Great Depression Hoover to Roosevelt
Objectives Cite and explain evidence that led to the transition of the U.S. economy from laissez- faire capitalism to an increasingly regulated economy. Critique the government‘s use of tariffs and trade agreements. Evaluate deficit spending as a means of financing government programs.
Should government provide a safety net for people when the economy fails them, and they cannot survive?
What if there was no safety net for people at all?... Food Stamps Social Security
What if there was no safety net for people at all?...
When the Stock Market crashed in 1929 and the Great Depression set in…many people had nobody to rely on but themselves. The government did not have any of the programs it has today (Food Stamps, Social Security, Welfare, Medicare, Medicaid). You only had yourself to look after you and your family.
Causes of the Great Depression Easy Credit/Rising Personal debt Speculation/Buying on Margin Overproduction Bank Runs
Causes of the Depression Video Crash Video and Roosevelt Respone to the Bank Crisis
Easy Credit/ Rising personal debt People got easy credit to buy a lot of stuff (cars, appliances). When the market goes bad, they can’t repay their debts
Speculation/ Buying on Margin People took big gambles on Wall Street hoping to get rich quick People made investments on borrowed money (buying on margin)
Overproduction Supply Demand/ Price As supply goes up, demand goes down. This means prices fall. This happened to farmers with their crops, it happened to the auto industry and industries that depended on it (steel, rubber, glass, etc.) Supply Demand/ Price
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 go broke. By 1933 – 11,000 of the 25,000 banks nationwide had collapsed
Clip from “It’s a Wonderful Life” Bank Run Scene
Herbert Hoover did very little… Great Depression stats Hoover’s Response 25% unemployment (9% in 2010) – 6% Today The US lost a total of $30 billion the week of the stock market crash Hawley-Smoot Tariff Act Reconstruction Finance Corporation
Reconstruction Finance Corporation Hawley Smoot Tariff Act Hoover’s response Reconstruction Finance Corporation Hawley Smoot Tariff Act 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.
Reconstruction Finance and Hawley Smoot Tariff basically do nothing for people… “Trickle-down Theory” really doesn’t work…
People blame Hoover for their problems…
Election of 1932… FDR promises a “New Deal” Says he will support people directly through relief, recovery and reform