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Happy Friday

Happy Friday. We have a QUIZ on Day 2 of the 1920s. Look over your notes and pay special attention to economic policy and causes of the stock market crash. Great Depression. Hoover to Roosevelt. Objectives.

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Happy Friday

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  1. Happy Friday • We have a QUIZ on Day 2 of the 1920s. • Look over your notes and pay special attention to economic policy and causes of the stock market crash.

  2. Great Depression Hoover to Roosevelt

  3. Objectives • Cite and explain evidence that led to the transition of the U.S. economy from laissez- faire capitalism to an increasingly regulated economy. • Critique the government‘s use of tariffs and trade agreements. • Evaluate deficit spending as a means of financing government programs.

  4. Should government provide a safety net for people when the economy fails them, and they cannot survive?

  5. What if there was no safety net for people at all?... Food Stamps Social Security

  6. What if there was no safety net for people at all?...

  7. When the Stock Market crashed in 1929 and the Great Depression set in…many people had nobody to rely on but themselves. The government did not have any of the programs it has today (Food Stamps, Social Security, Welfare, Medicare, Medicaid). You only had yourself to look after you and your family.

  8. Causes of the Great Depression • Easy Credit/Rising Personal debt • Speculation/Buying on Margin • Overproduction • Bank Runs

  9. Causes of the Depression Video • They mention some causes we don’t, there were MANY…we’re hitting the main ones

  10. Easy Credit/Rising personal debt People got easy credit to buy a lot of stuff (cars, appliances). When the market goes bad, they can’t repay their debts

  11. Speculation/Buying on Margin • People took big gambles on Wall Street hoping to get rich quick • People made investments on borrowed money (buying on margin)

  12. Overproduction • As supply goes up, demand goes down. This means prices fall. • This happened to farmers with their crops, it happened to the auto industry and industries that depended on it (steel, rubber, glass, etc.) Supply Demand/ Price

  13. Bank Runs • Banks depend on people putting their money into them…they use that money to loan out and make money • When the market started to fall, people panicked and withdrew their money…banks go broke. • By 1933 – 11,000 of the 25,000 banks nationwide had collapsed

  14. Clip from “It’s a Wonderful Life” Bank Run

  15. Herbert Hoover did very little… Great Depression stats Hoover’s Response • 25% unemployment (today we’re at around 9%) • The US lost a total of $30 billion the week of the stock market crash • Hawley-Smoot Tariff Act • Reconstruction Finance Corporation

  16. Hoover’s response Reconstruction Finance Corporation Hawley Smoot Tariff Act • Gave money to big businesses, railroads, insurance companies • Purpose: prosperity at the top would “trickle down” to the rest of the population • Puts a tariff in place • Taxes imported goods (stuff from foreign countries) so that foreign goods are more expensive. Encourages people to buy American products.

  17. Reconstruction Finance and Hawley Smoot Tariff basically do nothing for people… “Trickle-down Theory” really doesn’t work…

  18. People blame Hoover for their problems…

  19. Election of 1932…FDR promises a “New Deal” Says he will support people directly through relief, recovery and reform

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