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Farmers in trouble Industries in trouble- RR, steel, textiles Credit- People buying in credit and installment plans Buying on the Margin Lead to stock market crash Laissez-faire Govt does very little to help
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Overproduction Farmers produce more which leads to price of crops going down Debt Increase debt and foreclosures on farmers loans Hurt banks because farmers can’t make payments and foreclose
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Auto industry was booming Other industries failing Steel, coal mining, railroads, textiles, lumbering, other mining Lead to workers losing jobs and debt
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1928- Elected as Republican “Rugged Individualism” Belief that individuals should help themselves and government should not get involved to help people
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“Buying on the Margin” Way to buy stocks where you pay part of the money up front and banks finance the rest Example- you buy a $100 stock but only pay $20 because bank finances other $80 When stocks doing good- fine When stocks drop- people lose $20 and can’t pay back the other $80 Leads to panic and people selling stocks for whatever they can get
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October 29, 1929 “Black Tuesday” People sell stocks in record numbers and stock market drops dramatically People lose entire savings and investments Bank Failures Following collapse, people rush to banks to withdraw money Many banks couldn’t pay because they lose in stock market crash Leads to bank closings and people losing investments in banks
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High Unemployment as businesses fail 3% n 1929 to 25% in 1933 Worldwide Effects Many European investors lost money in US stock market crash European economies effected Hard to sell American farm goods overseas
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Cautious “Rugged Individualism” 1929- Boulder Dam (Hoover Dam) Provide electricity and control floods in Nevada and California (today provides water to Las Vegas and Los Angeles) Finally- 1931 Hoover acts Federal Home Loan Bank Act- reduce mortgage rates for homeowners Reconstruction Finance Corporation- $2 billion in emergency funds for banks and other businesses
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Hoovervilles Named after President Hoover Settlements of poor and unemployed Built homes from boxes, scrap metal, whatever they could find Dust Bowl Caused by drought and overproduction Extreme drought conditions Huge storms of dust and wind- drive many farmers to leave (for California) Dust storms- could not see, spread disease, winds causes destruction Will be referred to as Oakies From 1933-1936
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Bonus Army (1932) WWI veterans wanting bonus (Govt. had promised to pay this in 1945) Wanted it earlier- due to depression Hoover refused Most left Washington DC- about 2,000 stayed US Army forced to act- gassed about 1,000 people (some died, including 11month old baby) Hoover’s image and reputation will suffer
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Franklin Roosevelt (FDR) wins Promise to use government spending to help economy First action in 1932 will be to close all bank and declare a banking holiday Pass the Emergency Banking Relief Act Sound banks can reopen Those that needed help would get loans Programs will become known as the New Deal He will win re-election in 1936, 1940, and 1944
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