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Unit 8 The Great Depression Mrs. Francis

The Great DepressionSocial Studies 8

Mrs. Francis

Name: ____________________________

Essential Question: Was the New Deal an effective response to the depression?

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The Crash and Its After – EffectsDirections: Read the following selection, and then answer the questions.

During the 1920s, American production soared. New machines and the assembly line made it possible for companies to make many more products than ever before. Profits in these businesses increased by 80 percent. Profits in banking increased by 150 percent. Millions of people, hearing stories about investors becoming millionaires almost overnight, rushed to invest their life savings in the stock market.

Stocks are shares of ownership in a corporation. The price of a stock depends on several factors: the number of share available, the number of people who want to buy the stock, and the price that people are willing to pay for it. If someone buys stock and then later, many others want to buy it, the investor can sell it at a higher price than was originally paid for it. If people continue to want to buy, an owner can make even greater profits. This is what happened during the 1920s – speculation (gambling) on the stock market ran wild.

Many Americans were able to speculate due to a practice known as a “broker’s loan” or “buying on margin.” A broker is someone who buys and sells stock for customers. During the 1920s, brokers sold stock for only 10 percent of the market price. The remaining 90 percent was considered a loan from the broker. In this way, a customer could buy $1000 worth of stock with only $100. He would owe the broker the remaining $900. When he sold the stock, he would repay the broker the mney he owed and keep the remaining money as profit.

This system worked well as long as stock prices and demand for stocks continued to rise, as they did throughout most of the 1920s. But on October 24, 1929, stock prices dropped sharply. Panic spread throughout brokers’ offices across the nation. Millions of shares of stock were suddenly dumped on the market by brokers hoping to recoup some of the money they had loaned to investors. Everyone wanted to sell, few wanted to buy. Prices dropped even more. Soon the entire economic structure of the nation was near collapse.

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Speculation by individuals and businesses was not the only cause of the stock market crash, but it was a major contributing factor. Many other factors affected the extent of the crash and the Great Depression that followed. These included:

Worldwide economic problems followed World War I. Sales of American products in foreign nations slowed after World War

I. American industry made more products than the American public was

able to purchase. Automation increased unemployment Buying on installment (buying on credit) by individuals and businesses

increased during the 1920s Many corporations released misleading or false information to their

stockholders. Many people borrowed money to buy stock. Banks used the money deposited in their accounts to buy stock. Savings accounts were not insured. If a bank failed, all the depositors

lost their money. Farmers grew more corps than the public consumed.

Questions

1. Identify two economically unsound business practices used by corporations during the 1920s.

2. Why were many brokers financially ruined by the stock market crash?

3. How would agricultural surpluses affect farm prices?

4. Identify two causes of unemployment during the Depression.

5. How would prices be affected by a depression?

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Aim:

Do Now:

How does the stock market work?

Why do people buy stocks?

Why did the Stock Market crash?

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Who did it affect?

The Stock Market Crash: Before and After

The newspaper clippings below announce events that in many people’s minds caused the Great Depression. Read the clippings. Also read the statements that describe

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Questions:

1. What does this reading tell us about the stock market crash?

2. How can you explain the attitudes after the crash?

3. How do you think the stock market crash affected the following groups: a) workers, b) business people, c) students, and d) the elderly?

Stock Market Crash Diagram

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Reasons for Crash


1. Based on the diagram, what caused the depression?

2. What does the diagram tell us about the depression?

3. What do you think could have been done to prevent the depression, once the stock market crashed?

Aim: How did events of the 1920s contribute to the Great Depression?Aim: How did events of the 1920s contribute to the Great Depression?

Do Now: What is a depression? _________________________________Do Now: What is a depression? _________________________________

HW: HW:

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Causes of the Great Depression

As your classmates read aloud, follow the play below, and then complete the exercise that follows:

Moderator: Everything was so rosy just a few short months ago, and yet today the United States finds itself facing a horrible economic depression. We’ve invited the nations five top economists here to ask them, “How did this all come about?”

Economist #1: Big business caused the Depression. Sales were good, and companies expected sales to get even better. So companies overproduced. New techniques and machines made production more efficient. Unfortunately, these techniques and machines replaced workers who were no longer needed. Trouble came when sales began to slow down. Then more workers had to be laid off. The laid off workers couldn’t purchase the goods produced in such large numbers. This led to more unemployment.

Economist #2: The country as a whole was becoming richer, but most of the wealth remained in the hands of a few people. While the wealthy could afford to pay for cars and appliances, the average wage earner could not. The country would have been much better off if the wealth had spread to more people.

Economist #3: Those who gambled on the stock market were at fault. Many people took chances investing their money in companies that were poor risks. Such worthless stocks were sold and resold, so stock prices for worthless companies went higher and higher. Banks and companies that purchased large amounts of these worthless stocks were forced to close, resulting in losses of millions of dollars and layoffs.

Economist #4: The consumer must be blamed as well. People used the popular installment plan to buy refrigerators, cars, radios, furniture, and clothing when they didn’t have the savings to pay for them. When people lost their jobs, not only could they not pay for rent or food, but they also struggled to keep up with their payments for the goods they had purchased on credit. Also, people bought stocks with a down payment of only 10% of the purchase price. When the stock prices dropped, they

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lost all the money they had invested, and even lost money on their worthless loans.

Economist #5: The government did little to stop people from investing in worthless stocks. It should have stopped the practice of buying stocks with only 10% down. The government should have kept a closer eye on banks that were investing depositors’ money in worthless stocks. By keeping tariffs (taxes on goods from other countries) high, trade between countries was hurt severely. The government should have lowered these tariffs.

Causes of the Great Depression

ECONOMIST #1

ECONOMIST #2

ECONOMIST #3

ECONOMIST #4

ECONOMIST #5

1. What do most of the economists theories have in common?

2. Why was the stock market looked upon as gambling?

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3. Which economist’s theory do you agree with the most? Why?

4. Which economist’s theory do you disagree with the most? Why?

The F.D.R. Inaugural Address

In his inaugural speech in 1933, President Franklin D. Roosevelt addressed the problems of the Depression. After reading the excerpt below, complete the exercise that follows.

Exercise

In this column, make a list of problems that Roosevelt says have been caused by the Depression.

In this column, describe Roosevelt’s proposed solutions to the problems. If no solution is proposed, write N/A

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(not available)1.

2.

3.

4.

5.

Topic: Great DepressionTopic: Great Depression Aim: How did Hoover respond to the problems caused by the Great Aim: How did Hoover respond to the problems caused by the Great

Depression?Depression? Do Now: Explain the impact of buying on margin had on the economy.Do Now: Explain the impact of buying on margin had on the economy.

Rural LifeRural Life ____________________________________________________________________________________________________________________ 1930s – ____________________________________________________1930s – ____________________________________________________ ______________________________________________________________________________________________________________________________________________________

__________________________________________________________________________________ The “Grapes of Wrath” – _________________________________________The “Grapes of Wrath” – _________________________________________

Hoover’s Early ActionsHoover’s Early Actions Federal Farm Board (1929) – ______________________________________Federal Farm Board (1929) – ______________________________________ ______________________________________________________________________________________________________________________________________________________

__________________________________________________________________________________

Hoover’s actions to halt the DepressionHoover’s actions to halt the Depression Restore confidence – ___________________________________________Restore confidence – ___________________________________________ ____________________________________________________________________________________________________________________

__________________________________________________________ Reconstruction Finance Corporation (1932)- Reconstruction Finance Corporation (1932)-

____________________________________________________________________________________________________________________ Presidents emergency committee –Presidents emergency committee –

____________________________________________________________________________________________________________________

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Hoover and the Bonus ArmyHoover and the Bonus Army ______________________________________________________________________________________________________________________________________________________

__________________________________________________________________________________

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________ Two soldiers and one child were killed.Two soldiers and one child were killed.

Urban LifeUrban Life ____________________________________________________________________________________________________________________

__________________________________________________________ ____________________________________________________________________________________________________________________

__________________________________________________________

Culture of the Great DepressionCulture of the Great Depression Inexpensive leisure activities became popular: Inexpensive leisure activities became popular:

____________________________________________________________________________________________________________________ 60-90 million people went to the movies each week: King Kong, Gone 60-90 million people went to the movies each week: King Kong, Gone

with the Wind, The Wizard of Oz.with the Wind, The Wizard of Oz. Listen to the radio – comedy, soap operas, jazz.Listen to the radio – comedy, soap operas, jazz.

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The Falling Wages of Farm Workers

Hundreds of thousands of people who fled the dust bowl traveled to the West Coast in search of work. Many became migrant farm workers. They planted, weeded, and harvested fruits and vegetables in season. In 1935, university professor Paul Taylor interviewed migrant workers to learn more about the lives of these new immigrants to the West. He wrote this report:

…They travel in old automobiles and light trucks, some of them homemade, and frequently with trailers behind. All their worldly possessions are piles on the car and covered with old canvas or ragged bedding…Children, aunts, grandmothers, and a dog are jammed into the car, stretching its capacity incredibly…

Most of the refugees are in obvious distress. Clothing is sometimes neat and in good condition, particularly if the emigrants left last fall, came via Arizona, and made a little money in the cotton harvest here. But sometimes it is literally in tatters…

…They are largely farmers who have been carrying on agriculture in the family pattern which has been so long regarded as the great source of stability in our nation. Once of them, recently picking fruit with his family in the Sacramento Valley, told succinctly this story of his decline from farmer to farm laborer: 1927 – made $7,000 as a cotton farmer in Texas; 1928 – broke even; 1929 – went in the hole; 1930 – deeper; 1931 – lost everything; 1932 – hit the road; 1935 – serving the farmers of California as a “fruit tramp.”

…The life of the migrants is hard. It is not a succession of vacation camping trips. Employment is intermittent, jobs are often precarious, and annual incomes low. “We’d like to work and not just set around. I’d rather do anything but set around, but they just ain’t no chance here in California, seems like, “said a Kern County migrant last spring. “Livin”? It’s kind of sorry. You work a while, then lay up a little, then go broke, and then move.” “You wait for work two weeks,” then “fight like flies for the work.” “You eat it up faster than you can make it…”

The huge population explosion of migrants meant that farming areas of California had too many workers. As a result, growers could ignore demands for higher wages. They knew that they could always find someone to work at a lower rate. By the end of the 1930’s, California farms were producing records

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crops. For the most part, their owners were not feeling the pinch of the Depression. Farm workers, on the other hand, saw their wages drop 59 percent from their high in the 1920.

1. What happened to the wages of farm workers during the Depression?

2. Do you think the victims of the Dust Bowl were better off leaving their homes and moving west? Why or why not?

Causes of the Dust Bowl

Across the southern Plains, the storms kept coming. Day after day, the clouds of dirt rolled in. Everything in their path turned black. A vast area, from Texas to the Dakotas, earned a dreadful new nickname – the Dust Bowl.

Why did the Dust Bowl occur where and when it did? Scientists point ot several possible causes.

For thousands of years, tall grasses had covered the Plains. Their complex root systems held the soil in place. Then, in the early 1900s, farmers began using a new technology on the Plains. New kinds of plows pulled by tractors, cut deep into the soil and ripped up the root systems that had been in place for centuries. The wheat and other crops that farmers planted did not hold the soil in the same way. By the 193os, much of the soil had become dry and loose.

At about the same time, the Plains became drier than normal. Starting in 1931, a severe drought struck the Plains. When strong winds whipped through the region, they blew the dry, loose soil away.

The winds blew off and on for 10 years. Between 1932 and 1939, an average of fifty storms a year howled

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across the Plains. One 1935 storm carried twice as much soil as had been dug to make the Panama Canal!

The federal government sent aid to people in the Dust Bowl area. The Soil Conservation Service taught farmers ways to conserve and protect the soil. It encouraged them to plant grasses and to prevent overgrazing of livestock. The government also planted more than 18,500 miles of trees to break the force of the winds. By 1936, the work to undo the damage of the Dust Bowl was well underway.

Questions:

1. What human activities helped to bring on the Dust Bowl?

2. What steps were taken to undo the damage of the Dust Bowl?

The political cartoon and song lyrics below tell us about the depression from the point of view of the average American. Study both, and then answer the questions that follow:

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Brother Can You Spare a Dime?They used to tell me I was building a dream, And so I followed the mob –When there was earth to plough or guns to bearI was always there-right on the job.They used to tell me I was building a dreamWith peace and glory ahead – Why should I be standing in line?Just waiting for bread?

Once I built a railroad, made it run, Made it race against time.Once I built a railroad,Now it’s done – Brother, can you spare me a dime?Once I built a tower, to the sun.Brick and rivet and lime,Once I built a tower,Now it’s done –Brother, can you spare me a dime?

Milton Meltzer


1. Where do the men in the cartoon live? Why do they live there? ________________________________________________________________________________________________________________

2. Where are the men in the cartoon shocked and surprised by the article in the newspaper? ___________________________________________________________________________________________

3. What kinds of work did the person in the song do in the past? What is he doing now?_______________________________________________________________________________________________

4. What group of Americans des the person in the song represent? Who or what are the “They” that he refers to? Who or what is the brother? _________________________________________________

____________________________________________________________________________________

5. Based on the song and cartoon, how were Americans feeling about the depression and Hoover’s handling of it by 1932? ______________________________________________________________

____________________________________________________________________________________

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Aim: How did FDR plan to help the nation out of the Depression?Do Now: What is the significance of presidential advisors?______________________________________________________________________________HW:

RELIEF __________________________________________________________ __________________________________________________________ “Make work projects” EXAMPLES: __________________________________________________________

RECOVERY __________________________________________________________ __________________________________________________________ “Prime the pump” – ____________________________________________ Examples: __________________________________________________ AAA – _____________________________________________________

REFORM __________________________________________________________ Programs put in place to prevent another depression.Examples: FDIC: _____________________________________________________ SEC: ______________________________________________________ Social Securities Act: ___________________________________________ NLRB: _____________________________________________________ TVA: ______________________________________________________

Name the New Deal Act or Agency that would have helped these people. Many old people could not support themselves. ________________________ Mike Wallace lost his life savings in a bank that failed.

____________________

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Programs of the New Deal

The following chart describes some of the government programs established by Franklin D. Roosevelt. These policies became known as Roosevelt’s “New Deal.”

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Exercise

Use the chart of New Deal programs to fill in the boxes below.

Agencies to help workers

Agencies to help consumers

Agencies to help business

Two important New Deal programs were the Works Progress Administration (WPA) and the Civil Works Administration (CWA). After you have finished reading about each program, complete the exercise that follow.

The Works Progress Administration (WPA)

Two weeks have gone by and reports from the 3,000 counties of the nation show upwards of two million men employed. A grand total of four million will be employed by December 15.

In Texas, one city is extending its sewer system for several miles. In Kansas, the long –neglected and much-used market roads are being widened and bridges are being built. In all parts of the nation, projects in sanitation are being worked on, such as malaria control, sanitary toilet construction, and tick control. The rural school houses of entire states are being repaired and rebuilt. Men and women are at work on thousands of national, state, and local projects that are necessary and useful to the nation and to the community.

The Civil Works Administration (CWA)

The president was persuaded that the situation was so desperate that everybody in the country who wanted a job had to have a job. Even with very low pay. Almost overnight, he set up the Civil Works Administration. They set up this CWA very hurriedly. There were no tests. Any guy could

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just walk into the county office – they were set up all over the country – and get a job. Leaf raking, cleaning up libraries, painting the town hall. Within a period of 60 days, four million people were put to work.

Exercise

Study the cartoon carefully. Remember that Uncle Sam represents the United States. When you have finished studying the cartoon, answer the questions below.

1. Why is President Roosevelt (F.D.R.) pictured as a doctor?2. What do the medicines represent? Using the chart, make a list of

what each of the following “Alphabet Agencies” stands for:

CCC ______________________________________________

AAA______________________________________________

CWA______________________________________________

NRA______________________________________________

PWA______________________________________________

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FDIC______________________________________________

FERA______________________________________________

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The Social Security Act

One of Franklin D. Roosevelt’s key reform measures was the Social Security Act of 1935. Although it did not include all workers, by 1937, nearly 36 million retired workers were entitled under the law to old-age “insurance,” in the form of monthly pension, and 21 million workers were entitled to unemployment benefits. Read the Social Security Act, summarized below,

and complete the exercise.

Exercise

In the space below, explain briefly how the Social Security Act of 1935 tried to help the following groups of Americans:

1. Elderly, retired workers: ______________________________________________________________________________________________________________

2. Unemployed workers: ______________________________________________________________________________________________________________

3. People with disabilities: ______________________________________________________________________________________________________________

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Directions: Name the New Deal Act or Agency which would have helped these people.

1. Jane Ryan worked 7 days a week, 12 hours a day for a paper

company.

2. Many old people could not support themselves.

3. John Scott was sold worthless stock

4. John Benson wants his factory to have a union.

5. James Jones was paid only 10 cents per hour.

6. Carol Smith could not afford the rents which apartments were

asking.

7. Many young people could not find work.

8. Farmer’s overproduction caused prices to drop.

9. Young people worked on Conservation projects.

10. Farmers in the Midwest could not afford electric rates.

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Topic: The New DealAim: How did the New Deal help Americans?Do Now: Identify 2 acts that FDR proposed____________________________________________________________________________________________________________________________________________________________HW:

The Hundred Days• __________________________________________________________• __________________________________________________________

__________________________________________________________The New Deal’s 3 R’sEffects on the American People• Roosevelt as a masterful communicator:________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Review for Quiz• Identify factors that contributed to the agricultural surplus.• __________________________________________________________• How did Hoover deal with the Depression?• __________________________________________________________• What caused the Great Depression?

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Topic: The New Deal

Directions: Using your notes, answer the following questions.

1. How did FDR restore faith in the banks?

2. What was the Emergency Banking Relief Act?

3. Why were fireside chats important?

4. What were the main goals of the New Deal?

5. What programs provided relief for the jobless?

6. What help did the New Deal give for industry?

7. How did the New Deal help farmers?

8. What was the TVA? Why was it important?

9. How was the New Deal going to prevent another depression?

10. What was the FDIC? Why was it set up?

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Topic: New DealAim: Was the New Deal the answer to America’s problems?Do Now: Define collective bargaining.______________________________________________________________________________HW:

Critics of the New Deal• Senator Huey Long first supported FDR. He soon believed FDR had not

gone far enough to help the poor.• “Share Our Wealth” ___________________________________________• __________________________________________________________

___________________________________________________________________________

• Francis Townsend had a plan to help the older citizens.• __________________________________________________________

___________________________________________________________________________

• Charles Coughlin also felt the New Deal did not go far enough.• __________________________________________________________

The Second New Deal• In his second inaugural speech he stated that 1/3 of the nation was “ill-

housed, ill-clad, and ill-nourished.”• ___________________________________________________________________________

_________________________________________1935 Legislation • ___________________________________________________________________________

_________________________________________• Conservative businessmen challenged FDR’s programs.• The Supreme Court ruled the AAA invalid.

____________________________________________________________________________________________________________________

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Roosevelt and the Supreme Court• Roosevelt felt that the Supreme Court was going to challenge all of his

New Deal programs. • ___________________________________________________________________________

_________________________________________• In 1936, the court began invalidating many of the programs.

Court Packing• __________________________________________________________• He would be allowed to appoint a justice for every justice who did not

retire by age 70. The maximum he would add would be 6. • ___________________________________________________________________________

_________________________________________The Effect of the New Deal• ___________________________________________________________________________

_________________________________________• ___________________________________________________________________________

_________________________________________• ___________________________________________________________________________

_________________________________________

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The programs of the new Deal were popular subjects of political writers and

cartoonists during the 1930s. The cartoon below by Carey Orr appeared in

the Chicago Tribune in 1935. Study the cartoon carefully and answer the

questions that follow.

1. What does the “Trojan horse” in the cartoon represent?

2. How would you describe the cartoonist’s opinion of the New Deal?

3. How do you think a supporter of the New Deal would criticize the

cartoon?

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AIM: What do we need to study?HW: Study for test

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1. Which cause of the New Deal was the most serious problem?

2. What effect of the New Deal was most important? Why?

3. Least important?

4. Has the New Deal had a positive or negative effect on the US today? Explain?

Causes

Great Depression deepens Banking system nears collapse Millions of people are jobless Many businesses are bankrupt FDR becomes President

Effects

Role of government in the economy increases

Social Security gives pensions to retired people

People who lose their jobs can receive money from unemployment insurance

Savings accounts in banks are insured by government

Government pays for building projects, such as highways, schools and dams

Effects Today

Increased government spending contributes to national debt

Congress debates how to reform Social Security system

People disagree about proper size of government


Describe the conditions of a depression __________________________________________________________ __________________________________________________________ __________________________________________________________Describe how Hoover dealt with the depression. “Prosperity around the corner” __________________________________________________________ __________________________________________________________Causes and Effects Causes: __________________________________________________________ __________________________________________________________ __________________________________________________________ Effect: __________________________________________________________Identify Terms Bonus Army:

____________________________________________________________________________________________________________________

Dust Bowl: Midwest – ____________________________________________________________________________________________________________________

Hoovervilles: __________________________________________________________ Brain Trust: __________________________________________________________FDR’s plan ___________________________________________________________________________

_______ Includes: Congress to pass a wide range of relief legislation Identify and Describe AAA – Agricultural adjustment administration –

__________________________________________________________ TVA – Tennessee Valley Authority -

____________________________________________________________________________________________________________________

FDIC- Federal Deposit Insurance Corporation –____________________________________________________________________________________________________________________

Social Security – ____________________________________________________________________________________________________________________

CCC – Civilian Conservation Corp – provided jobs to young men to plant trees, build bridges and parks, and set up flood control projects.

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WPA- Works Progress Administration – ____________________________________________________________________________________________________________________

Bank holiday – FDR closed the nation’s banks by declaring a bank holiday in order to stop the collapse of the national banking system.

Wagner Act – guaranteed labor the right to form unions and to practice collective bargaining. __________________________________________________________

Packing the Court Plan ___________________________________________________________________________

_________________________________________Business leaders opposed to New Deal ___________________________________________________________________________

_______ – too much government involvementMeasures still used today __________________________________________________________ __________________________________________________________ __________________________________________________________Essay Be able to describe 2 reform measures. Create an Outline to include necessary information.

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