The Great Depression
Roots Hoover promised continued prosperity False Prosperity of the 1920’s –Buying things on credit –Credit, not savings, allowed people to buy a lot of stuff –Toward end of the 1920’s, consumers spent $$ on paying off credit which led to decline in sales Led to layoffs, consumers stopped purchasing
Roots Overproduction –Created a cycle of economic downturn Investments in the Stock Market –Buy stocks on margin Buy stocks on credit—small down payment, pay for stocks with earnings –Bull Market A long period of rising stock prices Caused people to invest more and more –Stock Market Crash October, 1929—Investors believed the BOOM was over…started selling
Stock Market Crash Lasted 1 week $30 billion lost –= $396 billion in today’s $ Equaled all the $ Made in 1929 to that point
Immediate Impacts Banks had invested deposited money into the stock market –Millions lost their savings –Created “Bank Runs” People pulled out what was left of their $$ Banks closed
Great Depression Massive unemployment (25% in 1933) Foreclosures and homelessness Families moved into “Hoovervilles” –Shanty towns built by homeless families near soup kitchens –Crime –Named after Hoover blamed for crash
Hooverville in Seattle
Hoover Cart
Hoover Leather
Hoover Flag
Hoover Blankets
Great Depression Hoover believed in “Rugged Individualism” –People should take care of themselves –No Government interference Social Darwinism?? Public Works –Increase employment in the private sector Hoover Dam – started In 1931
Hoover Dam
Dust Bowl Massive Drought in late 1920’s –Led to bare fields that turned to dust –Winds blew—caused dust storms from Texas to North Dakota –50 dust storms a year in the 1930’s Created massive migration of “Okies” westward
Approaching Dust Storm
Devastation
Relief Did not work—Hoover unwilling to spend $$ on projects –Raised taxes to pay for public works projects Only expands the problem NCC National Credit Corporation –Created a pool of money to give to banks –Give $$ to struggling banks—Didn’t work
Too little, Too Late Emergency Relief Construction Act –$1.5 Billion to public works –$300 million in emergency loans Could not fix the damage that had been done
Salt on the Wound The Bonus Marchers –100’s of WWI vets from Oregon marched to Washington DC They wanted legislation to be passed that would get their $1000 pensions from the war earlier than 1945 Camped in Hooverville in DC—15,000 vets had joined the cause –Removed by force by the US military Further harmed Hoover’s reputation
FDR to the Rescue Republican Party blamed for Great depression Election of 1932 –Hoover vs Franklin D. Roosevelt FDR won 89% of the Electoral Vote –Promised American’s a “New Deal”
Dust Bowl
FDR Governor of New York –Popular because he offered economic relief to those in need –Had Polio Barely ever seen standing Eleanor Roosevelt had a huge impact on FDR’s popularity
First 100 days in Office People feared that the Gold Standard would end, reducing the value of the dollar –Gold Standard—1 ounce of gold = certain $$ –Millions of people emptied bank accounts to convert to gold before price went down Thousands of banks closed “Bank Holidays” enacted –Protect banks from bank runs
First 100 days in Office Sent Bill after Bill to Congress –Passed 15 major acts to fight the depression SEC—Securities and Exchange Commission –Regulate stock market to prevent fraud FDIC—Federal deposit Insurance Corporation –Provides governmental insurance to banks Debt Relief programs –Restructured loans, lower rates, longer pay periods Relief Programs –Work programs to the unemployed
Book Time Yeah!! Go to pages 445 – 452 Find the following acronyms, write out what they stand for and 1 sentence describing what their purpose was: FDICSEC FCAAAA NIRA NRA CCCFERA PWA CWA WPA Wagner ActSocial Security Act
New Deal Legacy Did not end the depression, but gave Americans sense of stability and security Created a “Broker State” –Government acts as mediator among competing interest groups Created a “Safety Net” –Safeguards against another economic disaster