The Roaring Twenties and the Great Depression

Known as a period of economic boom in the United States.
- The economic reality is more complicated than it appears.
- By 1926, serious changes in the American economy begin to emerge that are often ignored.

Majority of Americans have stopped consuming at the same rates.
- People have purchased major items (cars, refrigerators, radios).
- Smaller luxury items (perfumes, bathing suits, cigarettes, flapper dresses) are not being bought at large scale.
This leads to a shift in supply and demand:
- Supply remains high while demand drops significantly.
- Companies begin to lose money due to unsold inventory.
Consumers are beginning to face credit card bills:
- Many Americans akin to a reckless teenager with a credit card—overspending without responsibility.
- This leading to realizations of high debt levels, but no immediate panic.

Mid to late twenties characterized by laissez-faire, social Darwinism presidents.
Herbert Hoover emerges as a key figure:
- Background: Engineer, prosperous business career, and holds positions in the Wilson and Coolidge administrations.
- Runs for president in 1928, leveraging economic success from his previous positions.
Takes office in March 1929, right before economic collapse begins.

October 1929: Major stock market collapse due to massive sell-off by shareholders.
- Financial institutions collapse, starting the Great Depression.
- American economy transitions from booming to a severe downturn swiftly.
- Warning signs present for three years prior, largely ignored.
Global economic implications of the Great Depression:
- The U.S. emerged as a superpower post-World War I and was financially involved in European recovery (e.g., aiding Germany).
- Germany borrows from the U.S. to pay reparations to France and England, creating a cycle of debt that becomes unsustainable.
The American economy's downturn results in an inability to support Germany, impacting Europe and exacerbating the global economic crisis.

Hoover's stance:
- Belief in laissez-faire capitalism; reluctant to intervene aggressively.
- Unwillingness to increase government spending or involvement in the economy initially leads to greater failures.
Reliance on voluntary charity and state/local governments to provide relief.
Passage of the Smoot-Hawley Tariff increases prices, worsening consumer hardships.
Rising homelessness and establishment of "Hoovervilles" (shantytowns) as economic collapse pushes many into poverty.

By 1932, a loss of banking confidence leads to widespread bank failures.
- People attempt mass withdrawals, further destabilizing banks without federal protection of deposits.
Hoover prepares to seek reelection in 1932 amidst public discontent; ultimately loses to Franklin D. Roosevelt.

Severe drought affects the Midwest regions.
- Resulting agricultural failures lead to widespread economic distress.
Windstorms create dust clouds, causing mass migration from affected areas.
- The Dust Bowl compounds the already serious Great Depression conditions.

FDR comes from a privileged background, musters significant political experience.
- Marriage to Eleanor Roosevelt plays a key role in his political image.
- Diagnosed with polio in 1921, leaves him partially paralyzed for life.
Elected as Governor of New York in 1929; gains a reputation as a progressive Democrat.
Runs for president in 1932, promising a "New Deal" to improve conditions for Americans.

Upon taking office in 1933, faces a staggering 25% unemployment rate.
- Famous quote: "The only thing we have to fear is fear itself."
Repeals prohibition as a means to stimulate the economy through re-legalized alcohol sales and production.
Establishes fireside chats as a means to communicate directly with the public and build confidence.

Bank Holiday to allow financial institutions to recover.
Creation of the FDIC to protect bank deposits.
Establishment of the Securities and Exchange Commission to regulate the stock market.
Various recovery acts:
- National Recovery Administration (NRA): Set out to revive the industrial economy.
- Agricultural Adjustment Act: Aims to stabilize agricultural production and prices.
Work programs like the Civilian Conservation Corps (CCC) to provide employment through public works.
1936 election results in FDR's reelection, keeping Democratic power stable.

FDR's New Deal faces criticism from both Republicans and segments of the Democratic Party.
Conservative Democrats and business interests argue for budget balance and against increased regulations.
The American Liberty League arises as a conservative backlash against perceived socialism in FDR’s policies.

The Great Depression and New Deal era marks a pivotal point in shaping modern American political parties.
- Republicans become more conservative and fiscally cautious.
- Democrats, under FDR's leadership, move towards more progressive and liberal policies, leading to division within their ranks.

The trajectory of the Great Depression and the responses form foundational shifts in American economics and politics, setting the stage for modern political dynamics. FDR establishes an array of initiatives aimed at recovery, though debates over their effectiveness and implications continue.