The Great Depression U.S. History

Underlying Troubles (1920s) 71% of Americans earned less than $ % had incomes over $100,000 and over 1/3 of the U.S. savings huge corporations dominated industry installment buying let people purchase expensive items and pay monthly with interest (low rates) speculation – taking chances in the stock market— middle class margin buying—paid a fraction of the price, borrowed the rest overproduction—too many goods were produced

rising interest rates worried investors investors quickly sold their stock panic led to $30 billion lost

Bank Crisis Borrowers defaulted on loans— some banks closedBorrowers defaulted on loans— some banks closed Depositors rushed banks to withdraw savingsDepositors rushed banks to withdraw savings Businesses lost resources and customersBusinesses lost resources and customers Businesses closed and workers lost their jobsBusinesses closed and workers lost their jobs

Other Causes of Great Depression global economic crisis—war debts, decreased exports Smoot-Hawley tariff (1930) – highest import tax in history, tried to protect domestic industry, but it slowed international trade unequal distribution of income—less buying power in economy consumer credit debt

Effects on Americans unemployment—avg. 25% homelessness poverty hunger low prices on farm products farm foreclosures

Why did Hoover oppose government- sponsored direct relief? Herbert Hoover ( )Herbert Hoover ( ) told Americans that “prosperity was just around the corner”told Americans that “prosperity was just around the corner” homeless people named their collection of shacks “Hoovervilles”homeless people named their collection of shacks “Hoovervilles” believed that a voluntary efforts from individuals and businesses would be more successful than federal government interventionbelieved that a voluntary efforts from individuals and businesses would be more successful than federal government intervention

Hooverville in Seattle, WA

Franklin D. Roosevelt ( ) defeated Hoover in the 1932 Election promised program of reform was called the New Deal 18th Amendment repealed by the 21st took an active approach to government introduced many relief efforts in his first “Hundred Days”

The New Deal Relief—short term programs designed to alleviate immediate suffering Recovery—long term projects to strengthen the economy back to its pre- crash level Reform—permanent structures meant to prevent future depressions

The New Deal Federal Deposit Insurance Corporation (FDIC)—protect depositors from losing their savings in event of bank failure Home Owners Loan Corporation (HOLC)— attempted to prevent foreclosures with low interest, long-term mortgages

The New Deal National Recovery Act (NRA)—set minimum wages and maximum working hours, right to collective bargaining Public Works Administration (PWA) Agricultural Adjustment Administration (AAA)—set production limits and federal subsidies

Civilian Conservation Corps (CCC) projects in national forests, parks, and public lands

The New Deal Tennessee Valley Authority (TVA)—build roads, dams, and hydroelectric plants in seven poorest states Works Progress Administration (WPA)— , put 8.5 million people to work Social Security—old-age pension funds through payroll and wage taxes

more than anything, FDR’s programs gave people confidence in the government and the economy FDR won 1936 election and continued his programs in the “Second New Deal” focusing on labor reforms

Dust Bowl