The Great Depression: Hoover, Stock Market Crash, and Economic Decline

1. Great Depression

2. Election 1928 • Herbert Hoover • -Republican • -Successful in WWI • -Head of the Food Administration in WWI • Alfred Smith • -Democrat • -Governor in NY • -First Roman Catholic ever nominated

3. Issues • Prohibition • -Hoover – Pro • -Smith – Anti • Religion • -Many protestants believed Catholic Church would run in the US if Smith was elected • Prosperity • -Republicans took credit for economic success in the country

4. Hoover’s first 6 months in office • Hoover won 444 to 87 in electoral college • (Sound movie cameras filmed his inauguration) • “I have no fears for our country. It is bright with hope.” • https://www.youtube.com/watch?v=G3WnsH06pGQ

5. -Pushed for reform in the treatment of Native Americans • -Increased forest reserves • -Expanded waterpower facilities • -Reduced military commitments in Latin America • (Good Neighbor Policy) • -Explored ways of saving money on military expenditures

6. Economic health of country • Stock prices reaching all time highs • Stock – share of ownership in a corporation • Sell shares of stock to make financial gain http://www.investopedia.com/simulator/ranking/?RGID=365341

7. Bull & Bear markets • Bull Market - Long periods of rising stock prices • Bear Market - Long periods of falling stock prices

8. Bull market Needs new investors to maintain it • By 1929  10% of Americans owned Stock • Bought on margin  put a small down payment on their stock and owed the rest • Ex. A person could buy $10,000 worth of stock with $1,000 and owe the rest with interest to a stock broker

9. Call – demand for payment of a loan • Speculation – people who wanted to make money quickly, bought and sold stocks quickly counting on the stock market to continue to rise

10. HOW THE CRASH HAPPENED • Banks used their depositors’ money to loan to speculators  who lost the money in the stock market  defaulted on their loans  depositors can’t get their money  become angry and refuse to deposit  tell others 

11. Banks have less money to loan  people can’t borrow  less money in economy  businesses suffer  recession •  Many banks were forced to close  Rumors of bank closings frightened Americans  pulled money out of banks  banks didn’t have depositors’ investments  were forced to close

12. Great depression • -1929-1939 • -Stock market crash did not cause it • -Put economy into a recession • -2 consecutive business cycles where the economy is in a slowdown • -GDP falls by less than 10%

13. Depression • -Extended period of economic decline characterized by large numbers in unemployment, inflation, and overproduction. • -When decline exceeds 10% of GDP • GDP - Gross Domestic Product • -Sum total of everything produced in a country in a year

15. What caused the Great Depression? • -Overproduction • -More efficient • productivity  increase • in goods, not enough • demand • -Uneven distribution of wealth • -Top 5% of families held 30% of the Nation’s Wealth • -⅔ of families earned less than $2,500/year

16. -Buying on credit • -Families bought high-cost items on installment plans • -Paying off debt for forced consumers to reduce other purchases • -Slowdown in retail sales • -High tariffs • -Reduced competition • -Reduced trade • -Fewer American goods were sold in foreign countries

18. -Mistakes made by the Federal Reserve System • -Instead of raising interest rates to avoid excessive speculation  kept rates low • -In response to the recession – raised interest rates and tightened credit, making it harder for businesses to recover

19. -Stock market crash • -Bank failures • -Default of International Loans • -Germany could not pay war reparations to US, GB, & France • -GB & France cannot pay US • -Lack of Government Programs Protecting or Giving Aid to Citizens

20. Life • By 1933 • 4,000 Banks failed • 3,000 Companies failed • 12 million people unemployed • (25% of the workforce) • Annual income went from $2,500 to $1,600 • Breadlines and Soup Kitchens were created by charities to serve the hungry

22. -Foreclosures took homes and farms of those who could not pay rent or loans • -Communities of homeless were Shanty towns called “Hoovervilles” because people blamed the President for their troubles • -Hoover flags were pockets turned inside out to show no money

24. HOBO • A migratory worker or homeless vagabond, especially one who is impoverished • The number of hobos increased greatly during the Great Depression era of the 1930s. • With no work and no prospects at home, many decided to travel for free by freight train and try their luck elsewhere. • Roger Miller - King of the Road - With Lyrics! - YouTube • https://www.youtube.com/watch?v=WrhAC0dFis0

26. Fantasy • -Helped people escape plight when possible • -Communities held dances • -Watched movies • -Snow White & 7 Dwarves • - Mr. Smith Goes to Washington • -Wizard of Oz • -Gone with the Wind • -

27. Monopoly invented • Soap Operas on radio • Novels • The Grapes of Wrath • By: John Steinbeck • The Sound & the Fury • By: William Faulkner

28. Dust bowl • -Due to over working the land and a severe drought, the Great Plains were unable to produce crops, winds carried off the soil for hundreds of miles, dumping on homes, crops even as far as the Atlantic Ocean

29. -Area North Texas to North Dakota was hit • -The hardest hit area was • Oklahoma and the people • who moved from there • were called “Okies” and • they went to California • in search of work

30. https://www.youtube.com/watch?v=_J80GOk1HFY • http://www.pbs.org/kenburns/dustbowl/photos/ • http://www.pbs.org/kenburns/dustbowl/interactive/

31. Great depression • -To assist the economy • -Hoover’s Plan was to increase Public Works • -Government financed building projects • -Only provided jobs for a portion of the unemployed • -Hoover asked the FED to put more money in circulation – but they refused • -He requested Congress to set up the Reconstruction Finance Corporation to provide loans from the government

33. Election of 1932 • -Republican  Herbert Hoover • – 59 votes • -Democrat  Franklin Roosevelt • – 472 votes • -Roosevelt won • -Believed in a balanced budget, the gold standard, capitalism, and progressivism • -Action Plan • -New Deal

34. -At his inauguration speech “The only thing we have to fear is fear itself.” He was referring to the Great Depression https://www.youtube.com/watch?v=Lm3Bntsp2ck

35. New Deal

36. First hundred days • -FDR’s bill sent to Congress • -Consisted of 15 major acts to meet the economic crisis • -Fireside Chats • -FDR talked to the public about his plans over the radio in language • anyone could • understand

37. New Deal Acts • Emergency Banking Relief Act • -Declared a National Bank Holiday closing all the banks for 4 days • -Federal examiners would survey the nations banks and issue licenses to those who were financially secure • Securities Act • -Required companies that sold stocks and bonds to provide complete and truthful information to investors • -Also established the Securities Exchange Commission to regulate the stock market and prevent fraud

38. Glass Stegall Act • -Separated commercial banks and investments banks • -Established the Federal Deposit Insurance Corporation • -Provides Government Insurance to protect bank deposits • Agricultural Adjustment Administration • -Provides subsidies to pay farmer to not grow crops because of overproduction

39. National Industrial Recovery Act • -Suspended anti-trust laws • -Set codes for fair competition • -Established minimum wage • -Limited factories to two shifts a day • Civilian Conservation Corps • -Offered unemployed single men 18-25 the opportunity to work for the National Forestry Service

40. Public Works Administration • -Construction Projects • -Highways, dams, schools, government facilities • Tennessee Valley Authority • -Built hydro-electric plants and dams aimed at providing electricity to and improving southern states and attracting industry to the south

41. Economy had shown only a slight improvement • -2 million jobs had been created • -10 million were still out of work

42. Challengers to the New deal

43. Huey Long • Louisiana Senator • Very popular • Champion of the poor • Improved schools, hospitals, roads, and bridges • Supported “Share Our Wealth” Clubs People thought of Long as a positive influence on a country whose upper echelon refused to let wealth trickle down. Insisted on increased taxation of the wealthy

44. Father charles Coughlin • Catholic priest • Radio Host • Detroit • Agreed with Long’s insistence to tax the wealthy • Gained popularity with each criticism of capitalist • policies, at the height of his disdain for Roosevelt, • he denounced FDR as a "tool of Wall Street” • Was also opposed to socialism, communism, • Marxism, and any political ideology that put the • power of the people into the hands of the government • As his speeches grew more anti-Semitic, stations refused to air his broadcasts, was a hero in Nazi Germany

45. Dr. Francis Townsend • Created Townsend Plan • Citizens over 60 would receive a • pension of $200/month • People would retire which would open • up jobs and increase spending • Rose from complete obscurity to become the • leader of a political movement supported by more than 25 million Americans. • FDR’s administration eventually adopted a version of the Plan when it created the Social Security program

46. second New deal • Roosevelt launches the 2nd New Deal • Works Progress Administration (WPA) • -Roads, Airports, Parks • -Federal Number One • -Controversial • -Offered work to artists, musicians, actors, and writers • Rural Electrification Administration (REA) • -Brought electricity to isolated rural areas

47. Banking Act • -Helped strengthen the Federal Reserve System • Social Security Act • -To provide some security for old people or unemployed workers • -Also provided modest payments to needy people, those with disabilities, and poor with dependent children

48. election of 1936 • Millions of voters owed their jobs, homes, and a salvaged economy to FDR • He easily won a second term, every state except for Maine and Vermont

49. Supreme Court • -1936 • -Declared AAA unconstitutional and had decisions pending on SS and Wagner Act • -Looked like they would strike down every New Deal program

50. Court Packing Plan • -FDR was angry at nine old men could strike down the will of the majority, so he decided to change the balance of the court • -Claimed the court was over burdened with work • -Sent a bill to Congress asking for an increase in the number of justices and requiring any justice with 10 or more years to retire within six months of turning 70 • -First political mistake • -It appeared the President was trying to interfere with the separation of powers • -Supreme Court backed down on SS