Hoover & The Crash
The Great Depression &The New Deal (1929-1940)
Chapter 26, Section 1
Essential Question:
• Should the Government Intervene in the Lives of its’ Citizenry? Explain.
Herbert Hoover• Secretary of Commerce
Under Calvin Coolidge
• Won the 1928 Presidential Election
• Republican = Believed in Laissez Faire!
• 3 Republicans in a Row During 1920’s: Harding, Coolidge & Hoover
• Considered One of the WORST Presidents! (Great Depression)
The Big Jinx!• In One of Herbert
Hoover’s Campaign Speeches, He Said:– “We shall soon be
in sight of the day when poverty will be banished from this nation”
– JINX!
– Why Did Herbert Hoover Believe This?
4 Industries in Trouble During the “Roaring
Twenties”• Agriculture (Farming)
– Overproduction of Crops with New Equipment = Lower Prices/Profits
• Railroads:– People Buying Cars
• Textile Mills:– Mass Production of
Textiles = Lower Prices
• Mines:– Other Forms of Energy
The Growing Poor
• By 1929, 71% of Americans Only Made $2500 Per Year (Below the Poverty Level)
• Unemployment Rate Was Growing
• African Americans Struggled to Get Jobs! (Racism)
1st Cause of Great Depression:
Overproduction• Businesses Made More
Goods! (Better Tech!)
• Even Though Prices of Goods Went Down, So Did Peoples Salaries!
• People Stopped Buying Goods! (Businesses Could Not Pay for Materials, Salaries, Equipment, Etc)
• Businesses Had to Cut Costs ($$$) to Survive (Fire Workers!)
Overproduction!
2nd Cause of Great Depression: Buying on
Credit• Installment Buying:– During the 1920’s
Most Americans Bought on Credit
• When Americans Salaries Dropped, They Paid Off Their Debts Instead of Buying New Goods!
• Businesses Sold Less/ More Overproduction
• Is This Happening Today?
3rd Cause of Great Depression: Speculation
• During the 1920’s Stock Prices Kept Going Up!
• Speculation is the Buying & Selling of Stocks in Hope of Making a Quick Profit!
• Most Americans Bought Stock in Companies & Sold It to Make $$$
• Is This Happening Today?
Wall Street NYC
4th Cause of Great Depression: Buying on
Margin• Investors Took Out
Loans From Banks to Buy Stocks
• If Stock Goes Up, Sell the Stock, Pay Back the Loan to the Bank, Make a Profit! (Awesome!)
• If Stock Goes Down… Uh-Oh!
1928 Presidential Election
• Herbert Hoover Won the 1928 Presidential Election by a Landslide
• Predicted More Prosperity for America
(The Big Jinx!)
• Republican – Laissez Faire (Hands Off)
Black Tuesday• October 29th, 1929
• As The Stock Market Kept Going Lower & Lower, Americans Panicked & Tried to Sell All of Their Stocks!
• Nobody Wanted To Buy! Everyone Was Afraid as Prices Kept Dropping!
• The Stock Market Crashed!
• Is This Happening Today?
Outside the NYSE
Failure of the Banks!• When the Stock Market
Crashed, Banks Demanded Customers to Pay Back Their Loans!
• People Who Bought on Margin Could Not Pay Back Their Loans! Banks Ran Out of Money!
• Citizens Ran to the Bank To Pull Out Their Savings! Banks Had No $$$ To Give!
• 9,000+ Banks Went Out of Business!
Business Failures 1929• When The Market
Crashed, People Stopped Buying Goods!
• Thousands of Businesses Went Bankrupt!
• To Save $$$, Businesses Fired Workers!
• No Work, No Paycheck! No Paycheck, Can’t Buy Goods! Businesses Fire More Workers, More People Have No Paycheck….. Bad Cycle!
Unemployment & Hunger• 25% Unemployment in
1933 (1 out of Every 4 Americans)
• Americans Bought Less Products = Businesses Fired More Workers!
• Poverty, Homelessness & Hunger!
• Everyone Affected!
Global/World Wide Depression
• The Great Depression Lasted From 1929-1941 (When the U.S. Entered WWII)
• Many Countries Around the World Took Loans From U.S. Banks to Help Rebuild After WWI
• When American Banks Crashed, So Did the World’s Economy!
Herbert Hoover: Laissez Faire Response!
• Herbert Hoover was a Republican = Believed Government Intervention Should NOT Take Place!
• He Cut Government Spending on Projects & Raised Taxes
• Plan Made Sense But TOTALLY BACKFIRED!
• Why Did Hoover’s Plan Make Things Worse?
“Rugged Individualism”• Herbert Hoover Did NOT
Want to Give Federal Relief ($$$ & Food) to the Poor– Feared Citizens Would Then
Rely on the Government (Dependent)
• Hoover Believed in the “Rugged Individual”
• Americans Had to Be Tough Through Hard Times! Suck It Up!
• Why Do YOU Think Americans Think of Hoover as One of the Worst Presidents Ever?
Private Charities• Herbert Hoover
Asked Private Charities to Help!
• Salvation Army, The American Red Cross & Religious Groups Did As Best As They Could!
• The Demand for Food, $$$, Shelter & Jobs Was too High!
Hoover Flags• Americans Blamed
Herbert Hoover For Their Suffering!
• Hoover Flags & Hoovervilles Were Used to Blame Herbert Hoover for the Depression
• Hoover Finally Changed His Laissez Faire Beliefs! (Too Little, Too Late!)
Hoovervilles
Public Works Projects• Government Funded
(Paid For) Projects
• Projects to Improve Infrastructure = Roads, Dams, Airports, Bridges, Tunnels
• Projects Would Give People Jobs!
• Reverse the Cycle!– Jobs = Paychecks =
Spending = Investment Capital = Businesses Hire More Workers = More Paychecks = Etc…
The Hoover Damn (AZ & NV)
Public Works Projects Today!
The Bonus Army• 12,000-15,000 WWI
Veterans Marched on Washington D.C., Summer of 1932
• Wanted Their Bonuses Early Because They Were Broke! Needed the $$$!
• They Refused to Leave Until They Got Their Bonuses!
• Set Up Camp in D.C.!
Hoover & Senate Say NO!
• Herbert Hoover & the Senate Vote Down a Bill to Give WWI Bonuses Early
• Most Veterans Went Home. Some Stayed & Protested!
• General Douglass MacArthur & the Present Army Kicked Them Out of D.C.– Fighting Broke Out!– Present U.S. Army
Used Tear Gas & Force!
Hoover Looks Really Bad!
• Americans Were Very Upset for the Harsh Treatment of the Bonus Army!
• Hoover Looked Really Bad! America Would Look For Change!
• FDR – Democrat Will Win the 1932 Election!
Essential Question:
• Should the Government Intervene in the Lives of its’ Citizenry? Explain.