The Great Depression

Longer Term Causes of Decline

  • Fundamental cause of depression was a decline in spending

    • led to decline in production

  • Farming and industry had huge surpluses

  • Spending decreased due to increased debts

  • Government played a role

    • lack of regulation

    • high tariffs

  • Other factors like Dust Bowl

Depression Begins

  • Fall 1929 → U.S. stock prices reached levels that couldn’t be justified by reasonable anticipations of future earnings

  • Variety of minor events led to price declines in October 1929

  • Black Thursday → panic selling began on October 24, 1929

  • Many stocks had been purchased on margin

Banking Panic & Monetary Contraction

  • People aren’t able to pay back their loans

  • No money in circulation since people are holding onto money instead of putting it in banks

  • FDR implemented “bank holiday” on March 6, 1933

    • closed all banks and were able to be reopened once deemed solvent by government inspectors

  • Panics took severe toll on banking system. By 1933, one-fifth of banks had failed

President Hoover’s Response to the Great Depression

  • Hoover didn’t really do anything

    • still believed in laissiez-faire

  • Made statements like “Prosperity is just around the corner”

  • Many people lost homes and started to live in shacks

    • Hoovervilles

  • People resorted to selling items like apples, pencils, and shoelaces

Dust Bowl

  • Farmers’ situation worsened in 1930s with a long drought in Texas, Oklahoma, Kansas, Colorado, and New Mexico

  • Because of poor farming techniques, vegetaion withered and soil erosion occurred

  • Loose topsoil was whipped into giant duststorms that swept across the Great Plains

  • Farm foreclosures grew in numbers

  • This event created a new group of migrants

    • farmers from Oklahoma who moved to California in search of work

  • Sufferings of Great Depression changed American culture since people sought inexpensive leisure activities

    • mini golf

    • Monopoly

    • comic books

    • Disney characters

The Bonus Army

  • A group of 19-25k WWI veterans went to Washington D.C. with their wives and children

  • Demanded immediate bonus payment for wartime services

  • U.S. House passed a bill that authorized this payout, but Senate rejected it

  • Many left, but some stayed to engage in protests

  • Hoover sent troops to drive them out

  • Eventually got their payouts

Human Impact of Depression

  • Bread lines

  • Home foreclosures

  • Poverty

America Gets a New President

  • 1932 → Hoover is defeated and Roosevelt is elected

    • served as Democrat in NYS Legislature

    • served as president throughout rest of depression and most of WWII until his death in 1945

  • Began restoring public confidence

    • master politician

    • good communicator (fireside chats)

    • controversial

      • attempted to make major changes to Supreme Court

      • ran for third term in 1940

  • Took on the economy

    • focused on ending the depression

  • New Deal

    • Relief Legislation - relief for people who were suffering

    • Recovery Legislation - recovery of economy so that it could grow again

    • Reform Legislation - measures to avoid future depressions

New Deal Legislation

  • Federal Deposit Insurance Cooporation (FDIC) - protected $$ people deposited in banks

  • Social Security Insurance (SSI) - provides retired workers with incomes

  • Federal Housing Administration (FHA) - regulated morgatges and housing conditions, insured loans

  • Securities and Exchange Commission (SEC) - controlled stock market limiting margin buying

  • Many of these helped to provide people with jobs and something to do

  • Roosevelt was very well liked due to this legislation and his policies

    • only president elected 4 terms

Supreme Court Reacts to New Deal

  • Supreme Court was rejecting most of his New Deal programs

  • FDR wanted to change court so it would support New Deal

  • Roosevelt tooks steps to influence Court’s decision in his favor

    • FDR asked Congress to increase number of Supreme Court justices to 15

      • never became a law due to checks and balances

Evaluating the New Deal

  • New Deal didn’t solve unemployment or farm crisis

  • New Deal did help people cope with Great Depression

  • Brought more power to presidency and federal government

  • Preserved free-enterprise system

  • Defecit spending raised the national debt