The Great Depression-

Overview

What Started the Great Depression?

Multitude of Factors – Impossible to find one reason

Some Contributing Factors:

Natural Economic Cycle – The country had experienced a huge economic boom, an

economic recession and/or depression typically naturally follow this

Demand decreases – everyone had already purchased cars/houses, no need to buy

anymore

Stock Market Crash – High demand for stocks led to an artificially high stock value, warning

sign of bad economy (but only affected about 1 % of population)

Overabundance of Credit – Buying large products on credit became very popular, but

when people lost jobs or stocks could not afford loan repayments, leading to massive

debt/bank issues

Bank Panic / Bank Crash – Banks had loaned out a lot of money and left very little in

reserve for depositors to withdraw.. Leading to a bank rush where many tried to withdraw

money at one time

Early Government Response

Herbert Hoover, elected President in 1928, was President of the US when the Great

Depression initially began

Hoover was a Republican- laisse faire (hands off) approach to government involvement in the economy

Believed the economy would recover on its own without government interference ,

asked companies to carry out business practices that would help the economy

Did try to create government jobs through programs and projects, such as the Hoover

Dam..

Did NOT provide any direct relief

In fact raised taxes for many Americans

Economics Background Info: Economists agree that a

healthy economy has an unemployment rate of 4-5%

Discussion

How did lives change during the Great Depression?

How high did Unemployment get during the Great

Depression?

How were those that kept their jobs still affected by the

Great Depression?

What do you think was the condition of the country

during this time?

Was Hoover completely to blame?

https://www.youtube.com/watch?v=KfeHWnaK7rY

FDR And the New Deal

Hoover extremely unpopular due to his lack of aid or support in Depression

Franklin Delano Roosevelt elected President in 1932, promised American people

a New Deal

Perhaps FDR’s greatest contribution is that he created hope for the US

Fireside Chats – talks on the radio where Hoover would assure the US people that

things would get better, he would explain what the government was doing to

help the people … think of it as a government infomercial

New Deal Programs

Government Programs and Regulations designed to do one of three things:

Create jobs (usually working on government projects, such as roads, parks, bridges, etc.)

Provide Relief – direct relief to people to help them get through depression

Regulate – create laws and regulations that would provide economic security (emergency banking act)

These programs also helped to build a modern infrastructure for the United States.. For example:

-Roads, bridges, highways, and dams built across the country

-Conservation projects in state and national parks that are still around today

-Powerlines built in rural areas in the country that had never before had access to electricity

-Regulations such as the Social Security Act, as well as the Banking Acts (regulate money in reserve at a bank) and the FDIC (Federal Deposit Insurance Corporation) created to restore confidence in banking

Conclusion

Did the Great Depression end with the New Deal? Why or why not?

What truly ended the Great Depression?

What did people go through during the Great Depression?

How does the Great Depression impact our lives today?

What can we learn about personal finance from the Great Depression?

How can a future Depression be prevented?