unit 4: the great depression

Laizzae fair

• an economic system where the government intervenes as little as possible in the economy, allowing businesses to operate freely with minimal regulation.

agrictultural decline

overproduction led to falling prices

dust bowl

worsened rural poverty

• drought poor farming techniques

industrial imbalance

• tradtional industries

• coal textimes railroads declined

• while new indsutries automobiles electrial goods boomed but depended on credit

wealth inequailtiy

• top 1% owned 40% of wealth

• underconumption by the poor

buying on credit

American bought cars radios appplieances on installment plan

what did installment plans lead to

a rise in depth

stock market specualtion

Buing on margin (borrwing money to buy stocks) inflated prices

stock market boom (1924-1929)

prices rose 400% but many stockes were oervalued

Henryes ford assembly line

overproduction of goods

farm and factory overproduction

• falling prices

• layoffs

• lower demand

factories and farms produced

more goods than people could buy

what fixed farming techniques

• new machines

• mass production

• and improved farming techniques

what industries kept making producs even when demands dropped

• industries like cars

• steel

• textiles

• and agriculture

americans didn’t have enough of what

didnt’ have enought money to buy the extra goods (low wages)

who followed laissex fair polices

• harding

• coolidge

• and hoover

Andrew mellon

• tresuary sectraty

• cut taxes for the rich

• reduce regulation

smoot hawley tariff

• high tariffs

• worseded global trade

what were some federal reserve mistakes

• kept interset rates low in the 1920s

• raised ratesin 1928 reduced money supply wich worsed crash

overall

• business couldn’t sell their produces prices drops and proftis failed

• companies laid of workers unemployment rose fewer poeple affored goods

vicious cycle

• overproduction

• underconsumption

• layoffs

• less spending

• deeper depresssion

The great crash

• the stock market began to fall shaprly

• investors started panic selling their stocks

• banks and large investors tried to buy up stocks to stop the panic but it only delayed the crash

black tuesday 1929

• the panic returned even worse than before

• a record 16 million shares were sold in one day

• the market lost 30 billion

• many people lost their life savings market collapsed

overall the great depression

• banks failed

• business closed

• unemployment skyrocketed

• confidence in economy vanished

B hoover failled response

• asked businesses to keep wages high (failed)

reconstrution finace corportaion (RFC)

• loaned money to banks and railroads (too late)

hawley smoot tariff -

• raised rarrifs

• global trade collapsed

bank runs

• 9000 banks failed

• people lost savings

gold standard abandoned

FDR took us off gold to inflate currency

Mass uneployment and social impact

enemployment peaked at 25%

hoovervilles

shaytowns for homeless

employmnet discrimination

• african americans and latines fired first

• women faced hostility for working

First hundred days

the three Rs

relief

immediate help for the unemployment and poor

recovery

fix the economy and create jobs

reform

change laws to precent another depression

emergency banking act

reopened solvent banks

Federal emergency relieft act

direct aid to unemployment

Civilian Conservation Corps (CCC, 1933):

Jobs for young men in conservation.

Agricultural Adjustment Act (AAA, 1933):

Paid farmers to reduce production (ruled unconstitutional in 1936).

Social Security Act (1935):

Pensions for elderly, unemployment insurance.

- Gave monthly checks to older Americans (65+) who had worked and paid into the system

- Gave temporary payments to people who lost their jobs, helping them stay afloat while looking for work

- Aid to the Disabled and Poor Familie

New deal

CCC, WPA
- recovery (AAA NIRA)

• reform (social security)