Transcript Hoover wouldn`t involve himself in any programs where the


Increase in spending led to large profits
so…
› Wages increased
› Encourages more spending

INSTALLMENT PLAN
› Partial payments over a set period of time
› Interest charges ranged from 11% to 40%

GREAT!!!
› Climbing stock market
› Increase consumer confidence
› Labor stability
Rich got Richer
Corporation vs Small
Businesses
Rich families (over $100,000) = .1%
Poor fams (<$2500) = 71%
CREDIT SPENDING  INCREASE IN PERSONAL DEBT
Mergers led to reduced competition.
 200 companies owned 50 % of nation’s wealth
 When one company went bankrupt… huge impact
on economy and society
 86,000 businesses failed
 wages were decreased by an average of 60%
 unemployment rate from 9% to 25%
 about 15 million jobless

STOCK SPECULATION people would buy and
sell stocks quickly to
make a quick buck
 b/c
of all this buying &
selling, stock value
increased
› (Ex: G.E stock $130 
$396/share)

Who did they need to
attract?
› HOW?

Investors only had to
pay for 10% of the
stock's actual value at
time of purchase

If a stock is $100 you
can pay $10 now and
the rest later when the
stock rose
› balance was paid at
a later date
The good
Stocks go up
 Borrowers sell at
high price
 Pay off
› Loan
› Interest
› + make extra $$$
The bad


High interest rates

Demand payment
anytime

If stocks fall then
don’t have money
to pay back
BUILDS UP!
 PRODUCTIVITY GOES UP!
 PROSPERITY AND WEALTH INCREASE

BUT……this doesn’t last
 Productivity
Problems?
› Too much
› Overstocked warehouses
 Held more goods then consumers
were buying.
› Led to Increase in Unemployment
FARMERS: Lower farm prices  Farmers
unable to pay off debts for land and
machinery
FACTORY WORKERS: Bad conditions,
wages still not good enough

BLACK TUESDAY, Oct. 29th, 1929 - NYC Stock
market crashed, causing a depression that
would last until 1942
 Loss
of confidence
 Uneven wealth
 Rising debt
 Stock speculation
 Overproduction
 Hardships of farmers and factory
workers
all
tried to sell stock
at once and bottom
fell out of market =
panic selling… (many
bankruptcies as
banks called in loans)
16.4mill
sold vs. the
avg 4-8mill
1. Risky Loans Hurt Banks
 Banks earned profit on interest they
earned from loans
 Gave loans to high risk businesses who
could not pay them back
2. Consumers Borrowing
 Took loans out of bank and could not
pay them back
3. Bank Runs
 PPL feared banks would run out of $$$
led to Banks Closing
4. Bank Failures
 Unpaid loans and banks runs  Banks
Closing.
- Over 5500 failed in a few yrs
5. Savings Wiped Out
 By 1933 9million savings accounts
vanished
6. Cuts in Production
 Businesses can’t borrow $$$ to
produce goods.
 No $$$ to produce or buy
7. Rise in Unemployment
 As businesses cut production
- Lay offs increase
- Unemployment increases
8. Further cuts in production
 As unemployment
increases, income decreases,
consumers spend less, and
production decreased more.

Farmers were already feeling the
effects
› Prices of crops went down
› Many farms foreclosed

People could not afford luxuries
› Factories shut down
› Businesses went out
Banks could not pay out money
 People could not pay their taxes

› Schools shut down due to lack of funds

Many families became homeless and
had to live in shanties

Some families were
forced to live in
shanty towns
› A grouping of shacks
and tents in vacant
lots

They were referred
to as “Hooverville”
because of
President Hoover’s
lack of help during
the depression.
1931-1940
“The Dust Bowl”
 Crops
turned to dust=No
food to be sent out
 Homes buried
 60% lost their farms
 Many moved
 South in state of emergency
 Dust Bowl the #1 weather
crisis of the 20th century
 didn't
believe gov't should play an
active role in the economy
 persuaded bankers/business to follow
his policy of VOLUNTARY NON COERCIVE COOPERATION
› Promise to keep wage rates
› End of 1931 most got pay cuts
PLAN BACKFIRES
 Democrats
in Congress passed a high
tariff (Hawley-Smoot Tariff) to protect U.S.
industry
› hoped to stimulate purchasing of U.S. goods
 this
turned out to be a fatal error...
 Congress did not understand that the
world had become a GLOBAL
ECONOMY
 in retaliation other countries passed high
tariffs and no foreign markets purchased
American goods, so U.S. productivity
decreased again
 he
persuaded Congress to establish the
RECONSTRUCTION FINANCE CORPORATION
› had power to make emergency loans to banks
but it was too little too late…
 Hoover
wouldn't involve himself in any
programs where the government directly
provides aid to individuals
› He didn't want to erode Americans sense of
"RUGGED INDIVIDUALISM"




Hoover was increasingly
unpopular, but he
continued to try...  he
persuaded Congress to
establish the
RECONSTRUCTION
FINANCE CORPORATION
had power to make
emergency loans to banks
but it was too little too
late…
and Hoover wouldn't
involve himself in any
programs of direct gov'tal
aid to individuals -didn't
want to erode Americans
sense of "RUGGED
INDIVIDUALISM"
1932 ELECTION
1 out of 4 was
unemployed…
nat'l income was
50% of what it had
been in 1929
Repubs. nominated
Hoover  no hope
winner by a
landslide = FRANKLIN
DELANO ROOSEVELT
(Dem - N.Y.
governor)
“This campaign is more than a contest
between two men. It is more than a contest
between two parties. It is a contest between
two philosophies of government.”
- What is this saying about Hoover & FDR?
- Their political ideologies?
- How was the federal government’s role
going to change?
FDR: Keynesian or "pump priming" economics
- Based on beliefs of economist John Maynard Keynes
- Money should be invested in people, the working class
- Then, spending would increase with new money in
circulation, then businesses would expand to meet the
new demand and hire new workers
Hoover: supply side or "trickle down" economics
- Money was to be invested at top, in business
- Then, businesses would expand, hire new workers and in
turn, spur on spending and further economic growth
http://www.socialstudieshelp.com/USRA_New_Deal.htm
Painting
American Gothic
Grant Wood
Literature
Literature
Of Mice
and Men
Literature/Cinema
Margaret Mitchell
Frances Perkins
Sec. of Labor
Eleanor Roosevelt
A woman is like a tea bag- you
never know how strong she is
until she gets in hot water.
Great minds
discuss ideas;
Average minds
discuss events;
Small minds
discuss people.
It is not fair to ask of others what
you are unwilling to do yourself.
I could not at any age be content to take
my place in a corner by the fireside and
simply look on.
No one can make you feel inferior without your consent.
The
First
From his inauguration in
March through June
1933 FDR pushed
Programs through
Congress to provide
relief, create jobs and
stimulate the economy
1. Relief
Immediate action to halt economy’s deterioration
2. Recovery
"Pump - Priming" Temporary programs to restart
flow of consumer demand
3. Reform
Permanent programs to avoid another depression &
insure citizens against economic disasters
 Bank
Holiday
› Closed all banks for inspection
› Reopened “safe” banks (some with loans)
 Federal
Emergency Relief Act (FERA)
› Direct loans to people to prevent foreclosures
 Civilian
Conservation Corps (CCC)
› Jobs building roads, plants trees, soil erosion
 Civilian
Works Administration (CWA)
› Jobs building bridges, causeways, hospitals
 Tennessee
Valley Authority (TVA)
› Jobs building factories & dams (elec. to farms)
 Works
Progress Administration (WPA)
› Work for artists & build roads, libraries, schl.
 National
Recovery Act (NIRA)
› Priced products, set min. wage, work condit.
 Agricultural
Adjustment Act (AAA)
› Paid to reduce crops, unseeded acres, plow
under crops/kill animals
Security & Exchange Commission (SEC)
› Watch stock market – no fraud / insider trading
 Federal Deposit Insurance Corporation (FDIC)
› Insured all bank accounts to $5,000
 National Labor Relations Act / Board (NLRA/B)
› Wagner Act – fair business (no monopolies)
 Social Security (SS)
› Today’s workers pay for today’s retirees

“Share the Wealth”
- Socialist
- Guaranteed $5,000 to all
- Take millionaire’s $ and divide
- Everyone gets car, house, radio
- “Every man a king”
- Shot and killed in 1935
- More economic & political
talks on radio than religious
- Supported FDR in 1932
- Economic reform =
anti-comm. & anti-capit.
- Supported fascism
- Anti-semitic (nickname)
- Isolationist
- Silenced
Congress
Can’t
Regulate
agr
State
Gov’t to
Regulate
Intrastate
Business…
Hurt small
business
Changing the Supreme Court…. WHY???
PROS
CONS
- Unemploy. decreased
- National debt
increased
- Increased income
- Doubled fed.
- Preserved resources
Bureaucracy
- Cushion for elderly/sick
Didn’t
increase
small
- Supported unions
business activity
- Ensured bank safety
Set a precedent that
the federal government is
responsible for the
economic welfare
of the people
“You have
nothing to fear,
except fear
itself”

Evaluate the effectiveness of FDR’s NEW
DEAL legislation. Look at: impact both short
and long term. What should have been done
differently? Are there any lessons that
Barack Obama should specifically learn from
FDR, in your opinion? How has this
recession impacted or how will impact you in
the long run?