The Great Depression & The New Deal


Causes and Effects of the Depression

•Wall Street Crash

Millions of Americans were investing in the stock market in 1928 and millions lost their investment in the huge panic on Black Thursday, October 24. 1929. Due to the unpredicted amount of stock being sold that day the market plunged and bankers tried to save it by buying huge amounts of stock, but it recollapsed on Black Tuesday, October 29 with millions ordering to sell their stock.

•Causes of the Crash:

-Uneven distribution of income of Americans

-People "playing the market"

-Increased installment buying

-Production of goods that know one could afford to purchase

-Weak farm economy due to debt, over production, and drought

-Government policies protected industries, but hurt farmers

-Europe was not recovered from WWI and were still in debt

•Effects of the Crash

The U.S. Gross National Product dropped from $104 billion to $56 billion in four years. The national income declined by 50% and 20% of banks in America closed, which destroyed savings. The number of unemployment rose to 13 million. Poverty and homelessness increased and evictions became common due to the loss of work. African Americans and farmers faced increased difficulties.

Hoover's Policies

•Responding to a Worldwide Depression

The Hawley-Smoot Tariff increased taxes from 31% to 49% on foreign imports to protect their markets from foreign competition. Europe counter attacked raising their tariffs sinking everyone further into depression. With everyone in debt the Dawes Act could no longer continue and Hoover proposed a moratorium on debts but France did not agree and both sides scrambled to meet the demands of those withdrawing money.

•Domestic Programs: Too Little, Too Late

The Federal Farm Board was created before the depression to help stabilize goods prices but could not handle the overproduction of farm goods.

The Reconstruction Finance Corporation was designed to give loans to key businesses and the benefits would trickle down to small businesses creating recovery.

•Despair and Protest

Farmers banded together in hopes of stopping banks from foreclosing their farms and evicting them, but their effort collapsed after violence.

In 1932 a thousand WWI veterans marched on Washington demanding an early bonus which they were to receive in 1945. Other veterans and their families joined them and camped out in shacks around the Capitol until Hoover declined their wishes and ordered it broken up. Many Americans then saw Hoover as heartless.

•The Election of 1932

The Republicans renominated Hoover who ran against democrat Governor Franklin Roosevelt who spoke of a "New Deal." Roosevelt gained office and the Twentieth Amendment or the "Lame Duck Amendment" was passed shortening the amount of time between election and inauguration.

Franklin D. Roosevelt's New Deal

FDR: The Man

Franklin Delano Roosevelt known as FDR was distant cousins of President Theodore Roosevelt and married Teddy's niece Eleanor. He greatly admired his cousin and followed his footsteps and became a NY state legislature and the U.S. assistant secretary of the navy. A democrat, he was nominated for VP for James Cox, but lost. FDR became paralyzed in 1921 due to polio, but gained control of his upper body and was mobile with the help of braces, crutches, or a wheelchair. Nothing stopped him, he resumed his career in politics and was elected governor of New York. His wife Eleanor was the most active First Lady in history writing a newspaper column and traveling the country giving speeches. She influenced FDR to support the less fortunate and minorities.

•New Deal Philosophy

"I pledge you, I pledge myself , to a new deal for the American people." -FDR

The New Deal programs were to serve three R's: relief for unemployed, recovery for business and economy, and the reform of the American economic institutions. FDR looked to his advisors from when he was governor for advice which included Louis Howe, Rexford Tugwell, Raymond Moley, and Adolph A. Berle Jr. Roosevelt's high administration was a diverse group of people which included Jews, Catholics, African Americans, and Women.

•The First 100 Days

After election FDR called congress into a special 100 day session where congress passed every law FDR requested. Roosevelt then ordered the banks take a "holiday" and close to stop the withdrawal of funds on March 6, 1933. Prohibition was ended with the Beer-Wine Revenue Act. FDR held fireside chats on the radio to the American People which reassured the reopened banks were safe. Financial Recovery Plans were enacted including HOLC, FDIC, the Farm Credit Administration, the Emergency Banking Relief Act. Other programs enacted that helped farmers, industry, and the unemployed were AAA, NRA, and FERA.

•Other Programs of the First New Deal

-The CWA created new jobs

-The SEC put limits on the stock market to help prevent another crash

-The FHA allowed for new houses to be built and old ones repaired

-The Gold Standard halted deflation

The Second New Deal

•Relief Programs

The Works Progress Administration employed 3.4 million men and women to build bridges, roads, and airports. Unemployed artists were employed to paint murals, and perform plays.

The Resettlement Administration under Rexford Tugwell provided loans for small farmers and housing camps for migrant workers.


The Wagner Act allowed workers to be in a union and for a union to bargain collectively.

The Rural Electrification Administration provided loans for companies to supply power to rural areas.

Federal Taxes were increased on the wealthy's income.

•The Social Security Act

A Federal insurance program that automatically collected taxes from employees and employers and gave monthly payments to retired Americans over the age of 65. Others who received help from this fund were the disabled, dependent children and their mothers.

•The Election of 1936

Roosevelt was put up for a second term against Alf Landon governor of Kansas. Roosevelt won every state except Maine and Vermont and 60% of the popular vote.