Great Depression

The Great DepressionCauses and Recovery

Buying on Margin

• Buying on Margin allows investors to multiply their returns when the market is good.

• If the market turns bad, Buying on Margin magnifies losses.

Run on the Banks

• All depositors rush to withdraw their money at the same time.

• Banks do not have all deposits at one time.

• Some people (80% or more) will not get their money.

International Debtors

• During WWI billions of dollars in loans given to European Allies.

• By the late 1920’s began defaulting on loans.

• Europeans raised tariffs on US imports decreasing the market for US goods.

Hoover’s Recovery Programs

• POUR - President’s Organization on Unemployment Relief.

• Federal Works Projects including the Hoover Dam.

• Moratorium on WWI debt repayment.

Hoover’s Recovery Programs

• RFC - Reconstruction Finance Corporation.

• $2 billion in loans to banks, insurance companies, railroads, state and local governments.

• Hawley - Smoot Tariff Act. Further weakened manufacturing industry.

Roosevelt’s Recovery Programs

• The New Deal - A series of Federal Government programs designed to provide direct aid to citizens.

New Deal Programs

• March 9, 1933 - National Bank Holiday.

• Emergency Banking Relief Act - Reorganized banks, prevented the hoarding of gold.

• March 12, 1933 First “Fireside Chat.”

More of FDR’s New Deal...

• AAA 1933 - Agricultural Adjustment Act.

• Paid farmers to reduce production.

More FDR’s New Deal...

• CCC - Civilian Conservation Corps. 1933

• PWA - Public Works Administration. 1933

• TVA - Tennessee Valley Authority

• Rural Electrification Administration.

Social Security Act

• 1935 - Originally intended as a supplement to personal retirement savings.

• Excluded farm workers, domestic workers, hospital and restaurant workers.