The Great Depression Roots Hoover promised

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: FDIC SEC FCA AAA NIRA NRA CCC FERA Wagner Act PWA CWA WPA Social 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