the great depression

Past Presidents

• Woodrow Wilson (1913-1921)

• Warren G Harding (1921-1923)

• Calvin Coolidge (1923-1929)

• Herbert Hoover (1929-1933).

• Herbert Hoover believed in “Rugged Individualism”. Keep the economy moving, government should not step in and help individuals!

• Hoover Becomes President. Prohibition and religion are big factors that help him win.

• Republicans keep control. Hoover was the third Republican president in a row. He continued ‘laissez faire” economic philosophy.

• Stock Market- is a system for buying and selling stocks.

• Bull Market- a long period of rising stock prices, caused many people began to invest in stocks.

• Speculate- betting that the market would continue to climb enabling them to sell stock and make money quickly.

• Margin- making a small cash down payment then borrowing the rest from a broker  which backed banks

• How did the stock market crash? Buying on Margin or Margin Buying. When banks/corporations buy stocks by making a small down payment and borrowing the rest (from the stock broker/ the bank). 

• Bull Market ends in 1929- rising stocks

• the market begins to fall and stocks bought on margin cannot be paid back. Everyone sells stocks.

The Spark of the Great Depression. Prices decline, the market plummets!

• Black Thursday – 10/24/1929

• Black Tuesday – 10/29/1929

• Banks lose Billions. Banks start closing as people take out all of the money. 1 in 4 banks closed in 1932.

Historians disagree as to the causes of the Great Depression. Most scholars would include:

a. bank failures

b. uneven distribution of income

c. the loss of export sales

d. mistakes by the federal reserve

e. Over Production:

                  1)  factories                

                  2) farms

• The Great Depression Begins. It was the longest, most widespread and the deepest depression in U.S. history.  It started in 1929 and lasted until the beginning of WWI.

• Banks begin to fail. Banks were the 1^st thing hit by the market crash. A bank run occurred when people fearing the bank would go bankrupt. rushed to the bank to take out their money. Bank Runs led to the closing of a bank because all of the bank’s money would be gone.

• How does Hoover respond to the Great Depression? He asked employers not to fire workers or lower their pay. He asked labor leaders not to ask for higher pay or to strike.

• The Reconstruction Finance Corporations (RFC)  was a gov’t agency that gave $2 billion in aid to state and local governments. It’s main purpose was to create jobs for Americans who wanted to work.

Effects of the Depression.

• Jobless/Homeless – Jobless goes from 4  to  12 million. Houses are lost, people become homeless.

• Hatred for Hoover. Hoover said it’s not government’s job to fix the poor.  People name poor places after Hoover.  Hooverville or shanty towns, hoovermobile /cars pulled by mules, Hobos (train kids) looking for jobs, Hooverblankets/ newspapers used as blanket while traveling the rails by the homeless.

• Hoover Federalism.  Hoover believed that charities (churches) or state and local government, not federal governments should provide food and shelter to people who were poor or out of work.

• Farmers burned crops and dumped milk rather than sell it for less than it cost them to produce it. This was an effort to raise the prices of their products. Low supply = high demand.

• The Bonus Army were veterans that had been promised bonuses to make up for their poor wartime pay. Congress was about to vote on a bill to give the vets their bonuses so they would not have to wait.  At first, Hoover sent the veterans food but after the bonus was voted down in Congress, Hoover told the veterans to leave.  About 2,000 stayed. Hoover ordered the army to use force to remove them. The U.S. Army used tear gas on the U.S. war veterans.

• Hoover voted out!! Because:  Many people blamed Hoover for their economic problems, the Bonus Army debacle was the final blow. In the 1932 election, Hoover faced democrat Franklin D. Roosevelt New York’s governor. Roosevelt, NY’s Governer, wins in a landslide.

• Natural Disaster “The Dust Bowl”.  The Great Plains suffers a huge drought (1931). Causes: no rain, and new technology. tractors and steel plows tear up extra sod that was holding onto soil, the drought turns open soil into a sand box.

• Huge dust storms cover the Great Plains. Results:  Suffocation of humans/animals from dust filling their lungs. Farmers can’t pay banks.  Banks take their farms.  Many Great Plains farmers move to California.

• Migrant Workers. Many farmers packed up their belongings and started for California to look for work.  They became migrant workers moving from place to place to pick crops. Many came from Oklahoma, so migrant workers were often called Okies.

• 1932 Election Platforms.  Hoover supported major cutbacks on Federal spending, high tariffs to protect U.S. business, believed that too much gov’t aid would make people dependent on it.

• FDR promoted competitive tariffs, pushed reform for financial and banking industries, favored programs to help farmers, believed in necessity for immediate gov’t assistance.

• Franklin Delano Roosevelt’s (FDR) campaign slogan was: “ The New Deal”,  Relief, Recovery and Reform is on the way!!

New Deal = FDR’s promise of the 3 R’s, Relief, Recovery & Reform.

• Relief – $$$ for those in need

• Recovery – Programs to fix economy

• Reform – regulate economy to prevent depression in the future

Why is the New Deal split in two?

• The First New Deal – the programs passed before 1935, most in the first 100 days of FDR’s presidency

• The Second New Deal- post 1935, focus goes from recovery to reforming economic security

• During FDR’s 1^st 100 days, the 1^st thing he does is repeal prohibition with the 21st amendment.

• FDR’s Fireside Chats. He felt that he must gain the country’s confidence back in the banking system. Within a week of his presidency he addressed the nation and passed the Emergency Banking Act which licensed banks that were financially sound. On March 12, 1933, he addressed the nation in the 1^st of many radio broadcast called “Fireside Chats”.

• The Emergency Banking Relief Act was a law passed by Congress that would close down insolvent banks and reorganize  and  reopen those banks strong enough to survive.

• Bank Holidays. The closing of banks during the Great Depression to avoid bank runs.

• The First New Deal laws focused on three things:  Putting people to work, Fixing the banking crisis, Helping farmers.

  FDR’s Bank Relief Programs Dealing with Banking and Stocks.

• Securities act – required companies that sold stocks & bonds to provide complete and truthful information.

• The Securities & Exchange Commission (SEC) regulates the stock market and stops fraud.

• The Glass-Stegall Act – separated commercial banking from investment banking.

• Federal Deposit Insurance Corporation – provides government insurance for banks.

• The Civil Works Administration hired workers to improve airports, roads, bridges and playgrounds.

FDR’s Farm & Industry Relief Programs

• Agricultural Adjustment Act (AAA) – raised farm prices by setting quotas and paying farmers to plant less.

• National Industrial Recovery Act (NIRA) – created standards for production and prices. Set minimum wages and work hours.

• National Recovery Administration (NRA) -eliminated unfair competitive practices and improve standards of labor; supported labor unions.

FDR’s Relief Programs Assistance to Help the Poor.

• Civilian Conservation Corps (CCC) – offered unemployed young men 18-25 jobs working for the forestry service planting trees, fighting forest fires and building reservoirs.

• Public Works Administration (PWA) – construction, began building highways, dams, schools, and other gov’t facilities to create jobs.

• Civil Works Administration (CWA) – employed 4 million to build airports,  schools, and parks. Temporary jobs only lasting through the winter.

• Tennessee Valley Authority (TVA) – Federal agency that revitalized the Tennessee River Valley by building 16 dams to control flooding, generate hydraulic power, and increase agricultural production.     

• The First New Deal were programs passed before 1935, most within the first 100 days of FDR’s presidency.

• The Second New Deal was post 1935, its focus went from recovery to reforming economic security.

• Works Progress Administration (WPA) was the largest New Deal agency; it created construction jobs. Under the WPA, 8.5 million workers built miles of highways, roads, public buildings and parks.

• The Wagner Act also known as the National Labor Relations Board (NLRB) guaranteed the right to unionize. The NLRB was created to hear disputes over unfair labor practices.

• The Birth of Social Security. The act was a milestone in American History because it acknowledged the responsibility of the federal government to take care of the less fortunate.

• FDR vs the Supreme Court. The Supreme Court had been a roadblock to some portions of Roosevelt’s New Deal programs.

• The Supreme Court had ruled that parts of Roosevelt’s New Deal were unconstitutional. To overcome this, Roosevelt wanted to increase the amount of judges on the U.S. Supreme Court.

• March of Dimes founded. Roosevelt having polio raised national awareness of the disease and a  drive to find a cure. In 1938 the National Foundation for  Infantile Paralysis is founded.  It later changes is name to the March of Dimes .

• A vaccine for polio was discovered by Dr. Jonas Salk in 1955.

• Minorities in the Depression. During the depression, most African Americans became Democrats.