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The Great Depression

1929-1940s. The Great Depression. Before the Bubble Burst. Economy doing very well after WWI for the US Laissez Faire - minimal government interference and regulation The game was working for almost everyone, so why change the rules??? Consumers buying goods on “credit”

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The Great Depression

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  1. 1929-1940s The Great Depression

  2. Before the Bubble Burst • Economy doing very well after WWI for the US • Laissez Faire- minimal government interference and regulation • The game was working for almost everyone, so why change the rules??? • Consumers buying goods on “credit” • A buy now pay later set up • Stocks also bought like this • People assumed that prices would always go up. But they never stay up forever in capitalism

  3. The Bubble Pops • As we talked about in the Industrial Revolution, wages were still kept low to make more profits for businesses. • This meant people had less money to buy the goods, and bought more on credit. • Now not enough money is in the system • People tried to sell off their stocks before they lost their value, but too many did it at one time…

  4. The Stock Market Crashes: October, 1929 • Over $30 Billion was lost in less than two weeks thanks to all of the stock being sold so quickly. • Nobody would buy and banks didn’t have any money to lend out to borrowers • Most people lost their entire life savings in a day Everyone tried to pull their money out of the bank before it was too late, but most were unsuccessful

  5. Plans to Recover • People lost their jobs at unprecedented rates since companies couldn’t afford to keep them • President Herbert Hoover tried to keep everyone calm and invest in public works, but it failed • It was worse than anyone knew, the Great Depression was here to stay for awhile

  6. The Great Depression • Depression: Long-term downturn in the economy • Stats of the Great Depression • 25% unemployment (Today- 7.9%) • Foreign Trade decreased by 70% • GNP dropped 33% • Gross National Product: how much a country produces in a year • Stock market recovered, but most Americans did not • Whole world affected, especially nations still trying to recover from World War I

  7. Soup Lines of the Depression

  8. Franklin D. Roosevelt • Elected in 1932, FDR comes in with a plan to help the nation • Uses “fireside chats” to boost morale (radio) • “Nothing to fear but fear itself” • Has a “New Deal” to help the economy • New Deal Programs had 3 goals • Immediate Relief for the needy • Economic Recovery • Prevent this from happening again Fireside Chat

  9. New Deal Programs- To Get people to Work!!!

  10. Feeling the effects today • Social Security began in 1935 • While you work, you pay a little bit to help support the elderly, handicapped and children. • The idea is that when you are older you’ll benefit and the system keeps paying for itself • This money is called a pension • Unemployment insurance set up if you lose your job to help you get back on your feet

  11. Farming during the Depression • Farmers were struggling to pay off loans and make ends meet. • 1/3 farmers was losing their land and $$ • Then a drought came in 1938 known as the “Dust Bowl” • Soil conditions already bad, this made it worse

  12. Prevention for the future • FDR made new regulations for banks • Federal Deposit Insurance Corporation • The FDIC made sure better investments were made • Also protected people’s accounts with insurance

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