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!)

Overproduction!

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?

Wall Street NYC

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?

Outside the NYSE

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!)

Hoovervilles

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…

The Hoover Damn (AZ & NV)

Public Works Projects Today!

The Bonus Army• 12,000-15,000 WWI

Veterans Marched on Washington D.C., Summer of 1932

• Wanted Their Bonuses Early Because They Were Broke! Needed the $$$ Early!

• They Refused to Leave Until They Got Their Bonuses!

• Set Up Camp in D.C.!!!

Hoover & Senate Say NO!!!

• Herbert Hoover & the Senate Vote Down a Bill to Give WWI Bonuses Early

• Most Veterans Went Home. Some Stayed & Protested!

• General Douglass MacArthur and the Present Army Kicked Them Out of D.C.– Fighting Broke Out!– Present U.S. Army

Used Tear Gas and Force!

Hoover Looks Really Bad!

• Americans Were Very Upset for the Harsh Treatment of the Bonus Army!

• Hoover Looked Really Bad! America Would Look For Change!

• FDR – Democrat Will Win the 1932 Election!

Essential Question:

• Should the Government Intervene in the Lives of its’ Citizenry? Explain.