Transcript The Great Depression & The New Deal

The Great Depression &
The New Deal
Economic Troubles of the 1920s
• Early twenties were roaring!
• Late twenties saw the gap between the
rich and the poor grow wider.
• Industries were struggling: Railroads,
Textiles, Steel, Housing.
• Farming suffered the most!
– Demand for goods decreased after the war.
– Farmers went into huge debts.
Consumers Have Less Money
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Americans were buying less.
Rising prices.
Stagnant wages.
Over-buying on credit (installment plans).
Rising debt.
Herbert Hoover – 31st
• 1929-1933
• Republican
• Issues:
– The Great Depression
The Stock Market
• During the 20s, Americans began
investing in the stock market.
• During the early 20s, stock prices rose
steadily.
• Risky Stock Practices:
– Speculation (To buy stock for quick profit).
– Buying on Margin (Paying part of a stock with
a down payment and borrowing the rest).
Stock Market Crashes!:
• In October, 1929, stock prices took a
plunge!
• “Black Tuesday”: October 29th:
Shareholders frantically tried to sell before
prices dropped any more.
The Depression Begins!
• The stock market crash signaled the
beginning of the depression.
• Period from 1929-1940, when the
economy plummeted.
• 1929: 600 banks closed.
• Banks were closing across the nation.
Financial Collapse:
• Total output of goods
cut in half.
• 90,000 businesses
went bankrupt.
• Unemployment went
from 3% to 25%.
• One out of every four
people was out of a
job.
A struggling young mother
Homeless Family on the Road
Another young, homeless mother
How could this happen?
Causes of the Great Depression:
- Reduced foreign market for American
goods.
- A crisis in the farming industry.
- Unequal distribution of income.
- Overuse of credit.
Hardship, Homelessness, and
Hunger!
Urban areas:
- People lost jobs and
homes.
- Shantytowns sprang
up.
- Soup Kitchens
- Bread Lines
- Violence against
blacks and
immigrants.
Rural Areas:
- Life in farms was also
hard, but some
farmers could grow
food for their families.
- Thousands of farmers
lost their lands.
Shantytowns – “Hoovervilles”
The Dust Bowl
• A major drought struck the Great Plains.
• Farmers had cleared land for farming,
cutting down trees.
• Wind storms accompanied the drought.
• Windstorms picked up millions of tons of
dust.
• “Dust Bowl” – Area hardest hit – Kansas,
Oklahoma, Texas, New Mexico, Colorado.
Effects of the Depression on the
American Family:
• Families tried to stick together.
• Men had difficulty coping with
unemployment; Became “hoboes”.
• Women took jobs outside the home, and
men resented them.
• Children suffered health problems.
• Malnutrition was rampant.
Hoover Tourists
• “Wild boys”
• Sons of poor farmers and people who had
lost everything.
• Traveled across the U.S. by train.
• Often were victims of crime.
Social & Psychological Effects:
• Suicide rate rose by 30%.
• People admitted to mental hospitals.
• People stopped going to doctor and
dentist.
• People developed life-long habits of
“thriftiness”.
Hoover struggles with the
Depression
• Hoover assured Americans that the
nation’s economy was “sound”.
• “Remain optimistic!”
• “Business as usual!”
• “The economy will fix itself!”
• Government’s role is “to encourage and
facilitate cooperation, not to control it.”
More on Hoover…
• Hoover opposed federal welfare.
• Valued individualism – people should
succeed through their own efforts.
• Took a cautious approach to the
depression.
– He asked employers not to cut wages or lay
off workers.
– He created a special organization that urged
private charities to help.
Hoover Takes Action…?
• Hawley-Smoot Tariff (1930)
– Set tax increases from 31% to 49% on foreign
imports
– Idea was to protect markets from foreign
competitors
– World reaction: European countries enacted
their own tariffs against U.S. goods
– Effect  reduced trade for ALL nations…sank
deeper into the depression
• Boulder Dam (aka Hoover Dam)
– 1929 ($700 million) along the Colorado River
– Provides electricity, flood control, and regulates water supply
• Federal Home Loan Bank Act (1931) – lowered
mortgage rates for homeowners and allowed farmers to
refinance their farms loans to prevent foreclosure
• Reconstruction Finance Corporation (RFC)
1932 - $2 billion for emergency financing for bank, life
insurance companies, railroads, and other large businesses
(belief was that the money would trickle down to the average
citizen through jobs growth and higher wages)
The Bonus Army:
• WWI veterans.
• Came to Washington to support the “Patman Bill”.
• The bill would pay a bonus of $500 and life insurance to
soldiers.
• Hoover opposed the legislation, but he respected the
marcher’s right to assemble.
• After the Senate rejected the bill, the Bonus Army
refused to leave.
• The angry group became violent! 1,000 were “gassed”,
including children. This was Hoover’s final straw!
Franklin D. Roosevelt – 32nd
• 1933-1945
• Democrat
• Issues:
– Great Depression
– New Deal
* Only President that
served more than two
terms.
The New Deal
• Americans were ready for change!!!
• FDR was elected President, and his “can
do” attitude gave Americans new hope!
• With his “brain trust” he created programs
that would give relief, reform, and recovery
to the American people!
• Roosevelt promised a “NEW DEAL” for the
American people!
The Hundred Days
• The first 100 days of Roosevelt’s
administration involved intense activity!
• Congress passed more than 15 major
laws.
• These laws expanded the federal
government’s role in the economy.
• FDR used radio addresses known as
“fireside chats” to spread his message of
reform.
The Second New Deal
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“Second Hundred Days”;
2nd year of FDR’s term.
Second phase of New Deal.
An attempt to attack certain issues that had not
been resolved.
• Focused on relief for farmers and workers.
• During this time, Eleanor Roosevelt traveled the
country observing the conditions and reminding
FDR about the suffering of the people.