Transcript The Great Depression and New Deal Living It Up in the old’ U.S.A.: The 1920’s      The years between the end of World.

The Great Depression and
New Deal
Living It Up in the old’ U.S.A.: The 1920’s
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The years between the end of World War One and the
Great Depression (1919-1929) are often referred to as
the “Roaring 20’s”
This title comes from the idea that for almost a decade,
the U.S. economy grew at rate that seemed
unstoppable.
American was growing into the modern nation we
would recognize today as the standard of living for
most Americans increased dramatically.
Billions of dollars were being created by our trade with
Europe, who being completely destroyed after World
War One, relied on a constant stream of American
goods and products.
The effect on the U.S. economy was trickle down. The
standards of living of millions of Americans increased
and a new “ middle class” developed.
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Living It Up in the old’ U.S.A.: The 1920’s
For the first time in U.S. history, middle-class
Americans had disposable income which they spent and
spent!
New technologies, designed to make life easier and less
dreary became to “must have” items for most
American families:
A home in the “suburbs”; new automobile; radios;
refrigerators; washing machines; telephones
HOWEVER---much of this economic prosperity was
built on a “house of cards”—
Much of the money being spent by Europeans on
American goods was supplied by the U.S. in the form
of loans
Many of the items bought by American consumers
were purchased on either “credit” or “installment”
plans.
Americans looked rich---but really didn’t own a lot!
The End of the Party: 1929
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The Stock Market Crash of 1929 would
shatter the illusion of American
prosperity.
It would also sink an already weakened
European economy into a deeper despair.
From New York, a tidal wave of
economic failure would literally grip the
world---It would be known as the:
GREAT DEPRESSION
The World Wide Great Depression
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In September of 1929, the United States
Stock Market (known as the Dow Jones)
suddenly faltered and with little warning
crashed.
For much of the 1920’s, the strength of
the Stock Market had rested in the
practice of investors buying “on margin”.
Buying “on margin” allowed investors to
purchase stock with a little real money
down and the rest funded by a loan from
a bank.
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The World Wide Great Depression
This system works and investors and banks
both make money on their investments as long
as the Stock Market continues to rise.
(OVERSPECULATION)
But, if the market falls, the investor loses
money and is unable to pay back the bank for
his loan.
In September of 1929, the Stock Market did
exactly that---it crashed and crashed hard!
Millions of investors were suddenly bankrupt
and unable to pay back their loans.
As a consequence, thousands of banks were
unable to collect their loans---which caused a
panic throughout the U.S.
The World Wide Great Depression
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Tens of thousands of regular bank customers
“rushed” their banks demanding their savings
The money was not there! The banks had
loaned it to investors and they had lost it!
Millions of people in the U.S. were suddenly
and without warning BROKE.
Home owners couldn’t pay their mortgages;
farmers couldn’t pay their loans; businesses
couldn’t pay their salaries; millions became
homeless and out of work---IT WAS THE MOST SERIOUS
ECONOMIC CRISIS OUR NATION HAS
EVER FACED!
The Great Depression
Some stats paint the bleak picture:
 By 1933—11,000 of the nations 25,000 banks had
failed.
 Almost 90,000 businesses went bankrupt
 Between 1929 and 1932 our GNP went from 104
billion to 59 billion
 Unemployment went from 3% in 1929 to 25% in 1933
(13 million workers)—1 out of every 4 persons lost
their job!
Two questions remain:
1.What effect does this have on the American public?
2. What will be the government’s response to this crisis?
Effects of the Great Depression
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The social and cultural effects were far-reaching.
Adults and children who survived the Great
Depression would bear the physical and
psychological scars of it for the rest of their
lives.
America itself would be forever changed be the
experience.
The lingering effects of that experience can still
be found within woven in the fabric of our
nation today.
Why? What did experience really do?
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The Depression Strikes Hard
As people lost their jobs, they were evicted from their
homes.
Across the cities and across the countryside, the
homelessness rate skyrocketed.
By 1932 almost 400,000 farms had been foreclosed
upon.
The homeless often gathered together in large bands,
setting up “shantytowns”—little towns of shacks set up
of the outskirts of cities or town. Survival became the
focus of each day.
The stresses of homelessness and joblessness took a
horrific toll on the American families.
Families often broke apart under the strain of finding
work to simply feed their families.
The Depression Strikes Hard
Many men often left their families, traveling
great distances to find work. Often they never
returned.
 Some were unable to deal with the “shame” of
not supporting their families.
 Some turned to the life of the “ hobo”--transient, wandering men living outdoors and
traveling by “hitching” rides on trains.
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By the mid-1930’s there were an estimated 300,000
men living as hoboes in the U.S.
The Dust Bowl
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Strangely enough, during this severe economic crisis,
the US also suffered a severe agricultural crisis in the
Midwest.
Due in large part to both a severe drought and unwise
farming techniques, large parts of the Great Plains
became known as the DUST BOWL.
Gigantic wind-storms blew massive clouds of sand and
grit hundreds of miles and made living and farming in
the Great Plains impossible.
Hundreds and thousands of farming families fled the
Midwest and moved in a great migration towards
California and the Pacific Coast States.
They became known as “Okies”.
Government Response
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With such economic, political, and social turmoil, most
would expect a far-reaching government response.
Unfortunately, at first, it did not come.
The president at the beginning of the Great Depression
was a man named Herbert Hoover.
Hoover, a Republican, truly believed that the economy--if left alone—would eventually correct itself.
The current suffering of the American people, he felt,
should be attended to by private charities—not
government intervention.
He believed that DIRECT RELIEF from the
government would weaken peoples self-respect and
“moral fiber”.
Hoover’s response shocked and frustrated millions of
suffering American families.
Government Response
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As the Depression sore on, Hoover’s administration eventually
began to soften on some of its ideals and offer forms of direct
relief to the American people.
For many, it was too little, too late.
Hoover actions towards the “Bonus Army” damaged his
reputation beyond repair in 1932.
This “Bonus Army” was a group of 20,000 World War One
veterans who “camped” out in Washington, D.C. to pressure the
government to pay their “wartime” bonus (about $500 per vet)
Hoover, nervous about having a large group of angry veterans
camped out in D.C.-called out the army.
On July 28th, 1932---1,000 armed troops “disbanded” the Bonus
Army using tear gas and in some cases live ammunition.
Several people were killed—including a 11 month year old babyAmerican were shocked and outraged---the next election would
be November and the American people were ready for a change.
FDR and the “New Deal”
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The change came in the 1932 presidential election. The
Democratic party offered a candidate in the person of
Franklin Delano Roosevelt—a two-term governor of
New York.
Roosevelt campaigned on the promise of a “New Deal”
for the American people.
The New Deal would be a series of programs set-up,
administered, and paid for by the Federal Government
to overcome and end of the suffering of the Great
Depression.
Franklin projected optimism and confidence—
something the American public was looking for—he
won in a landslide capturing 23 million votes.
The New Deal
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As Franklin came into office in 1933, he told the
American public that the only thing they had to
“fear” was “fear itself”.
Meaning, with hard work and proper programs,
America could and would emerge from the Great
Depression stronger than ever.
His New Deal programs were the blue print for
recovery.
They focused on three areas:
Relief: give needy American people the immediate
financial relief they needed (food, shelter, clothing,
etc.)
Recovery: put in place government programs to help
business and industry get back on track and hiring
workers
The New Deal
3. Reform: change the business practices of Wall
Streets and the banking system to prevent
another stock market crash in the future.
 Certainly the program had its share of successes
and failures—what was important however that
FDR’s administration was willing to experiment
and adapt their programs as needed.
 The American public’s confidence in its
government and financial system began to
SLOWLY recover.
Impact of the New Deal
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The New Deal affected American society not only in the 1930’s but
also in the decades that followed.
Many of the most important New Deal programs that were created in
the 1930’s are still part of our society today:
Federal Deposit Insurance Corporation (FDIC): safeguards individual
deposits in banks
Social Security Administration: Provides a income for “retired” or
disabled Americans over the age of 65
Securities and Exchange Commission (SEC): regulates banking and
investment activities.
But perhaps the most important impact of the New Deal is the change
that it caused in HOW Americans viewed the role of the Federal
Government.
The Federal Government was now not the impassive protector of
individual rights and “laissez faire” capitalism.
Government was NOW the guardian of citizens’ WELFARE and
SHOULD take an active role in both the regulation of business and
the protection of individual rights. This role remains the same today.