From Boom to BUST 1920S/Roaring Twenties to Great Depression Explosion of manufacturing and production The second industrial revolution Obsession with buying (mass consumerism of the 1920s) + BOOM : a period of great prosperity What is the solution to this equation? Things are good 1920s "This is our proudest boast: 'The American citizen has more comforts and conveniences than kings had two hundred years ago.'" Samuel Strauss, 1924 THE GREAT DEPRESSION 1929 So what caused the Great Depression ? Duhthe STOCK MARKET CRASH Stock Market Crash Great Depression Earlier Problems?? So what caused the Great Depression ? Before we answer this question, lets first think about the most notable sign of the troubled economy or the great depression. UNEMPLOYMENT -Over 25% of people could not find jobs. Now we can think about what may have happened to cause the unemployment rate to skyrocket. Wow! Look at these lines. Is it usually like this? No stupid, the bank is closed!d Bank closures No loans = less money circulating Deflation = drop in all prices Prices drop because of deflation Businesses cant sell products Businesses lay of workers Laid-off workers do not have $ to buy things Mass consumerism (obsession with buying) of the 1920s led factories to overproduce or make more goods than were sold. Lack of government interference in the economy? Lets not blame it all on the BANKS! ! How can these problems be solved? *Life in America sucks, I Franklin D. Roosevelt (a fifth cousin of the earlier President Theodore Roosevelt) promise you a new deal! Maybe if I call my political program something cool, people will like it? *This is not a direct quote! New Deals Attempt to Get America Out of the Great Depression: Economic Problem:New Deal Program created to help solve this problem: Unemployment Government-created/funded jobs Example: Public Works Administration (PWA) Banking Crisis Government provided funds to help banks and guaranteed individual deposits Example: Federal Reserve Insurance Corporation (FDIC) Wealth Gap/ Lack of workers rights Created the National Recovery Administration (NRA) to ensure safe/fair business practices. Wagner Act legalized labor unions Social Security Act money when you retire (pension) The 3 R s of R oosevelts NEW DEAL: R elief IMMEDIATE action R ecovery TEMPORARY programs R eform PERMANENT programs R elief IMMEDIATE action Example: Providing jobs to the jobless The Works Progress Administration (WPA) put people to work building or repairing public buildings, such as schools, post offices, and government offices. R ecovery Temporary programs Example: In 1933, Congress formed the Tennessee Valley Authority (TVA) to help recover the agricultural sector of the U.S. economy. This agency built giant dams along the Tennessee River to control flooding, provide cheap electricity, and increase jobs and prosperity in one of the countrys poorest rural areas. R eform PERMANENT programs to prevent future depressions Example: You may have seen this sign outside a bank. The Federal Deposit Insurance Corporation (FDIC) protected people from losing their money when they put it into a bank (up to $2,500) President Franklin Delano Roosevelt FDR beats a drum labeled New Deal This man is Chief Justice of the Supreme Court Economic freedom = government interference Before the 1930s During and after the Great Depression Economic freedom = government interference