Chapter 21-22

• Hoover won the election

  1928
• The Great Depression


  Period of worldwide economic decline from 1929-1939
• Causes of the Great Depression

  • Overproduction of Goods
  • Unequal distribution of income
  • Stock Market Crash
  • Financial Panic
• The Stock Market seemed to be doing very well
• Success of consumerism in the 1920s attracted new investors
• Market Speculation


  Risky investments in hopes of quick profit
• Buying on Margin


  Borrowing money in order to buy stock
• Stock values didn't match reality…and the stock market plummeted
• Black Thursday (bad)


  October 24, 1929
• Black Tuesday (worse!)


  October 29, 1929
• $10 billion lost in stock value
• Stocks 1929-1932: U.S. Steel ($262 to $22), GM ($73 to $8)
• "Run on the Banks"


  In a panic, a large number of people tried to withdraw money from banks
• Nearly 7,000 banks failed during the Great Depression
• Pres. Hoover and his cabinet believed in "associational action"


  Let business and charity organizations lead the way - voluntarily
• Smoot-Hawley Tariff Act (1930) - raised taxes on imported goods
• Caused other countries to raise tariffs against one another
• By 1932, Hoover eventually broke from his previous beliefs
• Hoover's actions


  • Reconstruction Finance Corporation - loaned money to banks/RR
  • Federal Home Loan Bank System - aid to foreclosed homeowners
• Hoover would not go any further and opposed direct relief to unemployed
• Effects of the Great Depression

  • Failure of businesses (26,000 businesses failed in 1930)
  • Unemployment (25% unemployment rate in the U.S.)
  • Homelessness (estimated 2 million) and hunger
  • "Hoovervilles" - makeshift settlements or "shanty-towns"
  • Bread lines
• The Dust Bowl- Severe drought in the Great Plains in 1930
• Combined with poor agricultural practices from the 1920s, resulted in the loss of topsoil
• Dust storms ("black blizzards") began in 1931
• 35 million acres of land became unusable for farming by 1934
• An additional 125 million acres was losing its topsoil
• Resulted in large-scale migration from the Great Plains
• About 2.5 million people migrated looking for work
• FDR won the election

  1932
• FDR's Campaign


  Promised "A New Deal" for Americans
• Hoover spent the next four months (Nov.-Feb.) as a "lame duck" president
• The 20th Amendment (ratified in Oct. 1933) reduced the "lame duck" period by setting presidential inauguration at January 20th at Noon (instead of March)
• The Three R's


  • Relief for people out of work
  • Recovery for business and the economy as a whole
  • Reform of economic institutions
• Relied on university professors and economic advisors known as the "Brain Trust"
• Diverse government administration: appointed African-Americans, Catholics, Jews, and women (Sec. of Labor Frances Perkins)
• Eleanor Roosevelt - set a precedent as First Lady, being involved in political and social initiatives
• First New Deal legislation and programs

  • AAA, CCC, NRA, etc.
• Held "Fireside Chats" to communicate directly to the American people over the radio
• "Bank Holiday" - FDR ordered banks closed and explained via radio to instill confidence in the public before reopening
• Passed the Beer & Wine Revenue Act