1929-1939

“A chicken in every pot and a car in every
garage” – Herbert Hoover

 A period of severe economic decline, marked by unemployment, decreasing business activity, and falling prices.
 Previous depressions: 1830s, 1870s, and 1890s

 Shocking after a decade of unprecedented prosperity
 Impacted all areas of American life
 Damaged confidence in the future

 Median incomes plunged to half of what they had been in
1929
 ¼ out of work
 Impacted all areas of American life
 Damaged confidence in the future

 1920s prosperity was superficial
 Causes of the Depression were complex and largely ignored throughout the decade

 The wealthiest 5% took in nearly 1/3 of the nation’s income
 Nearly ½ of the nation’s families earned less than $1,500 a year—while H. Ford made $14 million
 Causes: 1) Mellon’s tax cuts 2) Businesses increased profits while holding down wages
 Effects: Depressed consumer purchasing power
Secretary of Treasury
Andrew Mellon
1921-1932

 In 1929, 200 corporations controlled ½ of the corporate wealth
 Some industries thriving (auto) while others like agriculture declining steadily
 Average income for a farmer $273

 For an economy to function properly, the total demand must equal total supply
 In 1920s there was an oversupply of goods
(mechanization of industry & farming responsible) supply
1920s Economy demand

 Installment plans


Borrowing on margin to buy stocks
Private banks loaned out millions  rising debt throughout the 1920s

 America prospered in the 1920s, while European nations struggled to rebuild after the war
 U.S. lent $7 billion to Europe during the war
 Another $3 billion by 1920
Britain & France loans reparations
U.S.
investments Germany

 Fordney-McCumber Tariff of 1922
 Hawley-Smoot Tariff of 1930
How a tariff works
An item costs $4 to make in Britain
A 25% tariff is levied on such items
A $1 tax is added to the price
Now the British item is priced at $5
Americans are encouraged to buy the cheaper item produced in the US

 By 1929 about 4 million Americans or 3% of the population owned stocks
 Stockbrokers were willing to lend up to 75% of the stocks purchasing price
 Americans wanted to take advantage of the “bull market”
(rising stock prices)

 Example: RCA stock $85 in Sept. 1928, $420 one year later—even though the company had not paid a single dividend

 Panic on Oct. 24, 1929 (Thursday), stocks prices plunge
 Oct. 29, 1929 (“Black Tuesday”), 16 million shares of stock dumped in one day

 Mellon’s tax cuts
 Protective tariffs
 Federal Reserve Board tightens credit
1. Depressed purchasing power
2. Inability to sell goods at home or abroad

 Widespread bank failures
 Bankrupt businesses
 High unemployment

 Decrease in worldwide trade
 Increasing numbers of homeless persons
 Widespread hunger and illness

 Public opinion made him the villain of the Great
Depression. In fact, the 31st president was a visionary -but a hopelessly inept politician.
--
David M. Kennedy

Hoover successfully organized and authorized the construction of the
Boulder Dam (Now called the Hoover Dam)
The $700 million project was the world’s tallest dam
(726 feet) and the second largest (1,244 feet long)
The dam currently provides electricity, flood control and water for 7 western states

 The World War Adjusted Compensation Act of 1924 had awarded WWI Veteran bonuses in the form of certificates they could not redeem until 1945.
 The principal demand of the Bonus Army was the immediate cash payment of their certificates.

 President Herbert Hoover ordered the army to clear the veterans' campsite.
 General Douglas MacArthur commanded the infantry and cavalry supported by six tanks.
 The Bonus Army marchers, with their wives and children were driven out, and their shelters and belongings burned.

At least 69 police injured

Party
Home state
Running mate
Electoral votes
States carried
Popular vote
% of Popular vote
Franklin D. Roosevelt Herbert Hoover
Democrat Republican
New York
John Gardner
472
42
Iowa
Charles Curtis
59
6
22,821,277
57.4%
15,761,254
39.7%

Happy days are here again
The skies above are clear again
So, Let's sing a song of cheer again!

 “ I pledge you, I pledge myself, to a new deal for the
American people.” –FDR 1932
 Relief, Recovery, Reform

.
 First 100 days- special session of Congress
 Alphabet soup- New Deal legislation
 Lame Duck Amendment- 20 th Amend.
 Pump priming-the theory that government spending projects can generate economic growth in a recession.
 1 st New Deal: 1933-1935
 2 nd New Deal: 1935-1936 (greater focus on reform)
 End of the New Deal: 1936-1939

.
 Brains Trust—professors from Columbia Univ. who had informal conversations about economic and social policy with President Roosevelt.
 Black Cabinet—men and women who composed the first sizable representation of African Americans in whitecollar posts in the federal government (i.e. Mary McCleod
Bethune
Mary McLeod Bethune
Rexford Tugwell