Great Depression & the New Deal

Boom to Bust Most Americans believed the economic prosperity of the 1920s would last forever because: – Companies were producing 50% more from the beginning to the end of the decade – National income had grown from $64 billion to $87 billion – Most major corporations were making large profits – Everyone was making money in the Stock Market

Boom to Bust What happened? – Warning signs of economic trouble were missed or ignored including: – Excessive buying with credit created superficial prosperity – Iron, railroad, & automobile industries weren ’ t as prosperous – Farms nationwide were suffering heavy losses

Election of 1928 Herbert C. Hoover became the 31 st U.S. President In his inaugural address, Hoover pointed to future prosperity for the American people. “ We in America are nearer to the final triumph over poverty than ever before. ”

Stock Market Crash of 1929 Throughout the 1920s, stock prices rose steadily In order to take advantage of this “ bull market ”, Americans rushed to buy stocks & bonds in an attempt to “ get rich quick ” Because most Americans were “ buying on margin ” the rising stock prices did not reflect a companies ’ actual worth If stock prices declined, where would they get the money to pay off their loans?

Stock Market Crash of 1929 In early September 1929, stock prices started a steady decline causing some investors to sell their stocks On Black Thursday October 24 th panic selling hit the New York Stock Exchange as stock prices plunged & investors sold quickly On Black Tuesday October 29 th confidence in the market completely shattered as over 16 million stock shares were sold Investors that had bought stocks on credit were stuck with huge debts & others lost all savings

Economic Collapse The Crash signified the start of the Great Depression The Crash led to bank closings & business failures. Many Americans attempted to withdraw their savings from banks, but some couldn ’ t because many banks had also invested in the stock market.

Causes of the Great Depression End of “ easy money ” in the US – In the 1920s, Americans made & spent money with ease, businesses earned large profits, & investors received substantial dividends, but this prosperity eventually ended Excessive borrowing of money – Most Americans bought goods & stocks on credit with the expectation that it would be easy to repay their debts

Causes of the Great Depression High tariffs had a negative affect on world trade – High tariffs prevented other countries from selling their goods in the U.S., in turn preventing them from securing the money needed to buy American products Unequal distribution of income – Prices rose while wages remained low.

Causes of the Great Depression

Life during the Depression Cities – People lost their jobs & were evicted from their homes – Shantytowns, soup kitchens, & bread lines became common – Unemployment rates rose especially among African & Mexican Americans

Life during the Depression Rural Areas – Thousands of farmers lost their land & turned to tenant farming in order to survive – Dust Bowl Due to over-plowing the protective layer of prairie grasses was removed allowing winds to carry dust hundreds of miles Parts of Kansas, Oklahoma, Texas, New Mexico, & Colorado became known as the Dust Bowl as dust storms led to thousands of farmers & sharecroppers left their land behind.

Dust Bowl

President Hoover ’ s Efforts After the Stock Market Crash, President Hoover tried to assure Americans that the economy was on solid ground Despite some urging direct relief from the federal government, Hoover believed relief should be provided by individuals, charities, & local organizations His response only frustrated those struggling as the depression grew worse

President Hoover ’ s Efforts Despite some success from the Boulder Dam project (later renamed the Hoover Dam), President Hoover ’ s inaction led to him being unfairly blamed for the Depression Shantytowns became known as “ Hoovervilles ” & the homeless wrapped themselves in newspaper known as “ Hoover Blankets ”

Bonus Army Congress had promised World War I veterans bonuses to be paid in Many veterans were jobless & homeless as a result of the depression & marched to Washington D.C. to ask Congress to pass a law granting the bonuses early. With Hoover ’ s backing, the Senate voted down a bill that would provide the bonus

Bonus Army After a few thousand veterans & their families remained to protest, General Douglas MacArthur decided to drive the Bonus Army out of Washington The result was intimidation of veterans & their families including one death, which the public reacted to angrily

Question for Review Why was Hoover so unpopular with many Americans?

Election of 1932 Franklin D. Roosevelt became the 32 nd U.S. President by defeating Hoover Roosevelt ’ s campaign focused on the depression. Roosevelt promised that the federal government would “ take action ” by providing direct relief to combat the depression

FDR “ Let me assert my firm belief that the only thing we have to fear is fear itself. ”

A New Deal for the American People FDR promised the American people he would provide relief, recovery, & reform to get the country out of the depression Through his alphabet agencies, FDR was taking action