Great Depression

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The Great Depression Causes and Recovery


Buying on Margin •

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

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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.

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


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