Unit3
•  Prosperity,DepressionandtheNewDeal(1919-1941)
•  ThePost-WorldWarIperiodwascharacterizedby
economic,socialandpoliCcalturmoil.Post-war
prosperitybroughtaboutchangestoAmericanpopular
culture.However,economicdisrupConsgrowingoutthe
yearsledtoworldwidedepression.TheUnitedStates
aKemptedtodealwiththeGreatDepressionthrough
economicprogramscreatedbythefederalgovernment.
Chapter4:GreatDepressionandtheNewDeal
• ContentStatement:TheGreatDepressionwascaused,inpart,bythe
federalgovernment’smonetarypolicies,stockmarketspeculaConand
increasingconsumerdebt.Theroleofthefederalgovernmentexpandedasa
resultoftheGreatDepression.
• ExpectaConsforLearning:Describehowthefederalgovernment’s
monetarypolicies,stockmarketspeculaConandincreasingconsumerdebt
ledtotheGreatDepression.
• ExpectaConsforLearning:ExplainhowtheeffortstocombattheGreat
Depressionledtoanexpandedroleforthefederalgovernment.
SecCon1:CausesoftheGreatDepression
•  ContentElaboraCon:Oneofseveralfactorsleading
totheGreatDepressionintheUnitedStateswasthe
excessiveamountoflendingbybanks.Thisfueled
speculaConanduseofcredit.TheFederalReserve
aKemptedtocurbthesepracCcesbyconstricCngthe
moneysupply.Theeffectwastoworseneconomic
condiConsbymakingitharderforpeopletorepay
debtsandforbusinesses,includingbanks,to
conCnueoperaCons.
SecCon1:CausesoftheGreatDepression
•  ContentElaboraCon:Anotherfactorleadingtothe
DepressionwasstockmarketspeculaCon.Many
investorswerebuyingonmarginwiththehopeof
makinghugeprofits.Butthecollapseofthestock
marketledmanytolosetheirinvestmentsand
fortunes.Theclosingofmanyfactoriesledtothe
riseofconsumerdebtasworkerslostneeded
income.
StockMarketSpeculaConandthe
Crashof1929
•  a. Many people bought stock and made money
•  b. People even borrowed to buy stock
•  c. Many people got rich, so even more bought
stock
•  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.
•  Thestockmarketcrashof1929usheredina
decadecalledtheGreatDepressioninwhich
millionsofpeoplesufferedthrough
unemploymentandpoverty.ThenaCon’s
leaders,whowereoncesoopCmisCc,lost
theirconfidenceandbecamestrickenwith
fearanddoubt.
TheStockMarketBoom
•  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
• 
E. GET RICH QUICK!
I.CausesoftheGreatDepression
•  Reason#1:Stockmarketcrash
•  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:TheunequaldistribuCon
ofwealth
•  The unequal distribution of wealth
• 
A. A few people actually had money
• 
1. They spent a lot during the 1920’s
• 
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:Countriesowedusmoney
forWWI
•  Countries owed us money from the war
• 
1. We lent them money
• 
2. We were paying ourselves our
own money!
Reason#4:CreditandMarginLoans
•  A. People got loans to buy stocks
• 
B. THIS WAS A BIG GAMBLE!
• 
C. Businesses used money to buy
stock instead of machines and
factories!
Effects of the Great
Depression
• 
1.U.S.Economicoutputdecreasedby50%injust3
years
• 
2.farmincomewentdown/croppricesdecreased
• 
3.farmersstarteddestroyingcropstotrytoforce
pricesup
• 
4.railroads,mining,andlumberindustriesdeclined
Effects,conCnued
•  5.construcConprojectsandautopurchases
declined
•  6.1933:1/4unemployed
•  7.othershadwagescut
•  8.soupkitchensandbreadlines
•  9.HoovervillesandHooverflags
Effects,conCnued
•  10.Viciouscycle:
•  Consumerspendingdecreased=demandfor
goodsdecreased=producConofgoods
decreased=businesseslaidoffemployees=
peoplehadnomoneytospend
Effects,conCnued
•  11. Banking and credit
–  a.peoplelosttheirmoney:couldnotpaybankloans
–  b.manyhadborrowedtobuycars,equipment,andto
gambleinthestockmarket
–  c.1930-33:9000banksclosed
Effects,conCnued
•  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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TheDustBowl
•  severedroughtinGreatPlains(Oklahoma,Kansas,
NewMexico,Texas,Colorado)
•  beganin1931
•  cropsdriedupanddied
•  “BlackBlizzards”:duststorms
•  thisconCnuedforseveralyears
•  tonsofsoillostfromtheduststorms(Treesand
grassrootsusedtokeepsoilinplace,buttheyhad
beencutinordertomakemorefarmland)
TheDustBowl,cont.
•  OklahomawomandescribedthelivingcondiCons:
•  “Inthedust-covereddesolaConofourNoMan’sLand
here,wearingourshadehats,withhandkerchiefsCed
overourfacesandVaselineinournostrils,wehave
beentryingtorescueourhomefromthewind-blown
dust,whichpenetrateswhereveraircango.Itis
almostahopelesstask,forthereisrarelyadaywhen
atsomeCme,thedustcloudsdonotrollover.
Visibilityapproacheszeroandeverythingiscovered
againwithaslit-likedeposit,whichmayvaryindepth
fromafilmtoactualripplesonthekitchenfloor.”
TheDustBowl,cont.
--millionsforcedtoleavehomes
--By1940:2.5millionhadlem
--200,000wenttoCalifornia
--OneKansansaid:
“Thelandjustblewaway;wehadtogosomewhere”
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Use the following list to answer this question
• 
• 
Key Developments for the
United States in the 1920’s
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 1920’s?
• 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
States.
led to legislation restricting immigration to the United
OGTMulCpleChoice
•  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 1920’s
•  D. the fact that other countries did not pay us for
the costs of World War I
OGTMulCpleChoice
•  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
OGTMulCpleChoice
•  Puongdownasmallamountofcashtobuy
sharesofastockisknownas
•  A.percentagebuying
•  B.maniabuying
•  C.buyingonmargin
•  D.buyingonCme
OGTMulCpleChoice
•  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
OGTMulCpleChoice
•  Shantytowns of the suddenly poor were
known as
•  A. Hoovervilles
•  B. Bust Towns
•  C. Dust Bowls
•  D. Povertyvilles
OGTMulCpleChoice
•  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
OGTMulCpleChoice
•  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
OGTMulCpleChoice
•  The stock market crash was the beginning
of
•  A. The Great Depression
•  B. World War I
•  C. The Roaring Twenties
•  D. World War II
OGTMulCpleChoice
•  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
OGTMulCpleChoice
•  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
OGTMulCpleChoice
•  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.
OGTMulCpleChoice
•  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
OGTExtendedResponse
(PracCceTestBooklet2005)Duringthe1920’smanypeopleweregambling
inthestockmarket.Notonlydidpeopleusetheirownmoney,theyalso
borrowedmoneytoinvestinthestockmarket.Manypeoplemadealotof
moneyduringthe1920’sbyinvesCnginthestockmarket.
• 
A.IdenCfytwowaysinwhichpeoplemademoneybyplayingthe
stockmarket.(2points).
• 
B.Explainhowbuyingstocksonmarginmayhaveledtothestock
marketcrashof1929.(2points)
OGTExtendedResponse
•  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)
SecCon2:TheNewDeal
•  ContentElaboraCon:Duringthe1930’s,theroleof
thefederalgovernmentwasgreatlyexpandedwith
theNewDeal.Thisoccurredthroughitseffortsto
helptheeconomyrecover,withprogramssuchas
theNaConalRecoveryAdministraCon,toprovide
relieftotheunemployedbycreaCngjobsandto
insCtutereformsfortheprotecConoftheelderly,
farmers,investorsandlaborers.
AKemptstoAlleviatetheDepression
•  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 hungry
•  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)
PresidentHerbertHoover
TheBonusArmy
•  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
protestors
–  5. Public infuriated: VETS were being kicked
out of D.C.!!!
Hoover’sAKemptstoHelp
• 
A. The Great Depression did not end quickly. Hoover came up with a plan
to get us out of the depression:
• 
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 companies.
• 
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.
TheNewDeal
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ElecConof1932
•  Herbert Hoover
•  FDR
•  Republican
•  “Prosperity is just •  “New Deal”
around the corner.”•  Increase federal
•  If FDR wins: end
relief
of capitalism
•  “Happy Days are
Here Again”
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Franklin D. Roosevelt
ElecCon,conCnued
•  1.FDRwinsinalandslide(57%ofpopular
vote)
•  2.DemocratswininbothhousesofCongress
•  3.ThisallowedFDRtopassalotofbills---the
“NEWDEAL!”—ThiswasFDR’splantogetthe
UnitedStatesoutofthedepression
ElecCon0f1932
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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 FDR’s 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!!!!!!!!!!!!!!!!!!!!!!!!!!!
FDRGivingaFiresideChat
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The Hundred Days
•  A. March 9 to June 16
•  B. A lot of New Deal Legislation
passed
•  C. 3 R’s
–  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
hired young people to
Corps (CCC) (March 31) plant trees and build
roads.
US abandons gold
Causes a decline in the
standard (April 19)
exchange value of the
dollar abroad and an
increase in the prices of
stocks and silver in the
American exchanges
Agricultural Adjustment Paid farmers to grow
Act (AAA) (May 12)
fewer crops in order to
reduce the supply and
raise farm prices.
Federal Emergency
loaned millions of dollars
Relief Act (May 12)
to families for food,
shelter, and clothes.
Tennessee Valley
Built dams and power
Authority (TVA)
plants in the
Tennessee Valley
(May 18)
region to control
flooding and promote
the economic
development of the
Federal Securities Act
(May 27)
National Employment
System Act (June 6)
Home Owners
Refinancing Act (June
13)
Banking Act (June 16)
set rules about selling
stocks and bonds.
Established U.S.
Employment Service,
which provided
matching funding for
state employment
services
Set up refinancing for
mortgages
Set up the Federal
Deposit Insurance
Corporation (FDIC)
Gave workers right to form
National Industrial
Recover Act (NIRA) unions, set up minimum wage,
max work hours, prices,
(June 16)
***Later ruled
unconstitutional by
the Supreme Court
Emergency Railroad
Transportation Act
(June 16)
Farm Credit Act
(June 16)
production, and competition.
Est. the National Recovery
Administration (NRA) and the
Public Works Administration
(PWA), which paid people to
build roads and public
buildings.
Increased federal
regulation of the RRs.
Provided refinancing of
farm mortgages.
IV.CriCcsoftheNewDeal
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
HueyLong
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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.NaConalLaborRelaConsAct
•  Gave workers the right to start unions.
The government now was siding with
workers over business.
E.TheCongressofIndustrial
OrganizaCons(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
AFL-CIO.
FDRandtheSupremeCourt
•  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 Deal.
FDRandSC,conCnued
•  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
DidtheNewDealWork?
•  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.
OGTMulCpleChoice
• 
• 
• 
• 
• 
Social Security provided for
A. old-age insurance
B. public assistance
C. unemployment insurance
D. all of the above
OGTMulCpleChoice
•  ThepurposeoftheWPAwasto
•  A.helpbusiness
•  B.reestablishconfidenceinthebanking
system
•  C.provideimmediatefinancialaidtofarmers
•  D.provideworkfortheable-bodied
unemployed
OGTMulCpleChoice
• 
(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
policies
•  B. reduced government involvement in the
nation’s economy
•  C. shifted the nation’s wealth from the rich to the
poor
•  D. increased the role of government in the
nation’s economy
OGTMulCpleChoice
• 
(Practice Test Booklet 2005) Franklin D. Roosevelt’s 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
OGTMulCpleChoice
•  FDR’s 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
OGTMulCpleChoice
•  The “hundred days” was the time period
•  A. between FDR’s election and the first
inauguration
•  B. immediately following FDR’s first
inauguration
•  C. concluding FDR’s first term
•  D. immediately following FDR’s second
inauguration
OGTMulCpleChoice
•  All of the following were part of Hoover’s
plan to get us out of the depression except
•  A. Agricultural Marketing Act
•  B. Reconstruction Finance Corporation
•  C. Moratorium
•  D. Social Security
OGTMulCpleChoice
•  Who said “The only thing we have to fear
is fear itself.”
•  A. Herbert Hoover
•  B. John Maynard Keynes
•  C. Franklin D. Roosevelt
•  D. Phil Hellmuth
OGTExtendedResponse
•  TheGreatDepressionandtheNewDealare
twoofthemajorthemesofthe1930’s.(4
points).
•  ExplaintwocausesoftheNewDeal.
•  ExplaintwoeffectsoftheNewDeal.