1. Herbert Hoover 1929 - 1933

2. I. The Election of 1928 A. Democrats- 1. ALFRED E. SMITH a. Received votes from urban and industrial areas b. Catholic, anti- Prohibition c. 87 Electoral Votes

3. B. Republicans- 1. HERBERT HOOVER a.Received votes in rural/agrarian areas b.“The government should be an umpire instead of a player in the economic game” c. The prosperity of the 20s was seen as the “Republicans' doing.” d. 444 Electoral Votes

4. C. Major Issue: Prohibition- should it continue even though it was not working? 1. Most people still wanted it to continue. 2. It was called the “Noble Experiment”

5. For the first time since Reconstruction, some Southern states voted Republican!

6. II. Financial Troubles II. Financial Troubles Causes of The Stock Market Crash - 1929 What caused a spectacular business boom of the 1920s to collapse in October 1929?

7. A. “Sick Industries”? 1. Textile Industries 2. Coal Industries 3. Agriculture 4. Railroads 5. These industries were dragging the economy down because they were not stimulating enough growth

8. B. Farmer’s problems 1. Congress called a special session to discuss the problems a. The government should not get involved in buying and selling and price fixing b. Agricultural Marketing Act (1929): helped farmers use their organizations to produce more efficiently

9. c. Hoover will establish the Federal Farm Board, which offered loans and financed creation of farmers’ cooperatives. d. Also aimed for the gov’t to buy surplus crops e. Crop prices continued to fall; farmers continued to suffer. f. Plan was not successful. “Too little, Too late”

10. C. CONSUMER SPENDING DOWN consumers were buying less By the late 1920s, American consumers were buying less Rising prices, stagnant wages and overbuying on credit were to blame Most people did not have the money to buy the flood of goods factories produced

11. D. GAP BETWEEN RICH & POOR The gap between rich and poor widened The gap between rich and poor widened The wealthiest 1% saw their income rise 75% The rest of the population saw an increase of only 9% families earned less than $2500 per year More than 70% of American families earned less than $2500 per year Photo by Dorothea Lange

12. 1. Credit a. Purchases on credit in 1929 reached $7 billion. b. Interest rates were kept low to promote business c. Consumers ignored warnings of economic experts that feared a downturn was coming. E. An unstable economy

13. 2. Playing the Market a. Investors poured millions of dollars into the stock market i. Bull market- upward trend in stocks ii. Bear market- downward trend in stocks

14. III. The CRASH A. The value of securities, stocks, and bonds tripled between 1925 and 1929. B. More people were speculating- taking a chance on a quick profit

15. C. Many people bought stock on margin- paid a % down in cash and then the stock broker paid the rest. (left them in debt to broker, hoping the stock would pay off eventually) D. The stock market begins to decline- the first major hit came on Thursday, October 24, 1929

16. Buying on the margin… Stock value: $1000 You put down 10%: $100; You borrow 90%: $900 Stock values increase: $2000 When you sell, the broker is paid back first ($900 + interest). You then collect your profits, which are greater than they would have been had you only invested your pitiful sum. Stock values DECREASE: $500 Again, broker is paid back first ($900 + interest). As you can see, with this process, debt mounts QUICKLY.

17. E. Black Tuesday- 10/29/1929 1. 16 million shares of stock were sold and the bottom fell out of the stock market

18. THE GREAT DEPRESSION the beginning of the Great Depression The Stock Market crash signaled the beginning of the Great Depression as the period from 1929 – 1940 in which the economy plummeted and unemployment skyrocketed The Great Depression is generally defined as the period from 1929 – 1940 in which the economy plummeted and unemployment skyrocketed The crash alone did not cause the Great Depression, but it hastened its arrival Alabama family, 1938 Photo by Walter Evans

19. FINANCIAL COLLAPSE Americans panicked and withdrew their money After the crash, many Americans panicked and withdrew their money from banks Banks had invested in the Stock Market and lost money banks fail In 1929- 600 banks fail By 1933 – 11,000 of the 25,000 banks nationwide had collapsed Bank run 1929, Los Angeles

20. GNP DROPS, UNEMPLOYMENT SOARS (GNP) fell nearly 50% Between 1928-1932, the U.S. Gross National Product (GNP) – the total output of a nation’s goods & services – fell nearly 50% from $104 billion to $59 billion businesses went bankrupt 90,000 businesses went bankrupt Unemployment leaped Unemployment leaped from 3% in 1929 to 25% in 1933

21. HAWLEY- SMOOT TARIFF The U.S. was not the only country gripped by the Great Depression Much of Europe suffered throughout the 1920s the toughest tariff in U.S. history Hawley- Smoot Tariff In 1930, Congress passed the toughest tariff in U.S. history called the Hawley- Smoot Tariff It was meant to protect U.S. industry yet had the opposite effect It was meant to protect U.S. industry yet had the opposite effect Other countries enacted their own tariffs and soon world trade fell 60% Other countries enacted their own tariffs and soon world trade fell 60%

22. CAUSES OF THE GREAT DEPRESSION (1) Tariffs & war debt policies (2) U.S. overproduction of products and low demand (3) Farm sector crisis (4) Easy credit (5) Unequal distribution of income

23. IV. Hoover’s Policies A. Reconstruction Finance Plan- Hoover’s attempt to aid the economy by loaning state governments money for relief- immediate help (too late) 1. No federal $ directly to citizens 2. Money was going to RRs, large banks, farm mortgage associations, savings and loans associations

24. 3. “Trickle-down” theory 4. Hoover was a firm believer in rugged individualism- success comes through individual effort and private enterprise.

25. B. President’s Committee for Unemployment Relief 1. Designed to assist state and local relief efforts. 2. The committee did little beyond urging Americans to contribute more $ to charities.

26. C. Home Loan Bank Act - 1932 1. Hoover established the Home Loan Bank Board and provided aid to savings banks, building and loan associations, and insurance companies for low-interest mortgages. 2. In 1932, over 30,000 companies and 800 banks failed, wiping out savings.

27. HOOVER’S PHILOSOPHY Hoover was not quick to react Hoover was not quick to react to the depression “rugged individualism” He believed in “rugged individualism” – the idea that people succeed through their own efforts People should take care of themselves, not depend on governmental hand-outs “pull themselves He said people should “pull themselves up by their bootstraps” Hoover believed it was the individuals job to take care of themselves, not the governments

28. D. Want in the land of plenty 1. Fear- loss of confidence a. Banks were afraid to lend money b. Companies were afraid to introduce new products c. Business leaders would not build new factories d. People would not spend the little money they had.

29. 2. Many kept their jobs but had hours and wages reduced 3. Some were better off because they kept their jobs but prices declined

30. V. The Depression Worsens

31. A.The Human Cost of the Depression 1. Unemployment- businesses promised Hoover they would not cut wages, but as the depression worsened, they had to. a. Breadlines and soup kitchens appeared on every corner as private charities attempted to feed the long lines of people

32. b. Hoovervilles- those who could not pay their mortgage payments ended up in makeshift housing on the outskirts of town, some in doorways or park benches

33. B. The Bonus Army 1. In 1932, unemployed army veterans (WWI) marched to Washington D.C. to demand early payment of the Bonus Congress had agreed to pay them in 1945 2. Their numbers grew to an estimated 10,000-20,000!

34. 3. The government tried to keep the demonstration peaceful, but they rejected the bonus army’s demands 4. There was a clash between the bonus army and the local police - Hoover called out the National Guard

35. 5. General Douglas MacArthur- Commander of the troops, who carried out the president’s orders to clear the veterans from federal buildings 6. Tanks, machine guns, and tear gas were used! The American people turned on Hoover because of this excessive use of force

36. C. Fear of Revolution 1. The American people began to get restless a. They blamed the depression on bankers and industrialists 2. Radical alternatives - The unrest in society led to the rise of socialism and communism

37. 3. Both alternatives claimed to be the best for America a. They destroyed each other’s credibility on their way to the top 4. Most Americans clung to their democratic traditions and expressed their anger at the ballot box