Chapter 21 The Great Depression 1928-1932. Section 1 Causes of the Depression.

Chapter 21

The Great Depression1928-1932

Section 1

Causes of the Depression

1920’s

•Prosperity•Consumption increased•Gross national product increased

•Stock market increased

Herbert Hoover

•Chosen by Republicans as Presidential candidate in 1928

•From Iowa; orphaned as a child

•Mining engineer•Head of Food Administration

during WWI

•Secretary of Commerce for Pres. Harding & Coolidge

•Won the election; defeated Alfred E. Smith (Democrat)

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

• 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

Black Tuesday

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

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

Global depression

•Germany had been forced to pay war reparations

•France & Britain were attempting to rebuild

•Business failures, bank collapses & high unemployment

Section 2

Americans Face Hard Times

Effects of Depression

•25% of Americans lost jobs by 1933

•Others saw hours & pay cut

•Ate smaller meals: water replaced milk; no meat

•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

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

Depression Effects (con’t)

•Many men deserted their families

•Birthrates dropped•Many children quit school•African American poverty in

1932 was near 50%

Section 3

Hoover’s Response Fails

Hoover’s Plan

•“Hands-off” – at first •Saw business cycles as

natural occurrences•Asked businesses & industries

to keep employment, wages & prices at current levels

•Called for tax reductions, lower interest rates & public works programs

•Wanted wealthier individuals to give more money to charity

Localism

•Policy whereby problems could be solved at local & state levels

•More jobs & relief measures by state & local governments

Reconstruction Finance Corporation

•(1932) – gave $1billion in gov’t loans to railroads & large businesses

•Lent money to banks

Trickle-down economics

•Economic theory holding that money lent to banks & businesses will trickle down to consumers

Bonus Army

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

Chapter 22

The New Deal1932-1941

Section 1

FDR Offers Relief & Recovery

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

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

New Deal

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

Brain Trust

•Group of professionals & academics who advised FDR in the planning of the New Deal

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

•Recovery: long-term economic recovery

•Reform: to prevent future depressions

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.

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

Federal Deposit Insurance Corporation

•FDIC – insured bank deposits up to $5000 to reform the national banking industry

Securities & Exchange Commission

•SEC – established by Congress to regulate the stock market & make it a safer place for investments

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

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

Civilian Conservation Corps

•CCC – provided jobs for young men replanting forests, building trails, digging irrigation ditches & fighting fires

National Industrial Recovery Act

•Established the National Recovery Administration (NRA) to develop codes of fair competition to govern whole industries

•Established minimum wages & prices

Public Works Administration

•Built bridges, dams, power plants & government buildings

•Improved the nation’s infrastructure & created millions of new jobs

Section 2

The Second New Deal

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

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

Rural Electrification Administration

•Established to loan money to electric utilities to build power lines & bring electricity to isolated, rural areas

Welfare state

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

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

•Expanded Presidential role in developing social policy

•Won 3rd & 4th terms which led to the 22nd Amendment