Chapter 26 Section 1 The Great Crash
I. The Election of 1928
A. Herbert Hoover (R)
1. A self made millionaire from the Midwest
2. It was believed that he would keep the country prosperous
3. Rural and small town voters supported Hoover.
4. The stock market crashes in October 29, 1929 "Black Tuesday"
B. Alfred Smith (D)
1. He was the son of Irish immigrants and the first Catholic candidate.
2. He won the country's 12 largest cities
II. Causes for the Crash
A. Overproduction
1. Expenses rose faster than prices
2. Farmers did not reduce production
3. In effect, farmers could not pay off their loans; weakening the
banking system
B. Speculation
1. Investors noticed an economic slow down, and began selling stocks
2. Shareholders are forced to sell their stocks in order to repay their loans
3. In effect, many people lost everything; consumer confidence drops;
businesses laid off many workers
C. Uninsured banks
1. Banks had to close; people with bank accounts lost all their money
D. Factories cut back
1. People had no money; less demand for goods
2. Factory owners cut wages and laid off workers
III. Hoover's reaction
A. Federal aid
1. Hoover was concerned about the suffering
2. He did not believe government should be directly involved in
business crisis.
3. Relief for the needy should come from business leaders.
B. Reconstruction Finance Corp. (RFC)
1. Congress approved and loaned money to banks, railroads, and
insurance co.
2. Hoover believed that by saving these industries would save 1000s of jobs.
C. Private charities
1. Churches set up soup kitchens
2. Ethnic communities organized their own relief efforts
3. Many charities quickly became overwhelmed with needy and homeless.
D. Public works
1. Pres. Hoover initiated gov't projects to get Americans working again.
2. Workers were hired to build schools, dams, and highways
3. In effect, people were able to earn a living wage.
IV. Depression deepens
A. Too little, too late
1. Hoover did more to reverse hard times than any previous President.
2. By 1933, unemployment affected 25 % of the nation.
3. "Hoovervilles" popped up in many major cities.
B. The Bonus Army
1. A group of WWI vets who were to awarded a bonus by 1945
2. This group marched on Washington in 1932 demanding their checks.
3. They camped out for 2 months in protest
4. Finally, Gen. MacArthur was called to flatten the camp.
Chapter 26 Section 2 FDR and the New Deal
I. FDR's 1st Administration
A. The Hundred Days
1. Provide relief to the unemployed
2. Civilian Conservation Corps - young men hired to plant trees, build bridges,
and work on other conservation projects
3. Works Progress Administration - government sponsored construction and
arts projects and paid builders, actors, writers, and other to take part.
B. Plan for recovery
1. National Industrial Recovery Act - each industry wrote production codes for
itself; meant to end price cutting and workers layoffs.
2. Agricultural Adjustment Act - paid farmers not to grow certain crops; it was
assumed that small harvests would bring prices back up.
3. Public Works Administration - 1000s of workers hired for public works projects.
4. Tennessee Valley Authority - an example of public works project; meant to control
flooding and provide electricity in Tennessee and nearby states.
II. Defense of New Deal
A. Prevent Another Depression
1. Congress passed a record 15 new laws in the Hundred Days
2. Laws passed to curb risky buying and selling of stocks
3. The FDIC is implemented, so that if banks fail the government will provide money
to bank customers who lost savings.
Chapter 26 Section 3 Defense of New Deal
I. Optimism
A. Fireside chats
1. FDR used media to discuss the countries progress
2. Restored confidence in the American people
B. Relief Plan
1. for some of those living in poverty and unemployment
2. added safeguards to the economic system
II. Critics of the New Deal
A. Huey Long
1. a supporter of FDR, but did not feel his New Deal went far enough
2. Long, took up the motto “Share Our Wealth”
3. The motto pushed for higher taxes on the wealthy.
B. Francis Townsend
1. A California doctor believed there should be a pension for those
over 60 yrs old.
2. These same people would have to retire to get the pension
3. In turn, they free up a job for someone else.
C. Management
1. Large industries felt the new deal created socialism
2. Employer’s would get into violent confrontations with laborers.
3. Laborers would stage sit-down strikes to combat their bosses.
D. Supreme Court
1. By 1936, cases were being presented against the New Deal.
2. Roughly 8 New Deal laws were overturned, and deemed unconstitutional.
3. Roosevelt, decided to expand the number of Supreme Court justices
from 9 to 15.
Chapter 26 Section 4: The Nation in Hard Times
I. Second New Deal
A. Revenue Act 1935
1. Raised taxes on higher income earners; “wealth tax”
2. Roosevelt placed an upfront tax on those who made $5 million.
3. Wealthy were not fond of this tax
B. Social Security Act 1935
1. Set up a system of pensions for elderly, unemployed, and those
with disabilities
2. Some believed it did not help all workers such as farmers, housekeepers
or self employed
3. Today, it provides medical benefits and pensions to older Americans.
C. NLR or Wagner Act 1935
1. Protected workers from unfair management practices
2. Union membership grew from 3 to 9 million workers.
II. FDR’s 2nd Term
A. Election of 1936
1. FDR vs. Alf London, and FDR wins easily.
B. African Americans
1. Black workers unemployment rate was at 50% in 1934
2. Young African American men received jobs through the CCC.
3. FDR gained their support, and select leaders were invited to
the White House. (Black Cabinet)
C. African American vote
1. Many African Americans sided with Democratic Party.
2. They asked for help in the way of antilynching laws.
3. Mary Mcleod Bethune was a teacher, and outspoken leader.
D. Dust Bowl
1. Severe drought along with overproduction had dried the soil
in the Great Plains.
2. Oklahoma or “Okies” were the hardest hit area.
3. Many Okies headed west.