The Great Depression

1. Buying On Margin

1.1. Investors paid 10% of stocks value at time of purchase.

2. Panic Selling

2.1. Investors all tried to sell stocks at the same time and the bottom fell out of the market.

2.2. Economic Cycle- Purchase power went down with more unemployment and reduced productivity.

2.3. OverProduction- More goods then people to buy.

3. President Hoover's response

3.1. Voluntary Non - Coercive Cooperation where he gave tax breaks in return for private sector economic investment.

3.2. Hoover Moratorium - put a temporary stop to war debt & reparations payments.

3.3. Smoot Hawley-hoped to stimulate purchasing of U.S. goods. But Failed.

3.4. Other countries passed high tariffs and no foreign markets purchased American goods, so U.S. productivity decreased again.

4. The New Deal

4.1. A revolution in America - changed completely the way the gov't functions

4.2. Banking Holiday- banks shut down and subject to government inspection, allowed to open when "healthy"- people's confidence returned.

4.3. Liberty League - The Supreme Court overturned the NIRA & NRA, claiming that federal government was exceeding its authority (by interfering in state jurisdiction).

5. Crash

5.1. Oct. 29th 1929

5.2. Lasted until 1942

6. Stock Speculation

6.1. People would buy and sell stocks quickly, to make quick money.

6.2. Stock prices rose from $130 to $396 per share.

6.3. Stock Speculation hurt company's because they needed long term investments.

7. Uneven distribution of wealth-

7.1. 42% below poverty line.

7.2. most of other 58% fell into the middle class.

8. 1932 Election

8.1. 1 out of 4 was unemployed

8.2. national income was 50% of what it had been in 1929

8.3. Winner: Franklin Delano Roosevelt

9. Agrucultural Adhustment Act - passed in 1933 to aid formers

9.1. Food Stamp Act of 1939 - gave away surplus food to poor

9.2. Civilian Conservation Corps - in 1933 - set to establish work for young men (18-25)

9.3. National Youth Admin. (NYA) - created jobs for young people in urban areas

9.4. Social Security Act (1935)- This act typifies the Welfare State - unemployment insurance, old age pensions.