Notes on Hoover and the Crash, the Great Depression, and New Deal

Objectives

  • Understand America’s economic problems during the late 1920s.
  • Learn how the Great Depression started and its effects on Americans.
  • Explore President Hoover’s response to the Depression.

Key Vocabulary

  • decline (v.): to lose strength or power over time.
  • overproduction: when supply exceeds demand, leading to unsold goods.
  • bankruptcy: financial failure due to inability to pay debts.
  • default: failure to fulfill an obligation, especially a financial one.
  • bonus: an extra payment, often to incentivize.
  • voluntary: done freely or without coercion.

The Great Depression: Overview

  • The economic boom of the 1920s was built on fragile foundations, leading to vulnerabilities.
  • Signs of economic weakness included:
    • Decline in older industries (coal mining, railroads, clothing).
    • Overproduction where factories created more goods than consumers could buy.
    • Decline in automotive and housing sector as most consumers already bought their homes and cars.

The Stock Market Crash

  • October 1929: The stock market crashes on Black Tuesday.
  • Events Leading to the Crash:
    • Rapid price increases (stocks doubled from May 1928 to September 1929).
    • Panic selling and drop in stock prices by $4 billion.
    • Collapse of investor confidence leads to further selling of stocks.

Economic Crisis and Depression

  • Following the crash, America entered the Great Depression, defined by:
    • Massive unemployment (from 3% in 1929 to 25% by 1933).
    • Bank failures; over 5,500 banks closed between 1930-1933.
    • Widespread poverty affecting families across the nation.
  • The human cost was significant, with people struggling to find basic necessities.

President Hoover's Response

  • Hoover initially believed in limited government intervention and encouraged businesses to assist voluntarily.
  • Eventually created the Reconstruction Finance Corporation to aid failing banks and businesses.
  • Hoover’s popularity diminished after the handling of the Bonus Army in 1932, where veterans demanded early compensation for serving in WWI but were met with forceful eviction by government troops.

The Impact of the Great Depression on American Life

  • Families faced severe hardships. Many fathers left in search of work, leading to family breakdowns.
  • Women took on greater roles in the workforce, facing challenges amidst societal expectations.
  • African Americans suffered higher unemployment rates and discrimination, leading to widespread poverty.
  • Homeless communities—dubbed Hoovervilles—sprang up, indicating public discontent with the administration.

Government Programs and the New Deal

  • Franklin D. Roosevelt (FDR) became president and initiated the New Deal aimed at economic recovery:
    • Introduction of job creation programs like the Civilian Conservation Corps (CCC) and Works Progress Administration (WPA).
    • Infrastructure improvement projects, including dams and roads.
    • Social Security Act introduced a safety net for the elderly and unemployed, financed through payroll taxes.
    • Passage of the National Labor Relations Act (Wagner Act) which protected union rights and improved labor conditions.

Long-term Effects of the New Deal

  • The New Deal expanded the role of the federal government in economic and social welfare.
  • Critics argue it increased government power and spending without ending the Depression.
  • Supporters claim it restored faith in government and provided essential support to millions.

Cultural Shift During the Great Depression

  • The Great Depression influenced American culture profoundly:
    • Artists and writers sought to capture the hardships faced by Americans (e.g., John Steinbeck’s The Grapes of Wrath).
    • The media, including movies and radio, served as both entertainment and a means of coping during tough times.

Conclusion

  • The Great Depression and the resulting New Deal had a lasting impact on the American economy, culture, and social fabric, shaping modern government’s role in economic affairs and citizens' expectations of aid during crises.