1929-1939

The Great Depression and the New Deal

Ch.22 & Ch.23

Causes of the Depression1929-1933

Wall Street Crash:Rising stocks hit an all time high (September 3)

Black Thursday: (October 24, 1929)Extreme amounts of selling on Wall StreetStock prices plungedBankers tried to stabilize the market on Friday.

Black Tuesday: (October 29, 1929)*Investors panicked and sold while no buyers came.

What started the Depression?

Uneven distribution of income (Mellon Tax Plan)

Stock market speculation (Mellon Tax Plan)Excessive use of creditOverproduction of consumer goodsWeak farm economyGovernment policiesGlobal economic problems.

Effects

U.S Gross National Product- (Value of all goods and services produced by the US in 1 year)-Dropped from $104 billion to $56 Billion in 4 years.

US income dropped over 50%20% of banks closed (10 million savings accounts

lost)1933- 13 million unemployed (25%)

Hoover’s Policies “Do nothing president”

Hoover assumed the tides would turn

Message to Americans:Localism-Local and state gov. responsibilityVolunteerism- Charities take care of the poor and

needy.Rugged Individualism- Hard work, sacrifice, and

determination will get the US out of the depression.

Hoover Policies (Foreign)

Hawley-Smoot Tariff (1930)-Raised tariffs to an all time high.Consequence???

Debt moratorium-1931 (Economy was so bad) Dawes Plan not

working, Hoover suspended all payments of international debts. Tons of loan defaults.

Hoover’s Domestic Programs

Federal Farm Board- Help farmers stabilize prices by storing grain and crops.

Reconstruction Finance Corporation (RFC)-1932 Congress created gov. owned corporation-Help railroads, banks, life insurance companies, and financial

institutions. (Trickle Down Effect) (Business focused)

Farmer unrest- Created Farm Holiday Association in the Midwest. Try to stop banks from foreclosing and try to keep 1932 harvest from the market. (Not Effective)

Bonus March- WWI Veterans (Bonus Expeditionary Force) promised a bonus by 1945. March to D.C demanded an immediate payment.

Hoover ordered the army to break up the encampment.

Hoovervilles

Bell Ringer

1)If you were living at the time of the Great Depression, what are three ways the Depression would have directly influenced your life?

2) Describe Hoover’s approach to the Great Depression. How did most American’s view Hoover’s philosophy?

Election of 1932Hoover becomes unpopular(1930 Democrats control House)Hoovervilles1932- Worst year of the Depression so far.

Franklin D. Roosevelt (FDR)- Dominates Hoover“I pledge you, I pledge myself, to a new deal for the

American people.”Blacks started to favor Democrats instead of their

traditional support for Republicans.

Hoover “lame-duck” president:-Four months before FDR would become president. -20th Amendment- Shortened the period to January

20.

FDR

FDR’s New Deal Philosophy

FDR promised to attack the crisis through radical reforms and experimentation.

Congress gave him immense support Biggest problem at first was restoring

confidence

3 R’sRelief- for people out of workRecovery – for business and economy Reform- of American institutions

First 100 Days

March 4, 1933: FDR called Congress to aHundred-day-long special session. Congressed passed into law every request by

FDR.More major legislation than any single

Congress in history.

Bank Holiday

Early 1933Banks were failing at insane ratesTo instill faith in the remaining banks, FDR closed

the banks for a 4 day bank holiday on March 6, 1933.

FDR reassured Americans on the radio that the banks would be back when they were sound.

Fireside Chats

March 12, 1933 First fireside chatRadio broadcast of the president reassuring

Americans, especially in regard to the safety of the banks.

More money was deposited than withdrawn when banks reopened.