Great Depression To New Deal

Causes of the great depression…… Depressed Farming: The end of WWI led to a decline in demand for agricultural products 1. Too much food led to a 40% drop in crop prices The Stock Market: 2. Overspeculation of stocks 3. Many people borrowed money to pay for stocks, called buying on margin 4. There was no regulation of the stock market 5. Overproduction of goods

Buying Stocks on Margin

Overproduction of Consumer Goods Too much inventory…Not enough buyers

“Black Tuesday” The Stock Market: On Tuesday, October 29, 1929, the stock market crashed. People rushed to sell and investors lost $30 billion Only 3 million of 121 million Americans were initially affected by the crash. This is the beginning of the Great Depression

The U.S. stock market had only about 3 million active buyers & sellers but the spillover into the greater economy led to the Great Depression

Immediate reactions…….. 1.Many banks closed after crash due to loss of funds invested in the stock market. 2. Panic caused bank runs, closing 600 banks in 60 days. 3. Many people lost ALL their money when banks closed. 4. 25,000 banks and 90,000 businesses failed by 1933. 5. Unemployment rose to 25%

The Dust Bowl The effects of the depression were made worse by the Dust Bowl: Heavy droughts & over-farming in the West destroyed the Plains In the early 1930s, windstorms swept away loose soil- static electricity created “brown blizzards” Farmers in the Plains lost their farms & searched for work or better land in West

President Hoover’s Response 1.Initially, Hoover asked big businesses and the wealthy to help out. As the depression worsened, Hoover called for more gov’t action 2. The gov’t issued relief checks to help the unemployed 3. The Reconstruction Finance Corps (RFC) loaned money to failing businesses

Employment Agencies & Relief-Check Lines

President Hoover’s response (cont) 4. Public works projects like Hoover Dam, were started to provide jobs 5. Hoover believed the states, not the federal government, should provide relief These efforts did not end the depression & many citizens lost faith in President Hoover

Boulder Dam was renamed Hoover Dam

Americans who lost their homes, lived in shantytowns nicknamed “Hoovervilles”

“Hoover wagons” Horse-drawn automobiles were known as “Hoover Wagons”.

“Hoover Blankets” Newspapers used to cover the homeless were called “Hoover Blankets”

Mexican Repatriation Act In response to farmers wanting jobs in California, Hoover decided to deport 2 million people of Mexican descent to be deported back to Mexico. 1.3 million of those deported were actually American citizens.

hobos As people lost their jobs, they began to move from place to place, looking for work. They were known as Hobos and often used the trains as a way to travel “Riding the rails”

FDR is elected In 1933, FDR becomes president. In order to restore confidence in U.S. banks, FDR’s first response is to declare “bank holidays” and shut down all banks to prevent more bank closures. Only financially stable banks can open. He started “fireside chats”, addressing the nation by radio to give updates and reassurance.

The new deal Hundred Days – In his first 100 days in office, FDR was able to have 15 major acts passed by Congress to help the economic crisis, known as the New Deal.

Opposition to the new deal Those who opposed FDR’s New Deal included: Left Wing: (Democrats) Huey Long – Senator from Louisiana who believed in the redistribution of wealth Father Charles Coughlin – did not believe the New Deal helped enough. He publicly criticized FDR on his radio show.

Opposition to the new deal Those who opposed FDR’s New Deal included: Right Wing:(Republicans) Big Businesses – New Deal regulation caused them to lose money. Supreme Court – Believed New Deal was unconstitutional (FDR had gone too far)

Fdr’s court-packing plan…. In order to have more support for his New Deal programs, FDR proposed the following: Force all Supreme Court Justices to retire by 70 years old (not appointed for life) Increase the number of justices from 9 to 15 , allowing FDR to appoint 6 more justices who would support the New Deal. **This plan harmed FDR’s reputation and actually took away support for New Deal proposals.