The 1930s in America

The Great Depression and The New Deal

Recap – Buying on Credit

• Buy now, pay later

• Businesses give easy credit; consumers pile up large debts

• Consumers have trouble paying off debt, cut back on spending

The Stock Market

1920: stock prices rise steadily; people rush to buy stocks, bonds

Many engage in speculation = buy on the chance of making a quick profit

Buying on margin: pay small % of price, borrow rest

The Stock Market Crashes

October 29, 1929 (Black Tuesday)

• Shareholders sell frantically; millions of shares have no buyers

• People who bought on credit left with huge debts

• Others lose most of their savings

The Great Depression

Great Depression: economy plummets, unemployment skyrockets 1929–1940

Factors leading to Great Depression: tariffs, war debts, farm problems, easy credit,

income gap

Bank and Business Failures

People panic, withdraw $$ from banks

Banks that invested in stocks fail; people lose $

1929-1932: gross national product cut nearly in ½ 90,000 businesses go bankrupt

1933: 25% of workers jobless; those with jobs have hours and pay cut

Worldwide Impact Great Depression limits U.S.

ability to buy European goods

Hawley-Smoot Tariff Act: highest protective tariff in U.S. history

International trade drops; unemployment soars around world

Social Effects of the Depression

• People give up health care, college, put off marriage & children – all cost $$

• 1928–1932: suicide rate rises over 30%

• Admissions to state mental hospitals triple

Hoover’s Economic Theories

• Many think depression is normal part of business cycle

• President Hoover says economy is still okay• Gov’t should encourage cooperation between competing

groups• People should take care of their own families, not depend

on gov’t

Hoover Tries Reassurance

Asks business, banking, and labor leaders to solve problems

Creates organizations to help private charities raise money for poor

“Boulder Dam” built on the Colorado River Provides electricity, flood control, and water to states on

river basin … and provides JOBS Later renamed Hoover Dam

Election of 1932 Democrats nominate NY Governor Franklin Delano

Roosevelt

FDR wins by overwhelming majority

The New Deal New Deal: FDR’s plan for economic recovery and reform

The Hundred Days – passes over 15 New Deal laws in first 100 days in Office

Example: Emergency Banking Relief Act allows Treasury Dept. to

inspect banks Decide which are failing, need loans, or are sound Revives public confidence in banks

Fireside Chats Gave “fireside” radio addresses explaining New Deal acts

Discusses need for public support of gov’t and banks

People feel a connection with President and gain faith in New Deal

Regulating Banking and Finance

Glass-Steagall Act establishes Federal Deposit Insurance Corporation (FDIC) insures individual bank accounts, regulates banking practices

Federal Securities Act: companies must give all information on stocks

Securities and Exchange Commission (SEC) created to regulate stock market

Federal Housing Administration (FHA) gives loans for mortgages, repairs

Adding to “Alphabet Soup”

Civilian Conservation Corps - public works jobs for young men

Agricultural Adjustment Act (AAA) raises food prices, lowers supply

Tennessee Valley Authority (TVA) creates jobs renovating, building dams

Civil Works Administration - builds rural schools, pays teachers

Opposition to the New Deal

Deficit spending: spending more $$ than gov’t takes in Funds New Deal Policy still used today

Liberals: New Deal doesn’t do enough to help poor, fix economy

Conservatives: New Deal used to control business, socialize economy

The Second Hundred Days

• FDR launches second phase more relief for farmers, workers

• 1936: FDR reelected, Democrats win large majorities in both houses• First time most African Americans vote Democratic

Improving Labor

1935: Social Security Act creates Social Security system insurance for retirees 65

or older unemployment

compensation aid to disabled, families

with children

The New Deal Ends

1939: New Deal over (mainly for $$ reasons)

Supporters: FDR helped country recover from economic difficulties

Conservatives: FDR made federal gov’t too large

Liberals: FDR didn’t do enough to end inequalities

Government’s New Role

FDR expanded power of president and federal gov’t FDIC still protects investors; SEC still regulates

investments and monitors stock market

New Deal does not end Depression Federal gov’t goes deeply into debt to create jobs and give

aid

Massive spending on equipment/supplies for WWII ends Depression

Depression in Rural America• 400,000 farms lost to foreclosure

Many become tenant farmers –rent land from someone else

Farmers in Great Plains exhausted land through overuse

Drought and windstorms hit make problem worse

Dust Bowl: area from North Dakota to Texas hardest hit

Many families migrate to Pacific Coast states

The Black Blizzard

http://www.history.com/topics/dust-bowl/videos#black-blizzard

FDR’s Fireside Chat on the Dust Bowl

http://www.history.com/speeches/fdrs-fireside-chat-on-dust-bowl#fdrs-fireside-chat-on-dust-bowl