The Great Depression 1929-1939
by the sudden shock of the economy
The great depression was was worldwide
economic downturn that lasted a decade. It was
the longest, deepest and most widespread
depression of the 20th century. It begun in the
United Statesand quickly spread throughout
much of the world. During this time, many
people were out of work, hungry, and
homeless.
The Stock market crash
Oct 24, 1929 when the stock market crash
started and reach its grim peak on Oct 29 1929
also know as "Black Tuesday". Investors were
forced to sell their stocks at a loss, investors
take huge losses.
Margin Buying - investors would buy stocks on
borrowed money - if stocks fell they would find
themselves deep in debt.
Supply (seller) and Demand (buyer)
When the supply is greater than the
demand then it is more likely to deflate
the price and this will to
overproduction.
Inflation is when the price go up. Deflation is
when the price go down.
Th crash cost investors $30 billion, the
equivalent of $396 billion today. An that
terrified the the public because the crash cost
more than WWl.
Bank runs
Bank runs are the financial expression of pure
panic, occurring only in times when customers
simply dont trust banks to keep their money
safe.
 Banking panic, Everyone was terrified
that had been doing so well abruptly,
disintergrating around them. As a result
they wanted the comfort of having cold
cash in their hands and under their
mattresses.
 Americans flocked to banks and
withdrew cash en masse.
 Americans lost thier confidence in the
banking system, pulling out thier funds
and forcing the banks to sell off thier
assets.
 Business owners and investors could
not pay their loans leaving banks with
no income.
 Tight monetary policy Is the
management or political maneuvering
of nation's economy in the U.S. The
Federal reserve is responsible for
making monitary policy. The FED
typically sets the discounts and prime
interest rates for lending money in the
open market. Increasing the interest
rates is " tightening" the economy with
several intended effects in personal and
business environment.
 Ben Bernanke A past chairman of the
Federal Reserve (Govt), the Central
Bank helped create the depression
when it used " Tight monetary Policies"
when it should be done the opposit.
 Between 1930 and 1932 more than
5,000 U.S. banks failed.
Unemployment
The Great Depression affected all aspects of
society. By its height in 1933, unemployment
had risen from 3% to 25% of the nation’s
workforce. Wages for those who still had jobs
fell. U.S. Gross Domestic Product was cut in
half, from $103 billion to $55 billion, due partly
to deflation.
GDP - The most common indicator of economic
growth in the U.S.
31st President; Herbert Hoover
 He believes in Laissez-faire, a policy or
attitude of letting things take their own
course, without interfering; abstention
by governments from interfering in the
workings of the free market.
 Hoover argued that direct federal relief
would create vast bureaucracy, inflate
the federal budget, and undermine the
self-respect of people receiving aid.
 Rugged individualism the idea that
success comes from through individual
effort and private enterprise.
 Home Loan Bank Act 1932 provided
($10 Billion) money to savings banks,
building and loan associations, and
insurance companies for low interest
mortgages. The hope was that the act
would reduce foreclosures. He also
believed it would encourage
construction and boost employment.
 Smooth-hawley tariff was a law that
implemented protectionist trade
policies in the United States. Sponsored
by Senator Reed Smoot and
Representative Willis C. Hawley, it was
signed by President Herbert Hoover on
June 17, 1930. To protect domestic
industries and jobs, but it actually
worsened the issue.
 Many ended up living as homeless
“hobos.” Others moved to shantytowns
called “Hoovervilles," named after
President Herbert Hoover. Standing in
long lines at free soup was common.
32nd President; Franklin Delano Roosevelt
 In 1932, the country elected Franklin D.
Roosevelt as president. He promised to
create federal government programs to
end the Great Depression.
 Roosevelt’s program had three general
aims. 1) Relief to ease the plight of
citizens in economic distress. 2)
Recovery to restore the economy back
to health. 3) Reform to correct ills and
injustices in American society.
 He promised a “New Deal for the
American people”. The New Deal
included relief and recovery measures
to Banks, Farmers, Home owners, Direct
federal relief for the, unemployed, and
jobs. To revive the economy and
restore the confidence in U.S banks.
Dust-bowl
 It was the name given to the drought-
stricken Southern Plains region of the
United States, which suffered severe
dust storms during a dry period in the
1930s. As high winds and choking dust
swept the region from Texas to
Nebraska, people and livestock were
killed and crops failed across the entire
region.
 The Dust Bowl intensified the crushing
economic impacts of the Great
Depression and drove many farming
families on a desperate migration in
search of work and better living
conditions.
The Second New Deal

The second phase of the New Deal focused on

increasing worker protections and building
long-lasting financial security for Americans.

 Most famous program of 2nd New Deal

was the Social Security Act, which
required workers and employers to
contribute through a payroll tax, to the
Social Security trust fund. That fund, in
turn, makes monthly payments to
retirees over the age of 65, as well as to
the long-term disabled.

The depression ended only after the United

States entered World War II in 1941, when the
increased demand for wartime commodities
such as ships, tanks, and munitions gave the
U.S. economy the jump start it needed.