Great Depression

ReviewCreated By:

Michael Crews

How it Started• Black Tuesday – October 29,1929

– Stock Market crashed

• Economic Shift – The nation’s economy was changing from heavy industry to mass production

• 19th century economic basis = oil, steel, coal and iron• 20th century economic basis = mass produced consumer goods

– Shift from producers to consumers

• Buying stock on margin– Purchasing stock on credit and using ‘projected’ earnings to buy even more

• Overproduction in Factories• Overproduction on Farms• Bad Banking policies

– Many banks bought stocks with their patrons’ savings– Money vanished when the market crashed and the banks failed

• Income Inequality– The top 1% owned virtually everything– The bottom 20% owned virtually nothing

• Old War Debts

Hoover’s Response and Dust Bowl • Herbert Hoover – President at the beginning of the Great

Depression– Did not do much to stop or correct the economic crisis– Believed the market would correct itself and government should stay out– Created committees to aid farmers and industrial corporations

• Not effective

– Approved Reconstruction Finance Corporation in 1932– “Hoovervilles” = shanty towns – “Hooverflags” = empty pockets hanging out of pants

• Dust Bowl – Caused by not rotating crops and soil depletion– Ruined farmers in the mid-west– Many went searching for jobs along the west coast

• The novel “The Grapes of Wrath” is based off of this

Franklin D. Roosevelt’s Response• First New Deal – Economic policy reform instituted during his first

100 days– Had three goals = Relief, Recovery, Reform– Reformed Banking = FDIC– Created the ‘Alphabet’ Agencies

• CCC = civilian conservation corps• CWA = Civil Works Administration• AAA = Agricultural Adjustment Administration• TVA = Tennessee Valley Authority• PWA = Public Works Administration

– Restructured American Finance – created SEC to regulate Wall Street

• First New Deal came under opposition from both conservatives and liberals– Conservatives = too much government interference– Liberals = too little government aid

• Second New Deal – response to critics of the First New Deal– Relied on deficit spending– Congress launched WPA = hired nearly 10 million workers– Social Security Act = created a retirement program and unemployment

insurance for many workers– Increased aid for farmers– Passed labor reform laws

• National Labor Reform Act = allowed for strikes• Fair Labor Standards Act = set a national minimum wage outlawed child labor

Death of the New Deal• Legal Battles plague the New Deal

– Schecter v. United States = declared the National Industrial Recovery Act violated the Constitution because it gave the president too many powers and attempted to control intra-state trade not inter-state trade

– Butler v. United States = declared Agricultural Adjustment Administration unconstitutional because it attempted to place federal control over farm production

• FDR’s Court-packing scheme– FDR tried to appoint and fill the Supreme Court with liberal justices– It backfired ruining both his political and public perceptions

• The Hatch Act = forbade most civil servants from participating in campaigns also outlawed public office holders from using New Deal money to fund their campaings

End of the Great Depression• World War Two broke out• Increased need for industrial production of

war materials jumpstarted America’s economy• Men got paid for military service • Women entered the workforce