The Great Depression. Roots Hoover promised continued prosperity False Prosperity of the 1920’s...

TheGreat Depression

Roots• Hoover promised continued prosperity• False Prosperity of the 1920’s

– Buying things on credit– Credit, not savings, allowed people

to buy a lot of stuff– Toward end of the 1920’s, consumers

spent $$ on paying off credit whichled to decline in sales

• Led to layoffs, consumers stopped purchasing

Roots• Overproduction

– Created a cycle of economic downturn

• Investments in the Stock Market– Buy stocks on margin

• Buy stocks on credit—small down payment, pay for stocks with earnings

– Bull Market• A long period of rising stock prices• Caused people to invest more and more

– Stock Market Crash• October, 1929—Investors believed the BOOM was over…

started selling

Stock Market Crash

• Lasted 1 week

• $30 billion lost– = $396 billion in

today’s $

• Equaled all the $

Made in 1929 to

that point

Immediate Impacts

• Banks had invested deposited money into the stock market– Millions lost their

savings– Created “Bank Runs”

• People pulled out what was left of their $$

• Banks closed

Great Depression

• Massive unemployment (25% in 1933)

• Foreclosures and homelessness

• Families moved into “Hoovervilles”– Shanty towns built by homeless families near

soup kitchens– Crime– Named after Hoover

• blamed for crash

Hooverville in Seattle

Hoover Cart

Hoover Leather

Hoover Flag

Hoover Blankets

Great Depression

• Hoover believed in “Rugged Individualism”– People should take care of themselves– No Government interference

• Social Darwinism??

• Public Works– Increase employment in the private sector

• Hoover Dam – startedIn 1931

Hoover Dam

Dust Bowl

• Massive Drought in late 1920’s– Led to bare fields that

turned to dust

– Winds blew—caused dust storms from Texas to North Dakota

– 50 dust storms a year in the 1930’s

• Created massive migration of “Okies” westward

Approaching Dust Storm

Devastation

Relief

• Did not work—Hoover unwilling to spend $$ on projects– Raised taxes to pay for public works projects

• Only expands the problem

• NCC National Credit Corporation– Created a pool of money to give to banks– Give $$ to struggling banks—Didn’t work

Too little, Too Late

• Emergency Relief Construction Act– $1.5 Billion to public works– $300 million in emergency loans

• Could not fix the damage that had been done

Salt on the Wound

• The Bonus Marchers– 100’s of WWI vets from Oregon marched to

Washington DC• They wanted legislation to be passed that would

get their $1000 pensions from the war earlier than 1945

• Camped in Hooverville in DC—15,000 vets had joined the cause

– Removed by force by the US military• Further harmed Hoover’s reputation

FDR to the Rescue

• Republican Party blamed for Great depression

• Election of 1932– Hoover vs Franklin D. Roosevelt

• FDR won 89% of the Electoral Vote

– Promised American’s a

“New Deal”

Dust Bowl

FDR

• Governor of New York– Popular because he offered economic relief to

those in need– Had Polio

• Barely ever seen standing• Eleanor Roosevelt had a huge

impact on FDR’s popularity

First 100 days in Office

• People feared that the Gold Standard would end, reducing the value of the dollar– Gold Standard—1 ounce of gold = certain $

$– Millions of people emptied bank accounts

to convert to gold before price went down• Thousands of banks closed• “Bank Holidays” enacted

– Protect banks from bank runs

First 100 days in Office

• Sent Bill after Bill to Congress– Passed 15 major acts to fight the depression

• SEC—Securities and Exchange Commission– Regulate stock market to prevent fraud

• FDIC—Federal deposit Insurance Corporation– Provides governmental insurance to banks

• Debt Relief programs– Restructured loans, lower rates, longer pay periods

• Relief Programs– Work programs to the unemployed

Book Time Yeah!!

Go to pages 445 – 452Find the following acronyms, write out what they

stand for and 1 sentence describing what their purpose was:

FDIC SEC FCA AAA NIRA NRA

CCC FERA PWA CWA WPA

Wagner Act Social Security Act

New Deal Legacy

• Did not end the depression, but gave Americans sense of stability and security

• Created a “Broker State”– Government acts as mediator among

competing interest groups

• Created a “Safety Net”– Safeguards against

another economic disaster