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The Great Depression: Causes, Effects, and Hoover's Response

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  1. Chapter 21 The Great Depression 1928-1932

  2. Section 1 Causes of the Depression

  3. 1920’s • Prosperity • Consumption increased • Gross national product increased • Stock market increased

  4. Herbert Hoover • Chosen by Republicans as Presidential candidate in 1928 • From Iowa; orphaned as a child • Mining engineer • Head of Food Administration during WWI

  5. Secretary of Commerce for Pres. Harding & Coolidge • Won the election; defeated Alfred E. Smith (Democrat)

  6. Economic Troubles • Farmers: made up ¼ of workforce – had increased farm yields during WWI – bought more land & equipment (huge debts & mortgages) – demand fell after war but production remained high – rural depression

  7. Widening gap between the rich & poor • Overproduction/under-consumption • Installment buying – (buying on credit) small percentage down payment made at purchase with balance paid over a period of months or years

  8. Black Tuesday • Tuesday, October 29, 1929 – stock market crash signaling the beginning of the Great Depression

  9. Great Depression • Period lasting from 1929 to 1941 in which the economy faltered and unemployment soared • 641 commercial banks failed in 1929 • Too little money was in circulation after the stock market crash

  10. Global depression • Germany had been forced to pay war reparations • France & Britain were attempting to rebuild • Business failures, bank collapses & high unemployment

  11. Section 2 Americans Face Hard Times

  12. Effects of Depression • 25% of Americans lost jobs by 1933 • Others saw hours & pay cut • Ate smaller meals: water replaced milk; no meat

  13. Many became homeless developing “Hoovervilles”: makeshift shantytowns of tents & shacks built on public land or vacant lots (So-named for Pres. Herbert Hoover whom they blamed for the Depression) • Many farmers lost their farms & moved

  14. Dust Bowl • Term used for the central & southern Great Plains during the 1930’s when the region suffered from drought & dust storms • Storms killed cattle, birds & fish • Forced many farm families to migrate

  15. Depression Effects (con’t) • Many men deserted their families • Birthrates dropped • Many children quit school • African American poverty in 1932 was near 50%

  16. Section 3 Hoover’s Response Fails

  17. Hoover’s Plan • “Hands-off” – at first • Saw business cycles as natural occurrences • Asked businesses & industries to keep employment, wages & prices at current levels

  18. Called for tax reductions, lower interest rates & public works programs • Wanted wealthier individuals to give more money to charity

  19. Localism • Policy whereby problems could be solved at local & state levels • More jobs & relief measures by state & local governments

  20. Reconstruction Finance Corporation • (1932) – gave $1billion in gov’t loans to railroads & large businesses • Lent money to banks

  21. Trickle-down economics • Economic theory holding that money lent to banks & businesses will trickle down to consumers

  22. Bonus Army • Group of WWI veterans who marched on Washington D.C. in 1932 to demand early payment of a bonus promised by Congress

  23. Chapter 22 The New Deal 1932-1941

  24. Section 1 FDR Offers Relief & Recovery

  25. Election of 1932 • Herbert Hoover vs. Franklin D. Roosevelt • Hoover believed relief should come from state & local gov’ts & private agencies • Roosevelt believed strong action from the federal gov’t was needed

  26. Franklin D. Roosevelt(FDR) • Served in the New York State Senate • Assistant Secretary of the Navy for W. Wilson • Governor of New York • Promised a “New Deal” for all Americans

  27. New Deal • Programs & legislation enacted by FDR during the Great Depression to promote economic recovery & social reform

  28. Brain Trust • Group of professionals & academics who advised FDR in the planning of the New Deal

  29. First Hundred Days • FDR proposed & Congress passed 15 bills as part of the First New Deal to accomplish 3 goals: relief, recovery, & reform • Relief: from the immediate hardships of the depression

  30. Recovery: long-term economic recovery • Reform: to prevent future depressions

  31. Emergency Banking Bill • Gave FDR power to declare a four-day bank “holiday” with the idea that banks would get all accounts in order before reopening.

  32. Fireside chats • Informal radio speeches made to the American people by FDR explaining the measures taken to relieve the depression • Reassured the people that the banks were safe

  33. Federal Deposit Insurance Corporation • FDIC – insured bank deposits up to $5000 to reform the national banking industry

  34. Securities & Exchange Commission • SEC – established by Congress to regulate the stock market & make it a safer place for investments

  35. Agricultural Adjustment Act • AAA – sought to end overproduction of farm crops & raise crop prices • Provided financial aid; paid farmers subsidies not to grow certain crops & to kill excess livestock

  36. Tennessee Valley Authority • TVA – built a series of dams in the Tennessee river valley to control flooding & generate electric power • Replanted forests, built fertilizer plants, created jobs & attracted industry

  37. Civilian Conservation Corps • CCC – provided jobs for young men replanting forests, building trails, digging irrigation ditches & fighting fires

  38. National Industrial Recovery Act • Established the National Recovery Administration (NRA) to develop codes of fair competition to govern whole industries • Established minimum wages & prices

  39. Public Works Administration • Built bridges, dams, power plants & government buildings • Improved the nation’s infrastructure & created millions of new jobs

  40. Section 2 The Second New Deal

  41. Works Progress Administration • WPA – created to administer the $5 billion appropriated for new jobs • Built & improved highways, harbors; promoted soil & water conservation • San Antonio River Walk & Appalachian Trail

  42. Social Security Act • Created a pension system for retirees, established unemployment insurance for workers who lost their jobs, & created insurance for victims of work-related accidents

  43. Rural Electrification Administration • Established to loan money to electric utilities to build power lines & bring electricity to isolated, rural areas

  44. Welfare state • A government that assumes responsibility for providing for the welfare of children, the poor, elderly, sick, disabled and unemployed

  45. FDR’s effect on the Presidency • Increased power of the President & the executive branch • Made mass media an essential tool in advertising & promoting policies • Expanded Presidential role in managing the economy

  46. Expanded Presidential role in developing social policy • Won 3rd & 4th terms which led to the 22nd Amendment

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