Workers ► Eventually
Production > Consumption
 So what caused the GREAT DEPRESSION?
1. Consumer Crisis:

Too many people buying on margin.

Companies were overproducing, but wages did
not increase. Banks made too many bad loans
and investors were swindled into get-rich-quick
schemes. With lower demand, companies began
to cut jobs.
With no money and, often, no job, no one was
buying new products and people couldn’t repay
their loans.

Immediate Cause of the Great Depression: The Stock Market Crash.

This happened on October 29, 1929.

2. Banking Crisis:

Banks had been heavily invested in

stocks, too.
They had encouraged their customers to
invest in stocks. Customers couldn’t
repay their loans.
Banks started to close and people
panicked. They rushed to take out their
money, creating even bigger problems
for the banks.

3. Business Crisis:

When banks closed, businesses lost

their savings accounts. Many were left
with no money to operate.
Businesses canceled plans to build
factories and expand production.
They cut jobs. Unemployment rose
drastically.
Life during the Depression
Based on the reading, what were 7 ways that Americans were affected by the Great
Depression?
1. Little or no money for food or to pay the rent. People lost their homes.

2. People were frightened and miserable.

3. Millions of people lost their jobs. They took any job they could get.

4. People stood in “breadlines” waiting for free bread and soup.

5. Veterans marched on Washington, DC demanding the bonus that was

promised to them. (Bonus Army)

6. Some farmers gave up farming and moved to California.

7. Men and boys roamed the country living for work. They lived in
“Hoovervilles”: shanty towns usually on the edge of cities.

Complete the organizer below.

Who was affected?

Farmers, people living on the Where did it happen?
The Great Plains
Great Plains

What was it?

The Dust Bowl Dust Storms

What effects did it have?

Why did it happen?
400,000 farmers moved, many
Long periods of drought, high
to California, and became
temperatures and poor farming
migrant workers
practices led to wind erosion
Roosevelt’s New Deal (p. 778 – 783)
Read the assigned pages from the textbook. It is very important that you pay attention to
not only the main text, but any pictures, graphs, or primary sources in the assigned pages as
well. Once you have read, answer the questions and complete the graphic organizers.

1. Prior to being elected, Franklin Roosevelt (FDR) said to the country “I pledge you, I pledge
myself, to a new deal for the American people.” What do you think he meant by this?
He wants to give people new ideas and a plan for helping Americans.

2. Based on the document “America Tunes In” on page 779, what percentage of New Yorkers
owned radios in 1930? Why do you think more people owned radios in the North than in the
South?
Over 50%.
The north had more access to electricity; more people in the north
might have had money to buy radios, etc.

3. Why did FDR rely on the Brain Trust?

They were experts and could help him develop relief programs.

Franklin Delano Roosevelt

First Inaugural Address
March 4, 1933

“… This great Nation will endure [last] as it has endured, will revive and will prosper. So, first of all, let
me assert my firm belief that the only thing we have to fear is fear itself – nameless, unreasoning,
unjustified terror which paralyzed [stops] needed efforts to convert retreat into advance… Values of
property have shrunken… taxes have risen; our ability to pay has fallen; government of all kinds is faced
by serious [loss] of income… the withered leaves of industrial enterprise lie on every side; farmers find
no markets for their produce; the savings of many years in thousands of families are gone.
More important, a host of unemployed citizens face the grim problem of existence and an equally
great number toil with little return. Only a foolish optimist can deny the dark realities of the moment.”

4. In the speech that FDR gave at his first inauguration, what economic problems
does he see? Values of property have shrunken, taxes have risen,
savings are gone, the ability to pay has fallen, the government has a loss of
income, no market for farmers products

5. What feeling does he warn Americans of? Fear

6. What do you think the goal of his speech is? To motivate Americans; tell them
not to be scared, which causes inaction; to keep people moving forward
Choose 4 New Deal programs and, in the organizer below, explain what their purpose was.

Civilian Conservation Corp Tennessee Valley Authority

(CCC) (TVA)
Provided jobs for young men to Built dams to provide cheap
plant trees and build bridges electricity, set up schools and
health centers

New Deal
Programs

Public Works Administration

National Recovery (PWA)
Administration (NRA) Built ports, schools and aircraft
Set standards for production, carriers
prices and wages

Complete the organizer below.

VOCABULARY TERM DEFINITION / DESCRIPTION

Fireside Chat FDR’s broadcasts on the radio

Brain Trust FDR’s group of experts that gave him advice

New Deal FDR’s plan and programs to get the US out of the
Great Depression

Federal Deposit Insurance Guaranteed that money placed in a bank would not
Corporation (FDIC) be lost if the bank failed.

Securities and Exchange A group that regulated the sale of stocks and bonds.
Commission (SEC) Had power to punish dishonest stockbrokers.
 Read the section on pages 796 – 797 on the Social Security Act (Help for Those in
Need) . In the organizer below, show three things that the Social Security Act did.

Social Security Act

1. Set up monthly pensions for retired people

2. Unemployment insurance

3. Help for people with disabilities, the poor, elderly and

children

CRITICS OF THE NEW DEAL:

Some thought that the New Deal went
too far and that the federal government
was getting too much power, especially
over business. Many wanted to continue
the free-enterprise system.

Some thought that the New Deal didn’t

go far enough, and that the federal
government should do more to help the
needy and promote social reform.

Many were concerned with Roosevelt’s

Judicial Procedures Reform Act, which
would have allowed the President to
appoint a new justice (up to 6) for every
justice who did not resign after turning
70.
? DID THE NEW DEAL ACTUALLY END THE GREAT DEPRESSION?
YES: Supporters say that it prevented the economic and political collapse of the US and
created programs to help prevent future depressions.

NO: Critics say that it didn’t bring the US full economic recovery. They claim that it was
actually World War II that ended the Depression.

THE END OF THE GREAT DEPRESSION

In 1939, World War II broke out in Europe. Despite initial neutrality in the US, the economy
began to recover as the country met the demands of war. Production increased and
unemployment dramatically decreased.