The Great Depression1929-1941

• Republican Herbert Hoover won in a landslide.

The Stock Market• Stock Market- system established for

buying and selling shares of companies. • Bull Market- long period of risking stock

prices. In the 1920’s a long bull market lead to many Americans to invest heavily in stocks.

• As the market continued to soar many investors began buying stocks on margin- meaning they made only a small cash down payment.

Election of 1928

• Margin Call- demanding the investor repay the loan at once. This led to investors being very sensitive to any fall in stock prices.

• Buyers engaged in speculation- hoping to make a fortune over night.

• October 29, 1929 “Black Tuesday” The Stock Market Crashed

• Wall Street stocks lost $10 to $15 billion in value

• By mid-November stocks had lost roughly some $30 billion dollars.

• When stock values collapsed, the banks lost money on the loans they had made and did not allow for further loans to be given.

Possible Causes of the Great Depression• Overproduction of goods led to an overflow of goods driving prices down.• Americans purchased on credit and instalments. • The low consumption of goods led manufacturers to cut production and lay off

employees.• The laying off of employees led to less people purchasing goods, a chain reaction

had started.

The

Life During the Great Depression• People without jobs went hungry and lived on

streets.• Many joined bread lines to receive a free handout of

food or lined up outside soup kitchens. • Families or individuals who could not pay their rent

or mortgage lost their homes; piling their belongings in the street.

• Newly homeless people put up shacks on unused or public lands, forming communities called shantytowns.

• Blaming president Hoover, for their plight, people referred to such places (shantytowns) as Hooverville's.

• Many homeless people known as hobos began wandering around the country, walking, hitchhiking, or most often riding the rails looking for a better life.

The Dust Bowl• Farmers faced more problems than low

prices and debt collectors. • The Dust Bowl engulfed the Dakotas to

Texas, dust storms ravaged America’s pastures and wheat fields became a vast desert.

• Drought, uprooting of wild grass, and planting of vast wheat fields drained the top soil of its moisture.

• Families packed up headed west towards California in search for jobs.

Escaping the Depression• Americans could escape through

entertainment. • Families went to the movies, or they sat

together and listened to the radio programs.

• Walt Disney produced first feature-length animated film Snow White and the Seven Dwarfs.

• MGM produced The Wizard of Oz.• Gone With the Wind topped the

Depression-era epics, as audiences found inspiration in Scarlett’s unassailable will to survive.

• Radio melodramas were often sponsored by makers of laundry soaps, nicknamed “soap operas”.

• During the Depression, the homeless and unemployed became the subject of pictures and stories as artists and writers tried to portray life around them.

• The writing of novelists such as John Steinbeck evoked both sympathy for their characters and indignation at social justice.

Hoover Responds• President Hoover assured the nation that

Industry was on a sound and prosperous basis.

• President Hoover won a pledge to keep factories open and stop slashing wages; by 1931 however businesses leaders abandoned those pledges.

• President Hoover saw a problem with government paying for public works because the government would have to raise taxes, taking money away from consumers and hurt businesses.

• If the government would borrow money from banks there would be less money available for businesses and mortgages.

• President Hoover’s fear about deficit spending was that it would actually delay an economic recovery.

• The purpose of the National Credit Corporation (NCC) was to create a pool of money to rescue troubled banks so they could continue lending money in their communities.

• The Reconstruction Finance Corporation (RFC) failed because it didn’t increase its loans in sufficient amounts to meet the need, and the economy continued to decline.

• President Hoover opposed the federal government’s participation in relief because he believed only state and city govt. should dole out relief.

• President Hoover’s authorization of the Reconstruction Finance Corporation marked the first time an American president used federal power to intervene in the economy during peacetime.

• The purpose of the Emergency Relief and Construction Act called for 1.5 billion dollars for public works and 300 million in loans to the states for direct relief.

• President Hoover did however expand the economic role of the federal government more then any other president before.

• The Communist parties took advantage of the National problems to change American form of government.

• After WWI farmers had heavy mortgages for land, seed, feed, and equipment, when prices sank they couldn’t even earn their expenses back.

• Farmers tried raising crop prices by destroying the crops and produce

• The “Bonus Army” marched on Washington to claim their bonuses from WWI they were cleared out by tear gas, fire, tanks, and bayonets.

Roosevelt and the New Deal1933-1939

Roosevelt Takes Office• Franklin Delano Roosevelt was the Democratic candidate for president in 1932. • The “New Deal” was Roosevelt’s policies for ending the Depression.• Franklin Roosevelt’s attitude contrasted with Herbert Hoover’s because Roosevelt was

confident he could make things better, and Hoover was seen as having failed to do anything affective.

• Roosevelt’s reputation in the New York State Senate was that of a progressive reformer willing to stand up to the party bosses.

• New York Governor • Roosevelt offered an energy

and optimism that gave them hope which perhaps was viewed as the most important thing to them.

• People wanted to exchange their dollars for gold because people feared Roosevelt would abandon the gold standard and reduce the value of the dollar.

• Roosevelt instituted a “bank holiday” is when banks closed to prevent bank runs that could put them out of business.

• Roosevelt said to the American people in his Inaugural Address that “the only thing we have to fear is fear itself.”

The First New DealFixing the Banks

• One of Roosevelt's first actions was to restore confidence in the banking system.

• The Emergency Banking Relief Act required federal examiners to survey the nations banks and issue Treasury Department licenses to those that were financially sound.

• Under the Glass-Steagall Act, commercial banks could no longer risk depositors’ money by speculating on the stock market.

• The purpose of the Federal Deposit Insurance Corporation (FDIC) was to provide government insurance for bank deposits up to a certain amount

Regulating Stock Market• The Securities and

Exchange Commission (SEC) was created to regulate the stock market and prevent fraud.

• The Securities Act of 1933 required companies that sold stocks and bonds to provide complete and truthful information to investors.

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• The National Industrial Recovery Act (NIRA) provided industry with a set of rules that were known as codes of fair competition.

• The Federal Emergency Relief Administration (FERA) channeled a half-billion dollars to state and local agencies to fund their relief project.

Fixing the Great Plains• Theory behind the

Agricultural Adjustment Act was that prices for farm goods were low because farmers grew too much food.

• The Civilian Conservations Corps (CCC) offered unemployed young men 18 to 25 years old jobs. The work of planting trees, fighting forest fires, and building reservoirs.

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• The Civil Works Administration employed four million people in the winter of 1933-1934, 300,000 of them women.

• Perhaps the most important result of the first New Deal was a noticeable change in the spirit of the American people.

The Second New DealChallenges to the New Deal:

• The right wing thought of the New Deal as dangerous the left wing thought of the New Deal as Roosevelt's failed attempt to go far enough and that government should intervene even more dramatically in the economy

• Father Coughlin called for heavy taxes on the wealthy and nationalization of the banking system to make life better for many Americans.

• Dr. Francis Townshend proposed the federal government pay citizens over age 60 a pension of $200 a month, to free up jobs for the unemployed. Recipients would have to retire and spend their entire pension check each month

Launching the Second New Deal:• The result of the Works Progress

Administration (WPA) was the spending of $11 billion and employment of 8.5 million workers.

• Federal Number One program offered work to artists, musicians, theater people, and writers who created many new works.

• The ruling of the Supreme Court in the “sick chicken case” was that the Constitution did now allow Congress to delegate its powers to the executive branch.

The Rise of Industrial Unions• The National Labor Relations Act

protected workers rights to organize unions without interference from employers and to bargain collectively.

• Committee for Industrial Organization (CIO) was to organize industrial unions , included all workers in a particular industry skilled and unskilled.

The Social Security Act• One of the most important pieces of legislation in American

history, was the Social Security Act (1935), purpose was to provide some security for the elderly and for unemployed workers.

• Left out farm and domestic workers. 65% African American.

The New Deal Coalition• The White south, which had been the

correct of the Democratic party, now became just one part of a new coalition that included farmers, laborers, African Americans, new immigrants, ethnic minorities, women, progressives, and intellectuals.

• To oppose Roosevelt in 1936, the Republicans nominated Kansas Governor Alfred Landon who declared it was time “to unshackle initiative and free the spirit of American enterprise.”

• When it seemed likely that the Supreme Court would strike down nearly all of the major New Deal programs, Roosevelt tried to change the political balance on the court through a court packing plan.

• Keynesianism, the theory that government should spend heavily during a recession, even if it had to run a deficit in order to jump-start the economy, argued that Roosevelt had done exactly the wrong thing when he cut back programs in 1937.

• Although Roosevelt pushed ahead with a new series of New Deal programs, Roosevelt’s success were far more limited than they had been in previous years

• Even though the New Deals were only a limited success in terms of ending the Depression, it did give Americans a stronger sense of security and stability as Roosevelt soon shifted his eyes towards the militaristic governments gaining power in Europe and in Asia.