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Prosperity, Depression and the New Deal (1919-1941)


Unit 3 Prosperity, Depression and the New Deal (1919-1941) The Post-World War I period was characterized by economic, social and political turmoil. – PowerPoint PPT presentation

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Title: Prosperity, Depression and the New Deal (1919-1941)

Unit 3
  • Prosperity, Depression and the New Deal
  • The Post-World War I period was characterized by
    economic, social and political turmoil. Post-war
    prosperity brought about changes to American
    popular culture. However, economic disruptions
    growing out the years led to worldwide
    depression. The United States attempted to deal
    with the Great Depression through economic
    programs created by the federal government.

Chapter 4 Great Depression and the New Deal
  • Content Statement The Great Depression was
    caused, in part, by the federal governments
    monetary policies, stock market speculation and
    increasing consumer debt. The role of the
    federal government expanded as a result of the
    Great Depression.
  • Expectations for Learning Describe how the
    federal governments monetary policies, stock
    market speculation and increasing consumer debt
    led to the Great Depression.
  • Expectations for Learning Explain how the
    efforts to combat the Great Depression led to an
    expanded role for the federal government.

Section 1 Causes of the Great Depression
  • Content Elaboration One of several factors
    leading to the Great Depression in the United
    States was the excessive amount of lending by
    banks. This fueled speculation and use of
    credit. The Federal Reserve attempted to curb
    these practices by constricting the money supply.
    The effect was to worsen economic conditions by
    making it harder for people to repay debts and
    for businesses, including banks, to continue

Section 1 Causes of the Great Depression
  • Content Elaboration Another factor leading to
    the Depression was stock market speculation.
    Many investors were buying on margin with the
    hope of making huge profits. But the collapse of
    the stock market led many to lose their
    investments and fortunes. The closing of many
    factories led to the rise of consumer debt as
    workers lost needed income.

Stock Market Speculation and the Crash of 1929
  • a. Many people bought stock and made money
  • b. People even borrowed to buy stock
  • c. Many people got rich, so even more bought
  • d. On October 29, 1929 the stocks lost value.
  • e. Everyone tried to sell their stocks, but
    nobody would buy.
  • f. People lost everything they had.
  • g. This started the Great Depression.

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Panic on Wall Street People crowd Wall Street
after the Stock Market Crash of 1929.
Commissioner Whalen dispatched an extra detail of
400 police officers to guard the area.
  • The stock market crash of 1929 ushered in a
    decade called the Great Depression in which
    millions of people suffered through unemployment
    and poverty. The nations leaders, who were once
    so optimistic, lost their confidence and became
    stricken with fear and doubt.

The Stock Market Boom
  • A. People bought shares in large corporations
  • 1. Each share was a part of the company
  • 2. If company made money, price of each
  • share went up
  • B. Prices of stock went up beginning in 1921
  • C. By 1927, people would buy stock and sell it
    at a higher price to make a profit
  • D. They would use that money to buy more stock,
  • then sell it at a higher price

I. Causes of the Great Depression
  • Reason 1 Stock market crash
  • The price of stock declined a little, and this
    led to a collapse. People lost all of their
    money, and this led to the greatest depression in
    the history of the United States.

Reason 1, cont
  • Black Thursday
  • A. October 24, 1929
  • 1. Prices fell
  • 2. Everyone sold their stock
  • B. J.P. Morgan and Co.
  • 1. Bought 30 million in stocks
  • 2. Bought stocks at higher prices
  • 3. Prices went back up
  • 4. Things stable again

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Reason 1, cont.
  • The Great Crash
  • A. Tuesday, October 29, 1929
  • 1. Worst day of all
  • 2. Prices fell steeply
  • B. U.S. Steel stock
  • 1. Sept. 3 262/share
  • 2. Nov. 12 150/share
  • Many stocks decreased to half of its value

Reason 2 The unequal distribution of wealth
  • The unequal distribution of wealth
  • A. A few people actually had money
  • 1. They spent a lot during the 1920s
  • B. The rest were barely getting by
  • C. When stock market crashed, the rich stopped
  • spending
  • D. Inventories piled up
  • 1. cars
  • 2. refrigerators
  • 3. radios
  • E. People lost jobs
  • F. Downward spiral

Reason 3 Countries owed us money for WWI
  • Countries owed us money from the war
  • 1. We lent them money
  • 2. We were paying ourselves our own money!

Reason 4 Credit and Margin Loans
  • A. People got loans to buy stocks
  • C. Businesses used money to buy stock
    instead of machines and factories!

Effects of the Great Depression
  • 1. U.S. Economic output decreased by 50 in just
    3 years
  • 2. farm income went down/crop prices decreased
  • 3. farmers started destroying crops to try to
    force prices up
  • 4. railroads, mining, and lumber industries

Effects, continued
  • 5. construction projects and auto purchases
  • 6. 1933 1/4 unemployed
  • 7. others had wages cut
  • 8. soup kitchens and bread lines
  • 9. Hoovervilles and Hoover flags

Effects, continued
  • 10. Vicious cycle
  • Consumer spending decreased demand for goods
    decreased production of goods decreased
    businesses laid off employees people had no
    money to spend

Effects, continued
  • 11. Banking and credit
  • a. people lost their money could not pay bank
  • b. many had borrowed to buy cars, equipment, and
    to gamble in the stock market
  • c. 1930-33 9000 banks closed

Effects, continued
  • 12. Too many bank runs--people lined up at the
    banks to clear their accounts
  • a. Hundreds of banks failed
  • b. People lost their life savings
  • --lost retirement
  • --lost money saved for a house
  • --lost money saved for college

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The Dust Bowl
  • severe drought in Great Plains (Oklahoma, Kansas,
    New Mexico, Texas, Colorado)
  • began in 1931
  • crops dried up and died
  • Black Blizzards dust storms
  • this continued for several years
  • tons of soil lost from the dust storms (Trees and
    grass roots used to keep soil in place, but they
    had been cut in order to make more farm land)

The Dust Bowl, cont.
  • Oklahoma woman described the living conditions
  • In the dust-covered desolation of our No Mans
    Land here, wearing our shade hats, with
    handkerchiefs tied over our faces and Vaseline in
    our nostrils, we have been trying to rescue our
    home from the wind-blown dust, which penetrates
    wherever air can go. It is almost a hopeless
    task, for there is rarely a day when at some
    time, the dust clouds do not roll over.
    Visibility approaches zero and everything is
    covered again with a slit-like deposit, which may
    vary in depth from a film to actual ripples on
    the kitchen floor.

The Dust Bowl, cont.
  • --millions forced to leave homes
  • --By 1940 2.5 million had left
  • --200,000 went to California
  • --One Kansan said
  • The land just blew away we had to go somewhere

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Use the following list to answer this question
  • Key Developments for the
  • United States in the 1920s

easy credit and a rise in consumer debt growing unemployment in key industries such as construction overproduction and declining farm income buying stocks on margin and soaring stock prices
  • (2005 Practice Test) What was significant about
    the developments shown above for the United
    States in the 1920s?
  • A. They were causes of World War II.
  • B. They were signs of difficulties within the
    U.S. economy
  • C. They demonstrated the ability of the Federal
    Reserve to control the money supply
  • D. They led to legislation restricting
    immigration to the United States.

OGT Multiple Choice
  • All of the following were causes of the Great
    Depression except
  • A. the stock market crash
  • B. the uneven distribution of income
  • C. the high unemployment of the 1920s
  • D. the fact that other countries did not pay us
    for the costs of World War I

OGT Multiple Choice
  • All of the following were effects of the
    depression except
  • A. millions of unemployed people
  • B. malnutrition in children
  • C. bank runs
  • D. increased college enrollments

OGT Multiple Choice
  • Putting down a small amount of cash to buy shares
    of a stock is known as
  • A. percentage buying
  • B. mania buying
  • C. buying on margin
  • D. buying on time

OGT Multiple Choice
  • What happened on Black Tuesday?
  • A. the price of stocks dropped as many people
    began selling their stock
  • B. the price of stock stayed the same most of
    the day
  • C. the price of stocks went up as most people
    wanted to buy stocks
  • D. the price of stocks dropped as most people
    wanted to sell their stock

OGT Multiple Choice
  • Shantytowns of the suddenly poor were known as
  • A. Hoovervilles
  • B. Bust Towns
  • C. Dust Bowls
  • D. Povertyvilles

OGT Multiple Choice
  • As a result in stock market gambling,
  • A. Americans borrowed heavily to bet on stocks.
  • B. businesses put their cash into margin loans
    rather than into new machines and factories.
  • C. the connection between the real value of
    companies and their stock prices was reduced.
  • D. all of the above

OGT Multiple Choice
  • The stock market crash refers to all of the
    following EXCEPT
  • A. the failure of people to repay loans for
    stock bought on credit
  • B. the huge drop in the value of stocks
  • C. the inflated value of many stocks
  • D. millions of shares of stock being traded in
    one day

OGT Multiple Choice
  • The stock market crash was the beginning of
  • A. The Great Depression
  • B. World War I
  • C. The Roaring Twenties
  • D. World War II

OGT Multiple Choice
  • Which of the following was not a cause of the
    Great Depression?
  • A. too many stocks being bought on credit
  • B. unequal distribution of wealth
  • C. excessive stock speculation
  • D. government overspending

OGT Multiple Choice
  • Which man was President of the U.S. when the
    stock market crashed?
  • A. Calvin Coolidge
  • B. Warren G. Harding
  • C. Theodore Roosevelt
  • D. Herbert Hoover

OGT Multiple Choice
  • One of the causes of the Great Depression was an
    uneven distribution of income in the United
    States. What is the best explanation of uneven
    distribution of income?
  • A. When a country has too many rich people.
  • B. When a large percentage of people own most of
    the money in a country.
  • C. When everybody who lives in a country pretty
    much has the same amount of money
  • D. When a small percentage of people have a
    large amount of the money in a country.

OGT Multiple Choice
  • When the stock market crashed, there was a mad
    rush to the banks as many people wanted to get
    all of their money out of the bank. This was
    done for fear the banks were running out of
    money. This mad rush was called
  • A. money runs
  • B. bank hold ups
  • C. bank runs
  • D. margin runs

OGT Extended Response
  • (Practice Test Booklet 2005) During the 1920s
    many people were gambling in the stock market.
    Not only did people use their own money, they
    also borrowed money to invest in the stock
    market. Many people made a lot of money during
    the 1920s by investing in the stock market.
  • A. Identify two ways in which people made money
    by playing the stock market. (2 points).
  • B. Explain how buying stocks on margin may have
    led to the stock market crash of 1929. (2

OGT Extended Response
  • October of 1929 marked the beginning of the time
    period known as the Great Depression. This
    depression was great because it lasted so long
    and was so severe. There was not one cause that
    led us into this terrible time.
  • A. Explain two causes of the Great Depression.
    (2 points)
  • B. Explain two effects of the Great Depression?
    (2 points)

Section 2 The New Deal
  • Content Elaboration During the 1930s, the role
    of the federal government was greatly expanded
    with the New Deal. This occurred through its
    efforts to help the economy recover, with
    programs such as the National Recovery
    Administration, to provide relief to the
    unemployed by creating jobs and to institute
    reforms for the protection of the elderly,
    farmers, investors and laborers.

Attempts to Alleviate the Depression
  • A. Herbert is President from 1928-1932--he did
    not believe the government should give hand outs
  • B. At first, the government did nothing
  • Let the slump liquidate itself.
  • C. Called for the cities and states to feed the
  • D. Brought in business owners
  • 1. keep wages up
  • 2. keep factories working
  • E. Cut income tax (Similar to what George W.
    Bush did in 2003)

President Herbert Hoover
The Bonus Army
  • F. The Bonus Army
  • 1. 1924 Congress all veterans will get a
    bonus to be paid to all veterans in 1945
  • 2. Veterans want money NOW!
  • 3. They marched to Washington, D.C. to protest
  • 4. Pres. Hoover had the army remove the
  • 5. Public infuriated VETS were being kicked
    out of D.C.!!!

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Hoovers Attempts to Help
  • A. The Great Depression did not end quickly.
    Hoover came up with a plan to get us out of the
  • 1. Agricultural Marketing Act The government
    would buy farm products so the farmers could make
    some money. This plan failed, and farm prices
    continued to decline.
  • 2. Reconstruction Finance Corporation loaned
    money to banks, railroads, and insurance
  • 3. Federal works programs The government paid
    people to build dams, roads and buildings.
  • 4. Moratorium Told foreign countries they did
    not have to pay back war debts to the U.S. They
    could then use this money to buy U.S. goods.

The New Deal
Election of 1932
  • Herbert Hoover
  • Republican
  • Prosperity is just around the corner.
  • If FDR wins end of capitalism
  • FDR
  • New Deal
  • Increase federal relief
  • Happy Days are Here Again

Franklin D. Roosevelt
Election, continued
  • 1. FDR wins in a landslide (57 of popular vote)
  • 2. Democrats win in both houses of Congress
  • 3. This allowed FDR to pass a lot of bills---the
    NEW DEAL!This was FDRs plan to get the United
    States out of the depression

Election 0f 1932
FDR President During the Great Depression and
World War II
  • A. Franklin D. Roosevelt wins election in 1932.
    He told Americans the only thing we have to
    fear is fear itself.
  • B. Roosevelt had a plan to get us out of the
    Depression. He called it the New Deal.
  • C. FDR was a winner with good character--smiled
  • a lot
  • D. Had polio--was in a wheelchair
  • E. Distant cousin of Teddy Roosevelt
  • F. Only President to ever win 4 terms in office

FDR, continued
  • Roosevelt was willing to try ANYTHING to get
    us out of the depression. The following were all
    passed in the first 100 days of his presidency.
  • The Brain Trust A group of FDRs closest
    advisors. Together, they came up with many of
    the New Deal Programs.
  • Fireside Chats--FDR used the radio to speak
    with the American people
  • John Maynard Keynes--Felt the government should
    spend money instead of cutting back. The
    government should lower taxes, spend money, and
    purposely run up large deficits. This would keep
    people working and put more money into the
    economy. THIS WAS DIFFERENT!!!!!!!!!!!!!!!!!!!!!!

FDR Giving a Fireside Chat
The Hundred Days
  • A. March 9 to June 16
  • B. A lot of New Deal Legislation passed
  • C. 3 Rs
  • 1. Relief give people money and items NOW
  • 2. Recovery of American business and industry
  • 3. Reform the economic system

The Hundred Days, cont.
Emergency Banking Relief Act (March 9) Good banks could reopen. President has a lot powers over banks.
Civilian Conservation Corps (CCC) (March 31) hired young people to plant trees and build roads.
US abandons gold standard (April 19) Causes a decline in the exchange value of the dollar abroad and an increase in the prices of stocks and silver in the American exchanges

Agricultural Adjustment Act (AAA) (May 12) Paid farmers to grow fewer crops in order to reduce the supply and raise farm prices.
Federal Emergency Relief Act (May 12) loaned millions of dollars to families for food, shelter, and clothes.
Tennessee Valley Authority (TVA) (May 18) Built dams and power plants in the Tennessee Valley region to control flooding and promote the economic development of the area.

Federal Securities Act (May 27) set rules about selling stocks and bonds.
National Employment System Act (June 6) Established U.S. Employment Service, which provided matching funding for state employment services
Home Owners Refinancing Act (June 13) Set up refinancing for mortgages
Banking Act (June 16) Set up the Federal Deposit Insurance Corporation (FDIC)
National Industrial Recover Act (NIRA) (June 16) Later ruled unconstitutional by the Supreme Court Gave workers right to form unions, set up minimum wage, max work hours, prices, production, and competition. Est. the National Recovery Administration (NRA) and the Public Works Administration (PWA), which paid people to build roads and public buildings.
Emergency Railroad Transportation Act (June 16) Increased federal regulation of the RRs.
Farm Credit Act (June 16) Provided refinancing of farm mortgages.
IV. Critics of the New Deal
  • A. Conservatives Business felt this would end
    capitalism. Felt New Deal did way too much to
    help people--free handouts
  • B. Liberals Felt New Deal not enough help
  • C. Huey Long US Sen. from Louisiana.
  • 1. Share-the-Wealth increase tax on rich
  • 2. have minimum yearly income for everyone
  • 3. He took plan to people
  • 4. wanted to run for President
  • 5. assassinated in Sept. 1935

Huey Long
V. Second New Deal
  • A. 1st New Deal helped
  • B. Needed more
  • 1. Works Progress Administration
  • a. gave jobs to 2 million Americans
  • b. construction jobs airports, bridges,
  • highways, and public buildings
  • c. employed artists, writers, and musicians

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C. Social Security
  • 1. established income-support for American
    workers and families
  • a. tax for workers and employers
  • b. Provides pensions and insurance

D. National Labor Relations Act
  • Gave workers the right to start unions. The
    government now was siding with workers over

E. The Congress of Industrial Organizations (CIO)
  • started a union of skilled AND unskilled workers
  • CIO broke from the A F of L
  • later in history these 2 reunited to form

FDR and the Supreme Court
  • A. The Supreme Court felt much of the New Deal
    was unconstitutional. Most of the Supreme Court
    justices were very old.
  • B. When the old justices retired, Roosevelt
    replaced them with younger men who liked the New

FDR and SC, continued
  • C. Feb. 1937 Court packing
  • 1. FDR wants 15 S.C. justices
  • 2. Reason behind in work
  • D. S.C. had continued to strike down New Deal
  • E. FDR wants more justices
  • 1. They would vote for his New Deal programs

Did the New Deal Work?
  • A. People still out of work
  • B. Saved America
  • 1. no civil war
  • 2. no dictator
  • 3. spirits stayed high
  • New Deal got us through the toughest time in
    American history (excluding wars).
  • The U.S. did not get out of depression until
    World War II, when all of the factories were
    making war materials.

OGT Multiple Choice
  • Social Security provided for
  • A. old-age insurance
  • B. public assistance
  • C. unemployment insurance
  • D. all of the above

OGT Multiple Choice
  • The purpose of the WPA was to
  • A. help business
  • B. reestablish confidence in the banking system
  • C. provide immediate financial aid to farmers
  • D. provide work for the able-bodied unemployed

OGT Multiple Choice
  • (Practice Test Booklet, 2005) The Great
    Depression has had a great influence on the
    United States economy because it
  • A. marked a return to laissez faire economic
  • B. reduced government involvement in the
    nations economy
  • C. shifted the nations wealth from the rich to
    the poor
  • D. increased the role of government in the
    nations economy

OGT Multiple Choice
  • (Practice Test Booklet 2005) Franklin D.
    Roosevelts New Deal was an example of
  • A. using the government to try to solve the
    problems caused by the Great Depression
  • B. limiting the government so that the economy
    could have a chance to improve on its own
  • C. using the government to overturn a capitalist
    system that had failed
  • D. providing assistance only to the very wealthy
    in the hope that everyone would benefit

OGT Multiple Choice
  • FDRs often spoke to the public over the radio.
    These were commonly known as
  • A. Fireside chats
  • B. Burning talks
  • C. Radio addresses
  • D. Talk radio

OGT Multiple Choice
  • The hundred days was the time period
  • A. between FDRs election and the first
  • B. immediately following FDRs first
  • C. concluding FDRs first term
  • D. immediately following FDRs second

OGT Multiple Choice
  • All of the following were part of Hoovers plan
    to get us out of the depression except
  • A. Agricultural Marketing Act
  • B. Reconstruction Finance Corporation
  • C. Moratorium
  • D. Social Security

OGT Multiple Choice
  • Who said The only thing we have to fear is fear
  • A. Herbert Hoover
  • B. John Maynard Keynes
  • C. Franklin D. Roosevelt
  • D. Phil Hellmuth

OGT Extended Response
  • The Great Depression and the New Deal are two of
    the major themes of the 1930s. (4 points).
  • Explain two causes of the New Deal.
  • Explain two effects of the New Deal.