The History of the New Deal

1. The History of the New Deal The Stock Market Crash The Great Depression The New Deal

2. The Roaring Twenties • A time of much prosperity after WWI. • Industrialization and technology was increasing tremendously. • Radio and automobiles came on the scene in daily life, and air travel became more common. • The economy was booming.

3. The Roaring Twenties • Jazz music because very popular. • Baseball became America’s past time. • Flapper fashion was all the craze.

4. President Hoover

5. Possible Causes of the Depression • Poor distribution of wealth. No one can afford to buy anything. • The cost of WWI. Most of the loss was paid in debt. • It is all a conspiracy man. Some believed it was bankers’ fault, others blamed Jews, Communists, and other minority groups- take your pick.

6. 1929 • President Herbert Hoover comes in office. • In May there is a bump in the stock market. In June & July following bumps occur and Hoover does nothing. He feels the market will settle on its own. • The rise and fall of the market was due to too many people selling stocks at once.

7. Trusts formed • People would join together, buy up a ton of a company’s stock, and then sell all the stock at once- creating a drop in the market. The people in the trust make a lot of money off of this during 1929. • Since this time insider trading and stock trusts have become an illegal practice

8. A little info on stocks • The stock market was excelling. The Dow Jones Industrial average soared and many people were buying stocks in the countries largest companies. • From 1921 to 1929 the Dow Jones went from 60 to 400!

9. Dow Jones? • It’s complicated, but to simplify its explanation: The Dow Jones Industrial Average is a stock market index that represents stock prices of its components and dividing by the number of stocks. The remaining value represents the average price of a stock represented in the index. Usually only the top companies are represented by this index.

10. Dow Jones in the 1920s • There were 30 stocks represented by the index in 1928, the height of the Roaring Twenties. • This time period was seen as a “Bull Market” or a time when investors confidence in the market is good and so investors buy stocks hoping for later gains. • A lot of money was invested into the stock market and the New York Stock Exchange was the largest stock market in the world.

11. Thursday, October 24, 1929 • Stock market goes into a panic selling mode. • High volumes of trading occurred leading up to this day. • Following the trading, recovery and high prices occurred. • The market was incredibly unstable.

12. Black Tuesday • Occurred on October 29, 1929. • 16 million shares of stock were sold that day. • The market dropped 40 points. • This equals approximately a $14 billion loss in one day. At the end of this week the market had lost $30 billion dollars.

13. What happened next? • It was not just individuals who invested in the stock market. Banks as well had invested in the stock market, and with the crash these banks lost all of their depositors money. • Many peoples’ life savings’, retirement funds, etc. were all lost due to the crash.

14. Hysteria! • When the public discovered that many banks were going under, people ran to their banks in mass numbers and withdrew all their funds. This added to the problem for the overall market. • Some people dealt with this by burring money in their backyard, others (primarily the aristocracy) by committing suicide by jumping off of buildings.

15. Hoover problems • President Hoover believed in a belief of economics that if the market were left alone, it would adjust itself. • He did not feel government intervention into private businesses was the answer to the problem.

16. Bonus Marchers • WWI vets secured a bonus calculated at $1 a day for stateside vets and $1.25 a day for overseas vets for each day they served. This maxed out at $500 stateside and $625 for overseas vets. • Vets were not supposed to get this bonus until 1945, but vets decided they wanted it now to help ease their Depression woes.

17. Bonus March • Beginning in May of 1932, marchers from across the country began their quest for Washington. • They traveled by train, bus, car, or any means they had to get there. • By mid-June approximately 20,000 veterans and their family members in D.C.

18. What happened? • The senate refused to pay the marchers. • The marchers lived in shanty huts, called Hoovervilles, and refused to leave. • On July 29, 1932 federal troops stormed the hooverville camps and burned them down and removed the marchers by force. • One veteran died and many more were injured.

19. Burning Hooverville

20. Farm Holiday Association • Hoover initiated a program to insure the prices of food would stay high enough for farmers to afford to keep their farms. • This program called for farmers to burn the surplus of their crops. • Needless to say, the starving and unemployed were outraged at this idea. • This program in effect had no outcome on food prices.

21. How did things change? In the 1932 presidential election Franklin Delano Roosevelt, or FDR, was elected by a large majority of votes. Everyone was fed up with Hoover not doing enough to help the nation. FDR came into office in March of 1933 with a plan he called “The New Deal.” The New Deal Video!

22. FDR

23. It’s time to change • The American people needed answers and change. • By the time FDR came into office in March of 1933 there were approximately 13,000,000 people unemployed in America and many banks had closed.

24. First 100 Days • In FDR’s first 100 days as president he and congress began to enact many programs to lift the country out of the Great Depression. • These programs have been referred to as an alphabet soup of programs since most are known by acronyms. • Let’s look at some of these programs:

25. Bank Holiday • FDR called for an emergency session of congress upon taking office. • FDR proposes and passes a bank holiday were all banks close for 7 days. • During this time banks had to organize their books and restructure themselves.

26. Tennessee Valley Authority (TVA) • The TVA was one of FDR’s biggest achievements, and it is still in place today. • It used $4 billion to make hydroelectric dams and help the Tennessee Valley area to create and sell electricity. • TVA is a self-sustaining organization, meaning it pays for itself.

27. Civilian Conservation Corps. (CCC) • FDR promised 250,000 jobs by July with this program and exceeded it. • Young men got jobs in the CCC planting trees and doing work in state parks, doing many outdoor construction, forest firefighting, building schools, post offices and other municipal city buildings in communities across the country.

28. CCC • In the CCC young men earned $30 a month, and were made to send $25 home to their families. • Over $72 million dollars went into this program. • A CCC camp in a community raised approximately $5,000 a month that would go into the community from the young workers spending money. There was at least one CCC camp in each state.

29. Agricultural Adjustment Act (AAA) • Put in place to solve farming crisis. • Paid farmers not to overgrow crops. • It allowed for the government to buy the surplus of crops and for farmers to afford their land. • This was a very popular program with farmers, however it was not very popular with others.

30. Public Works Administration (PWA) • Gave jobs to build schools, post offices, hospitals, roads, bridges, and tunnels. • The PWA is the biggest of the programs in the first 100 days. $3.3 billion went into this program.

31. Security Exchange Commission (SEC) • Created to watch the stock market and to regulate it. • This program made the stock market transparent and under control.

32. Federal Deposit Insurance Corporation (FDIC) • Protected depositors for up to $100,000 of their deposits. • The FDIC guaranteed deposits in commercial banks and helped restore the faith of Americans to use banks again.

33. So, did The New Deal help? • Yes, but it wasn’t 100% effective. It got people working, banks organizing, and provided relief for farmers. • It took until 1955 (26 years) for the Dow Jones to surpass it’s 1929 high before the crash. • With the New Deal programs and the onset of WWII the country was able to begin its journey out of financial downturn.

34. Some things to study: • New Deal programs: the bank holiday, TVA, CCC, PWA, FDIC, and SEC. • Differences between the way Hoover handled the Depression vs. how FDR did. • How the crash of the stock market was a precursor to the Great Depression.

35. Sites Used • The History Place. "Presidential Portraits." The History Place. Available from http://www.historyplace.com/specials/portraits/presidents/index.html. Internet; accessed 22 October 2007. • "Stock Market Crash." Available from http://www.stock-market-crash.net/1929.htm. Internet; accessed 22 October 2007. • "The Sad Tale of the Bonus Marchers." Available from http://www.worldwar1.com/dbc/bonusm.htm. Internet; accessed 22 October 2007. • YouTube. "The New Deal." YouYube. Available from http://www.youtube.com/watch?v=jQ9oBg6T2UE. Internet; accessed 22 October 2007.