Hoover and The Crash The Great Depression & The New Deal (1929-1940) Chapter 26, Section 1
Essential Question: • Should the Government Intervene in the Lives of its’ Citizenry? Explain.
Herbert Hoover • Secretary of Commerce Under Calvin Coolidge • Won the 1928 Presidential Election • Republican – Believed in Laissez Faire! • 3 Republicans in a Row During 1920’s (Harding, Coolidge, Hoover) • Considered One of the WORST Presidents! (Great Depression)
The Big Jinx! • In One of Herbert Hoover’s Campaign Speeches, He Said: • “We shall soon be in sight of the day when poverty will be banished from this nation” • JINX!!! • Why Did Herbert Hoover Believe This?
4 Industries in Trouble During the “Roaring Twenties” • Agriculture (Farming) • Overproduction of Crops with New Equipment = Lower Prices/Profits • Railroads: • People Buying Cars • Textile Mills: • Mass Production of Textiles = Lower Prices • Mines: • Other Forms of Energy
The Growing Poor • By 1929, 71% of Americans Only Made $2500 Per Year (Below the Poverty Level) • Unemployment Rate Was Growing • African Americans REALLY Struggled to Get Jobs! (Racism)
1st Cause of Great Depression: Overproduction • Businesses Made More Goods! (Better Tech!) • Even Though Prices of Goods Went Down, So Did Peoples Salaries! • People Stopped Buying Goods! (Businesses Could Not Pay for Materials, Salaries, Equipment, Etc) • Businesses Had to Cut Costs ($$$) to Survive (Fire Workers!)
2nd Cause of Great Depression: Buying on Credit • Installment Buying: • During the 1920’s Most Americans Bought on Credit • When Americans Salaries Dropped, They Paid Off Their Debts Instead of Buying New Goods! • Businesses Sold Less/ More Overproduction • Is This Happening Today?
3rd Cause of Great Depression: Speculation • During the 1920’s Stock Prices Kept Going Up!!! • Speculation is the Buying and Selling of Stocks in Hope of Making a Quick Profit! • Most Americans Bought Stock in Companies and Sold It to Make $$$ • Is This Happening Today?
4th Cause of Great Depression: Buying on Margin • Investors Took Out Loans From Banks to Buy Stocks • If Stock Goes Up, Sell the Stock, Pay Back the Loan to the Bank, Make a Profit! (Awesome!) • If Stock Goes Down… Uh-Oh!
1928 Presidential Election • Herbert Hoover Won 1928 Presidential Election by a Landslide • Predicted More Prosperity for America (The Big Jinx!) • Republican – Laissez Faire (Hands Off)
Black Tuesday • October 29th, 1929 • As The Stock Market Kept Going Lower and Lower, Americans Panicked and Tried to Sell All of Their Stocks! • Nobody Wanted To Buy! Everyone Was Afraid as Prices Kept Dropping! • The Stock Market Crashed!!! • Is This Happening Today?
Failure of the Banks!!! • When the Stock Market Crashed, Banks Demanded Customers to Pay Back Their Loans! • People Who Bought on Margin Could Not Pay Back Their Loans! Banks Ran Out of Money! • Citizens Ran to the Bank To Pull Out Their Savings! Banks Had No $$$ To Give! • 9,000+ Banks Went Out of Business!!!
Business Failures 1929 • When The Market Crashed, People Stopped Buying Goods! • Thousands of Businesses Went Bankrupt! • To Save $$$, Businesses Fired Workers! • No Work, No Paycheck! No Paycheck, Can’t Buy Goods! Businesses Fire More Workers, More People Have No Paycheck….. Bad Cycle!!!
Unemployment and Hunger • 25% Unemployment in 1933 (1 out of Every 4 Americans) • Americans Bought Less Products! = Businesses Fired More Workers! • Poverty, Homelessness & Hunger! • Everyone Affected!
Global/World Wide Depression • The Great Depression Lasted From 1929-1941 (When the U.S. Entered WWII) • Many Countries Around the World Took Loans From U.S. Banks to Help Rebuild After WWI • When American Banks Crashed, So Did the World’s Economy!
Herbert Hoover: Laissez Faire Response! • Herbert Hoover was a Republican – Believed Government Intervention Should NOT Take Place! • He Cut Government Spending on Projects & Raised Taxes • Plan Made Sense But TOTALLY BACKFIRED!!! • Why Did Hoover’s Plan Make Things Worse???
“Rugged Individualism” • Herbert Hoover Did NOT Want to Give Federal Relief ($$$ and Food) to the Poor • Feared Citizens Would Then Rely on the Government (Dependent) • Hoover Believed in the “Rugged Individual” • Americans Had to Be Tough Through Hard Times! Suck It Up! • Why Do YOU Think Americans Think of Hoover as One of the Worst Presidents Ever?
Private Charities • Herbert Hoover Asked Private Charities to Help! • Salvation Army, The American Red Cross & Religious Groups Did As Best As They Could! • The Demand for Food, $$$, Shelter & Jobs Was too High!
Hoover Flags • Americans Blamed Herbert Hoover For Their Suffering! • Hoover flags and Hoovervilles Were Used to Blame Herbert Hoover for the Depression • Hoover Finally Changed His Laissez Faire Beliefs! (Too Little, Too Late!)
Public Works Projects • Government Funded (Paid For) Projects • Projects to Improve Infrastructure – Roads, Dams, Airports, Bridges, Tunnels • Projects Would Give People Jobs! • Reverse the Cycle! • Jobs = Paychecks = Spending = Investment Capital = Businesses Hire More Workers = More Paychecks = Etc…