The 1920s were a decade of consumer spending and the economy looked healthy on the surface Income did increase in the 1920s, but there were severe problems with the U.S. economy In October 1929, the “Roaring Twenties” came to an end and the Great Depression began…why?

Over-production and under-consumption Factories produced too much stuff (over-production) People did not buy as much stuff (under-consumption) Too much inventory… Not enough buyers

Farmers were overproducing crops During WWI there was a big market…that ended by 1922 Farmers could not make a profit…they could not pay back loans End of WWI

Americans were in debt Easy credit meant lots of debt…when we can not pay off debt, banks and stores are hurt

Stock market speculation People borrowed money to play the market…eventually they will loose the money and cannot repay loans The stock market was not regulated so there was a lot of insider trading and false reporting

The event recognized as the beginning of the Great Depression was the stock market crash October 29, 1929 (Black Tuesday) A panic caused people to rush to sell stock which caused prices to drop quickly

People lost confidence in the US economy and tried to get their money out of banks Banks did not have enough money in reserve so they called in loans Loans could not be repaid so banks failed. This caused a panic (run on banks)… hundreds of banks failed, thousands of people lost their savings

The event recognized as the beginning of the Great Depression was the stock market crash October 29, 1929 (Black Tuesday) A panic caused people to rush to sell stock which caused prices to drop quickly

People lost confidence in the US economy and tried to get their money out of banks Banks did not have enough money in reserve so they called in loans Loans could not be repaid so banks failed. This caused a panic (run on banks)… hundreds of banks failed, thousands of people lost their savings

When the Great Depression began, millions of people lost their jobs or took pay cuts to keep their jobs From 1929 to 1932, unemployment grew to 12 million people Americans lacked confidence in the future so they tried not to spend money The decline in consumer confidence made the depression drag on until the 1940s

The Great Depression led to a global depression in Europe, Asia, and Latin America World trade fell by 40% To try to help American factories the government passed new high tariffs… …European nations responded with their own tariffs which meant US trade stalls

The Great Depression led to a collapse of the American financial system by 1933 Americans lost confidence in banks; 25,000 banks failed; fewer banks meant little money for investment The lack of spending and stock market crash led to failure of 90,000 businesses Unemployment peaked at 25% of all Americans; People lost their homes, farms, and businesses The USA had record poverty and suicide rates and healthcare declined; Charities offered soup kitchens and breadlines to help

The effects of the depression were made worse by the Dust Bowl Decades of over-farming and droughts in the Plains led to windstorms that swept away soil and made farming impossible

Farmers in the Plains (called “Okies”) moved West looking for work or batter land

When the Great Depression began, Republican President Herbert Hoover tried unsuccessfully to solve America’s economic problems He believed that Americans should have “rugged individualism” (using hard work and perseverance) Supported private charities to help (“volunteerism”) He wanted to keep taxes low and avoided direct gov’t intervention

As the depression worsened, Hoover called for more direct government action to ease peoples’ suffering Under Hoover, the gov’t issued relief checks to help the unemployed Reconstruction Finance Corps (RFC)  loan money to save failing businesses

Congress approved new building projects to put Americans to work like the Hoover Dam

These efforts did not end the depression and many citizens lost faith in President Hoover Americans who lost their homes, lived in shantytowns nicknamed “Hoovervilles”

By the election of 1932, Americans were looking for new leadership and a president who could save them from the Great Depression

When FDR became president be promised decisive gov’t action to fight the depression FDR believed the gov’t should use deficit spending (spending that causes debt) to stimulate the economy

In his first 100 days in office, FDR and Congress passed a broad platform of legislation to attack the depression called the “New Deal”

FDR’s first action was to address the bank crisis By 1933, 25,000 banks had failed and the USA was in a complete financial collapse FDR declared a four- day “bank holiday”: all banks were closed and inspected by federal regulators to determine which banks were healthy… …Only healthy banks could reopen after the bank holiday

After the bank holiday, few U.S. banks failed and Americans slowly began to regain confidence in banks

FDR’s “fireside chats” used simple, clear language to explain New Deal programsfireside chats FDR used the power of the radio to communicate to the American people the steps the government was taking to address the problems of the depression These weekly radio addresses gave people confidence that the government was actively fighting the Great Depression

First Lady Eleanor Roosevelt served as FDR’s “legs and eyes” as she toured the nation Eleanor became the “conscious of the New Deal” as she expressed concern for the needs of the American people She was the first First Lady to give lectures, radio broadcasts, write a daily newspaper column, and speak out on behalf of African Americans

The New Deal focused on the three “Rs”

From 1933 to 1935, FDR’s New Deal programs helped lower unemployment and restored hope, but the Great Depression had not come to an end FDR’s failure to end the depression led to criticism of the New Deal The most vocal critic was Louisiana Senator Huey Long Huey Long’s Share the Wealth plan proposed taxing all personal income over $1 million and give each U.S. family $2,500 per year The “first” New Deal

“The Kingfish” Huey Long Huey Long threatened to run as a 3 rd party candidate but was assassinated in 1935

In 1936, FDR was overwhelmingly elected to a second term… …But his second term would prove more difficult than his first

The “First” New Deal The “Second” New Deal By 1937, President Roosevelt faced criticisms that the New Deal was too expensive, did not eliminate unemployment, or end the depression FDR backed off government funded job programs and unemployment quickly rose The New Deal was not stimulating the economy to end the Great Depression

In addition, two New Deal recovery programs (AAA and NRA) were declared unconstitutional by the Supreme Court FDR feared that the Supreme Court would weaken the New Deal FDR threatened to “pack the Supreme Court” and increase the number of justices from 9 to 15 People were outraged as FDR appeared to be overstepping his Constitutional powers

The “First” New Deal The “Second” New Deal After 1938, Congress focused on trying to control spending and did not pass any more New Deal laws

FDR’s New Deal dramatically changed America The New Deal was successful in offering relief programs like the CCC, PWA, WPA to help people through the Depression New Deal was successful in offering reform to the stock market (SEC), banking (FDIC), unions (Wagner Act, FLPC), elderly (Social Security)

FDR’s New Deal dramatically changed America But, the New Deal did not lead to recovery in the American economy By 1938, nearly 10 million people were unemployed Wealth remained unevenly divided

FDR’s charisma and active involvement in the economy in changed the role of the presidency and expectations of gov’t FDR’s leadership unified African Americans, unions, immigrants, and poor voters under the Democratic Party

For the first time, the gov’t used deficit spending and created welfare programs to help groups in need