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.
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Banks do not have all deposits at one time.
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Some people (80% or more) will not get their money.
International Debtors •
During WWI billions of dollars in loans given to European Allies.
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By the late 1920’s began defaulting on loans.
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Europeans raised tariffs on US imports decreasing the market for US goods.
Hoover’s Recovery Programs •
POUR - President’s Organization on Unemployment Relief.
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Federal Works Projects including the Hoover Dam.
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Moratorium on WWI debt repayment.
Hoover’s Recovery Programs
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RFC - Reconstruction Finance Corporation.
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$2 billion in loans to banks, insurance companies, railroads, state and local governments.
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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.
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Emergency Banking Relief Act - Reorganized banks, prevented the hoarding of gold.
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March 12, 1933 First “Fireside Chat.”
More of FDR’s New Deal... •
AAA 1933 - Agricultural Adjustment Act.
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Paid farmers to reduce production.
More FDR’s New Deal...
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CCC - Civilian Conservation Corps. 1933
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PWA - Public Works Administration. 1933
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TVA - Tennessee Valley Authority
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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.