THE GREAT DEPRESSION 1928 Election u Herbert Hoover

THE GREAT DEPRESSION

1928 Election u Herbert Hoover (Republican) won u He wanted to limit the role of government in the economy. Promised prosperity u “A chicken in every pot and a car in every garage. ”

The Stock Market Crash u u Stock prices soared in the late 20's, but then suddenly plummeted. Causes 1. Over speculation – People were buying and selling quickly to make a quick profit – Stocks are meant to be long term investments – This pushed the prices of stock far above their actual value u u 2. Buying on the margin (People bought stock on credit) 3. Too much easy credit (People going into debt)

Black Thursday & Black Tuesday (Oct. 24 & Oct 29, 1929) u u On Thursday, many investors got nervous about rising interest rates and began selling off lots of shares. When stock prices fell sharply, other investors panicked and sold off their stock, making the situation even worse. Losses were estimated at between $6 -9 billion. With our financial markets such a mess, The Great Depression had begun

LONG-TERM CAUSES OF THE GREAT DEPRESSION. Too many countries owed the US money (and couldn’t pay). u 1 u Remember, Europe had been experiencing a depression since after WWI

2. Uneven distribution of wealth u Businesses were making high profits, but often kept wages low, so there weren’t enough people who could afford to buy what was produced (and thus boost the economy)

3. Too much easy credit

4. Overproduction in farming and manufacturing

5. Poorly managed banks u They couldn’t pay back money to hundreds of patrons who made a “run on the bank” to withdraw their savings when the market crashed

6. The Hawley-Smoot Tariff u Highest tariff rates in history. Made economic situation worse because Europe raised their tariffs in retaliation. Trade suffered worldwide.

EFFECTS OF THE DEPRESSION 1. 1/4 of banks closed down

2. Many businesses forced to close

3. Widespread unemployment & poverty u u 1/4 of Americans unemployed People did what they could to get by, whether it was selling apples or waiting around with dozens of others in hopes of getting picked for a day job

4. Hunger & Malnutrition u u Men & women waited in breadlines sponsored by charitable organizations Some found themselves fighting over garbage

5. Homelessness u u Many people lived in makeshift shelters built out of boxes and scraps called shantytowns. Those who blamed the president for the Depression nicknamed them “Hoovervilles”.

6. Farm foreclosures u Many had to leave the land they’d worked on their whole lives (or that had been in the family for generations)

The Dust Bowl u Making things worse for western farmers was The Dust Bowl. Land on the Great Plains was overgrazed and the soil was depleted. Eventually the soil got so dry that in dry years fierce dust storms became frequent, ruining crops and killing livestock.

7. Family Changes u u u Marriage rate dropped (didn’t marry if you had no job to provide for family) Birthrates dropped because of lower marriage rate More women worked out of necessity to provide for the family People saved everything because you had to make do with less Neighbors and families often pulled together to help each other Others became depressed and felt worthless – Suicides increased 28% between 1929 and 1932

GREAT DEPRESSION Review Questions 2. Who was President of the U. S. when the Depression began? What event “kicked off” the Depression? 3. List any 3 long-term causes of the Depression 4. List any 3 effects of the Depression 5. What were the shanty-towns around the country nicknamed? What fraction of Americans was unemployed during this time? When dirt storms messed up farms in the Midwest, the region came to be known as the 1. 6. 7.

Great Depression. Cause & Effect CAUSES u 1. Farmers were producing too much grain u 2. Factories produced more goods than they could sell u 3. It was very easy to get credit in the 20’s u 4. The U. S. raised our tariff rates a lot u 5. The stock market crashed u 6. Large numbers of nervous Americans went to their banks to withdraw all their money…at the same time u 7. Many businesses had to shut down u 8. Many Americans couldn’t afford to pay their bills u 9. Many young men didn’t feel like they could make enough money to provide for more than just themselves u 10. Some Americans lost their homes or were evicted from their apartments

HOOVER AND THE GREAT DEPRESSION u u u Hoover didn’t think the government should interfere in the freeenterprise system; believed that people would help themselves (rugged individualism) Thought government handouts would reduce people’s self respect and cause debt. He encouraged lots of volunteerism, but many organizations lacked the resources to do much

u Some people organized community chests (private welfare funds to help needy neighbors). u The Red Cross and Salvation Army were very active

Hoover’s Programs u u u Believed in the “Trickle Down” theory- Spending at the top would make its way down to the people (instead of giving them $ directly) He did sponsor a few public works programs (like Hoover Dam), and tried to buy up some of the surplus farm products and provide farm loans By 1932, Hoover was extremely unpopular, but he believed his policies of rugged individualism and limited government involvement were best for the long-term

The Bonus Army u u In 1924, a law had been passed to give WWI veterans an insurance policy (bonus). They were to receive it before 1945. When veterans decided they needed it to help themselves out in 1932, 15, 000 vets marched on Washington, camping out on the grass and conducting military drills.

u u When many protesters remained after Congress rejected the latest bonus bill, Hoover’s response was to order in the regular army to remove them, using tanks and tear gas. Many were injured. The public was horrified, and Hoover’s popularity dropped even more.

GREAT DEPRESSION Review Questions 2. Who was President of the U. S. when the Depression began? What event “kicked off” the Depression? 3. List any 3 long-term causes of the Depression 4. List any 3 effects of the Depression What were the shanty-towns around the country nickname What fraction of Americans was unemployed during this time? When dirt storms messed up farms in the Midwest, the region came to be known as what? 1. 5. 6. 7.

F. D. R. u u u Election of 1932 - Hoover was so unpopular, it was easy for Franklin Delano Roosevelt (FDR), the democratic candidate, to win. FDR was a distant cousin of Teddy Roosevelt, and a progressive socialist He was aware of the nation’s problems, but remained optimistic. “The only thing we have to fear is fear itself. ” Believed in a “Pump Priming” approach- give direct aid to the needy and the whole country will benefit.

THE NEW DEAL u The name for FDR’s recovery plan was the New Deal – It emphasized the 3 R’s- Relief, Recovery, & Reform. u The Hundred Days- During his first 100 days in office, Roosevelt pushed through a great many programs to help people out. – The congress at that time was nicknamed the “Rubber Stamp Congress” because they basically signed off on anything he proposed

The Bank Holiday u u Shut down all banks and only reopened reliable ones. People regained confidence in banks and the govt. Roosevelt discussed the bank problem on the radio in the first of his famous fireside chats (Roosevelt would use the radio frequently to share his plans with the American public).

JOB PROGRAMS OF THE NEW DEAL u u Initially, the government gave out direct relief to families, but many Americans preferred a “hand up, not a handout”, so federal programs shifted to employment programs. Civilian Conservation Corps (CCC) - First relief program. People 18 -25 planted trees, built dams, created trails and campgrounds, and did other environmental projects.

Tennessee Valley Authority (TVA) u Expanded electrical power, controlled floods, replanted forests, practiced soil conservation, and built recreational facilities. Other projects combated illiteracy and malnutrition throughout the rural South.

Public Works Administration (PWA) Built roads, bridges, dams, power plants, and other public buildings.

OTHER LEGISLATION OF THE NEW DEAL National Industrial Recovery Act (NIRA) u Created the National Recovery Administration (NRA), which encouraged businesses to set prices, establish minimum wages, and limit hours. u Later ruled unconstitutional because it violated free enterprise

Agricultural Adjustment Act (AAA) u u u Provided farm subsidies acquired from taxing food processing businesses. Decided how much land/livestock the country needed each year. Mainly, it paid farmers NOT to plant (so prices could rise). Also declared unconstitutional

Federal Deposit Insurance Corporation (FDIC) u Stabilized the banking system; insured individual bank deposits up to $5, 000

Federal Housing Administration (FHA) u Helped the needy afford houses through low down-payment loans.

Social Security Act u u Provided unemployment compensation, pensions for retired workers, and payments to widows, the elderly, and the disabled. Today these provisions still remain, as well as subsidies for school lunches and other social welfare programs.

National Labor Relations Act (Wagner Act) Most important law in American labor history. u Reaffirmed labor’s right to organize, allowed govt. to intervene in unfair labor practices. u Unions were finally beginning to make some gains, and membership grew u

Revenue Act of 1935 (Wealth Tax Act) u Raised taxes on the wealthy again

Election of 1936 u FDR won reelection in 1936 easily. He pledged to continue the New Deal, and had majorities in Congress to help him do so.

FDR & THE SUPREME COURT u u u Roosevelt was often resisted by the “Nine Old Men” of the Supreme Court who kept declaring his legislation unconstitutional. He tried to pass laws to allow him to replace judges over 70 with new ones (or to add several new seats to the court filled with his supporters ) What he really wanted was to get rid of conservative judges and put in his own guys

“Court Packing” Plan rejected u Even a largely Democratic Congress recognized the slippery slope of doing this, and defeated FDR’s “Court Packing” plan. u This damaged FDR’s relationship with Congress and cost him some of his popular support. u As it turned out, by 1945, 8 of the 9 were Roosevelt nominees anyway!

IMPACT OF THE NEW DEAL 1. 2. 3. 4. Renewed faith in democracy/capitalism Gave people a sense of self-worth during hard times Extended power of the federal government, especially the president Consistent use of deficit spending more money than the govt. makes.

IMPACT OF THE NEW DEAL 5. 6. 7. 8. Establishment of the welfare state ( The govt. being responsible for the economic security of its people) through social programs. People became more dependant on the government to take care of them Improvements for labor. Conservation became a permanent part of politics. 90% of rural areas (the South in particular) acquired plumbing and electricity

Review Activity Which does not belong? 7. PWA Bank Holiday AAA Overproduction Bonus Army Debt spending Veterans FDA Social Security CCC Easy Credit Fireside chats Govt. dependency Retirees TVA Trickle Down NIRA Homelessness New Deal Electric power The Disabled 8. Shirley Temple Rudolph Valentino Clark Gable 1. 2. 3. 4. 5. 6.