The Great Depression (1929-1941)

1. The Great Crash When Herbert Hoover took office as President in 1929, he saw a growing economy. Farmers hit hard times. Their expenses rose higher than the prices farmers received for their products. The farmers did not reduce production. This caused prices to drop and the farmers’ income to fall dramatically. Many farmers could not pay back their loans, so they lost their farms. Herbert Hoover

In August 1929, many investors were worried that the economic boom might end, so they began selling off their stocks. The rash of selling caused the stock prices to fall. The Stock Market Crash

This created a panic in the stock market between October 24th and October 29th. Desperate people tried to unload their stocks. On Tuesday October 29th, also known as Black Tuesday, there was a stampede of selling in the stock market. This stampede of selling stocks caused stocks to be worthless. stock market

Causes of the Great Depression Easy Credit/Rising Personal Debt The period of hard times that followed the stock market crash became known as the Great Depression. It lasted from 1929-1941. Causes of the Great Depression Easy Credit/Rising Personal Debt Speculation/Buying on Margin Overproduction of Goods Bank Runs

Bank Runs Banks depend on people putting their money into them…they use that money to loan out and make money When the market started to fall, people panicked and withdrew their money…banks went broke. By 1933 – 11,000 of the 25,000 banks nationwide had collapsed

Hoover’s response to the Great Depression Hawley Smoot Tariff Act Reconstruction Finance Corporation Gave money to big businesses, railroads, insurance companies Purpose: prosperity at the top would “trickle down” to the rest of the population Puts a tariff in place Taxes imported goods (stuff from foreign countries) so that foreign goods are more expensive. Encourages people to buy American products.

Hoover’s action does not help the average man Hoover’s action does not help the average man. Many blamed the President for doing so little. They gave the name Hoovervilles to the shacks where the homeless lived. Hoovervilles

Election of 1932… FDR promises a “New Deal” Says he will support people directly through relief, recovery, and reform

Spending Money to Make Money 2. FDR and the New Deal Franklin Delano Roosevelt, known as FDR, promised to help the jobless workers and farmers with his New Deal. Deficit Spending Spending Money to Make Money President’s often use deficit spending to stimulate the economy. FDR will use deficit spending (spending money we didn’t have) to fund his New Deal programs. This was all an attempt to stimulate demand by increasing income levels.

FDR’s Fireside Chats Roosevelt made public radio addresses, which he called “fireside chats.” In these speeches, Roosevelt appealed to radio listeners for help getting his agenda passed. Letters would pour in following each of these "chats," which helped pressure legislators to pass measures Roosevelt had proposed.

The Wagner Act National Labor Relations Board This gave unions the right to go on strike and negotiate with business management. This made it much more possible for workers to get the rights and working conditions they sought. Intended to increase union membership.

Organized labor American Federation of Laborers Congress of Industrial Organizations Pushed for better working conditions, wages, and benefits. Only includes skilled white laborers. Group of Labor Unions Pushed for better working conditions, wages, and benefits. Willing to involve all laborers, including unskilled minorities and women.

Banking Regulations (Safety Net) Emergency Banking Relief Act Glass-Steagall Act Banking Act of 1933 This law allowed only banks backed by the Federal Reserve to operate in the United States. This effectively gave control of the banks to the government. This law created the Federal Deposit Insurance Corporation(FDIC) which insured funds held in banks up to a certain amount. Created regulations to protect consumers by decreasing risky investments by banks.

Banking Regulation Securities and Exchange Commission The SEC regulates any trading (exchanging) of stocks. The SEC has the power to prosecute those who violate laws regarding stock exchange in the United States.

New Deal Organizations Tennessee Valley Authority(TVA)- the idea was designed to develop a hydroelectric plant that would distribute electric power to the Tennessee Valley. This created jobs and raised the standard of living. National Recovery Administration(NRA)- New Deal agency designed to create fair practices in business. The NRA even went as far as setting prices to level the playing field for business.

Social Security Act (Safety Net) This law provided a safety net for retirees based on the amount of taxes they had paid throughout their life. When younger people all lost their jobs, there was no one there to take care of the elderly.

Dust Bowl 1930-36

Dust Bowl Causes Effects Farmers didn’t rotate their crops - use different areas of land in different seasons to allow soil to recover. The healthy topsoil eroded away…turning into worthless dust Farmers must move westward to escape the terrible conditions 440,000 leave Oklahoma (Okies) 300,000 leave Kansas

FDR’s Solution to the Dust Bowl Civilian Conservation Corps (CCC) Plants trees in the soil to prevent further erosion. New Deal program giving jobs to young unmarried males. Over 1 million jobs created.

Works Progress Administration The largest and most ambitious New Deal agency. This agency created tons of jobs, mostly for unskilled workers. Built infrastructure (roads, bridges) and developed communities. Funded by the Emergency Relief Appropriations Act of 1935.

What do we learn from this? President Roosevelt tried to cure the problems of the great depression through Relief, Recovery, and Reform. As President Roosevelt created more and more “New Deal” agencies, he expanded the power of the Presidency and the role of government in the lives of Americans. The government built an enormous amount of debt through the use of deficit spending to fund the “New Deal” programs. However, millions of Americans are going back to work and making money which they will use to buy goods and stimulate the economy.