Chapter 21

AP US History

What caused the Great Depression, and how did President

Hoover respond?

What strategy guided the early New Deal, and what problems and challenges arose in 1934-1935?

What key measures and setbacks marked the course of the New Deal from 1935 on?

How did the depression and the New Deal affect specific social groups in the United States?

What key developments shaped American culture in the 1930s?

Focus Questions:

By 1929, 4 million Americans (3% of the population) owned stocks.

By late 1929, the stock market was suffering: Not many new investors taking a chance Caused stock prices to drop Bull Market ended

Stockbrokers called their margins. Investors sold their stocks rapidly Stock Market plummeted even more

October 24th: The market took a dive that sent the investors into a panic.

By October 29th, the bottom fell out of the market.

Crash and Depression, 1929-

1932

The Stock Market crash signaled the beginning of

the Great Depression. Lasts from 1929 to 1941 Millions of people are out of work

Crash alone did not cause the Depression Made economic collapse happen more quickly Made the Depression more severe

Historians and economists differ on the main causes of the Depression. We agree on the following causes:

Causes of the Great Depression

Causes of the

Depression

1. An old and decaying industry

2. A crisis in the farm

sector

3. Availability of easy credit

4. Unequal distribution

of income

The 4 factors (named above) led to falling demand for consumer

goods. Additional Problems: Federal government caused more problems:

Keeping interest rates low Allowed businesses and individuals to borrow easily Borrowing builds up large amounts of debt Some of the borrowed money bought stocks Federal government did very little to regulate stock purchases. Borrowers were also not discouraged from purchasing stocks.

People were in shock that financial collapse had hit the United States. Hoover encouraged Americans to remain confident about their

economic future. There was no stopping this Depression: the worst was on its way!

Additional Factors

Dow Jones Industrial Average

(The Dow)

Most widely used barometer (measurement) of the health of the Stock Market.

Tracks the state of the Stock Market

Still used today!

Based on the stock prices of 30 representative large firms trading on the New York Stock Exchange (NYSE).

1920s – stock prices rose steadily and people rushed to purchase stock

Most engaged in speculation: buying on a chance of making a profit quickly

Buying on Margin: paying a portion of the price and BORROWING the remainder…BAD!!!

Black Tuesday is coming

September 1929: stock prices peaked and then fell.

Investors began selling

October 24: The market to a small plunge Investors panicked Worst was to come

October 29: Black Tuesday The bottom fell out of the market 16.4 million shares of stock were dumped on

this day Millions of shares could not be sold Many lost their savings in this crash

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The Depression Worsens

By 1933

thousands of banks had closed

millions of American workers were unemployed

Lining Up at Soup Kitchens

Bread Lines or Soup Kitchens emerged as the Depression worsened

These were started by private charities

Served unemployed workers & the poor

People could receive free food

Living in Makeshift Villages

unable to pay your mortgage or rent? Foreclosure = lost homes Often, landlords would use force to remove

tenets who refused to leave Bailiff = Court officer who would evict tenets

The Rise of Shantytowns

Newly homeless people built shacks on public lands

referred to these towns as “Hoovervilles”

Dwellers blamed the president for their financial troubles

Hobos, or homeless Americans who wandered around hitching rides on railroad cars, searched for work and a better life.

Hobo Life

Making turtle soupWalking the rails after eviction from a train

The Dust Bowl

As crop prices dropped in the 1920s, many American farmers left their fields uncultivated.

A terrible drought in the Great Plains, beginning in 1932, caused the region to become a “Dust Bowl”.

Many Midwestern farmers and Great Plains farmers lost their farms.

Many families moved west to the west coast hoping to find a better life, but most still faced poverty and homelessness.

Roosevelt's Rise to Power

Early Life

Parents: James and Sara D. Roosevelt (both came from old, wealthy American families.

Education: Groton, Harvard, and Columbia University School of Law.

Married: Eleanor Roosevelt (distant cousin and niece to Teddy Roosevelt).

Family: Eleanor and Franklin had 5 children.

4 boys and 1 girl

3 of his sons would serve in the US House of Representatives.

Began his political career in 1910 winning a seat in the New York

State Senate.

Allied himself with other New York Democrats standing against Tammany Hall.

Roosevelt was a progressive who supported reforming American politics.

Supported Woodrow Wilson in the 1912 presidential election.

Served as the assistant Secretary of the Navy from 1913-1920.

Viewed by many as an “able administrator.”

Roosevelt’s only political loss was in the 1920 presidential election where his was nominated as the vice presidential candidate for the democratic party.

Political Start

FDR as Assitant Sec. of the Navy

1921 = Roosevelt contracted polio while on vacation. Polio left him a paraplegic (paralyzed from the waist down). Roosevelt worked out daily and was able to regain partial use of his legs

(with braces). Roosevelt reentered politics in 1928

Elected governor of New York Instituted a series of programs to combat problems of unemployment

and poverty. Farm Relief Plan State Power Authority Regulation of Public Utilities Old age Pension programs

1932 = surrounded himself with a group of intellectuals that became known as the “Brain Trust”

He was one of the most determined and dedicated political officials willing to confront the Depression.

Polio and Politics

Roosevelt with another

Polio survivorRoosevelt as New York

Governor

Roosevelt's Inauguration

Roosevelt projected an air of friendliness and confidence that attracted voters.

Roosevelt was unafraid to try something new.

Hoover was viewed as a “do-nothing” president.

Roosevelt won by a landslide.

Between the election in November 1932 and inauguration in March 1933, Roosevelt planned how to defeat the Depression.

His plan was called the “New Deal”

March 9-June 16, 1933: referred to as the Hundred Days

What is the Hundred Days?

This is the first 100 days of any presidency.

Historians study or watch each president’s first 100 days…thinking it will reveal what is to come in that presidency.

During Roosevelt’s 100 Days

Congress passed 15 major pieces of legislation designed to

assist America in this economic crisis

These programs become “The New Deal”

The Hundred Days Begins

Preparing for the Presidency

Roosevelt’s advisers proposed ideas to meet everyone’s needs

These advisers divided into 3 major groups:

New Nationalism (advocated by Teddy Roosevelt)

Government and business should work together to manage the economy.

Government Planning

Wanted government control of the economy

New Freedom (advocated by Woodrow Wilson)

Government’s responsibility to restore competition to the economy.

Roosevelt had to restore America’s trust in the Banking system.

Declared a national bank holiday (closing all banks) Requested a special session of Congress

Emergency Banking Relief Act Required federal examiners to survey the banks. Treasury Department would then license sound banks.

Securities and Exchange Commission (SEC) Required new regulations for banks and the stock market

Glass-Steagall Banking Act Separated commercial and investment banking. Stock Market speculation becomes illegal Created the FDIC (Federal Deposit Insurance Corporation) =

government insures bank deposits to a certain amount. First Fireside Chat

Encouraged Americans to trust the banks. The banking crisis ended.

Fixing the Banks and the Stock Market

Roosevelt asked Congress to pass other laws to help farming and industry: Agricultural Adjustment Administration (AAA)

Reduced production Increased prices Ultimately helped those who raise on large crop rather than small farmers

National Industrial Recovery Act (NIRA) Suspended antitrust laws Allowed business, labor, and government to cooperate in establishing

voluntary rules Codes of Fair Competition

Everything was run by the National Recovery Administration (NRA) People were encouraged to buy products only from those who were

members of the NRA. Declared unconstitutional by the Supreme Court 1935!

Managing Farms and Industry

National Recovery

Administration Poster

Providing Debt Relief

Helping America deal with debt:

Home Owners’ Loan Corporation (HOLC)

Bought mortgages of homeowners behind in payments.

Restructured the mortgages to have longer to pay and lower interest rates.

Loans were only granted to employed persons.

Failure to pay = foreclosure.

Farm Credit Administration (FCA)

Established to help farmers refinance their mortgages.

Could have slowed true economic recovery

This act only provided for poor inefficient farmers instead of business.

Roosevelt also supported work programs:

Civilian Conservation Corps (CCC)

Employed young men (18-25)

Worked with the National Forestry Service

Planted trees, fighting forest fires, and building reservoirs

Federal Emergency Relief Administration (FERA)

Channeled money to help state and local agencies fund relief projects

Public Works Administration (PWA)

Begins construction projects

Civil Works Administration (CWA)

Established by Harry Hopkins (head of FERA)

Hired workers directly

Shut down because of cost!

Spending and Relief Programs