The New Deal Causes of the Great Depression

During the 1920’s, the United States experienced a strong bull market (a market where stock prices are rising). When the stock market crashed on October 29, 1929, stock prices fell, and the majority of investors tried to sell all of their investments. Most of the investors received pennies on the dollar for their stocks. Others lost all of their money in stocks. People holding savings accounts became worried that they would not be there when the bank experienced so much loss of cash. They ran to the bank in huge numbers and withdrew all of their money. As people pulled their money out, the banks foreclosed. Businesses closed because they could no longer borrow money to cover their expenses. As a result, workers lost their jobs, and unemployment skyrocketed. This led to a long period of high unemployment and increased poverty called the Great Depression ( ). Stock Market Speculation

Collapse of Farm Economy The biggest problem for farmers during the 1920’s and 1930’s was that they produced more food than consumers needed. These surpluses drove down prices to the point that the harvest could no longer pay for the farm’s operation. Between 1933 and 1936, the land between the Dakotas and Texas received little rain. The huge dust storms blew all of the topsoil away know as the Dust Bowl. They left their homes by the thousands and moved to the Pacific Coast looking for work, further aggravating the problems of unemployment.

President Hoover’s Administration ( ) Elected during a time of economic prosperity, Republican Herbert Hoover ( ) received all of the blame when the economy was thrown into depression. Between 1929 and 1933, 85,000 businesses shut down, and 400,00 farmers lost their farms because no one had money to buy farm products. Outside the cities, people built communities of tents and shack called Hoovervilles. Children’s malnutrition rate rose from 18% to 60%.

Roosevelt’s New Deal With the help of Congress he instituted a series of federal polices and programs to boost the economy and put unemployed people to work, known as the “New Deal”.(1932) The New Deal was based on three R’s: relief, recovery and reform. Under the Agricultural Adjustment Act (1933), the government gave loans to farmers, and the government paid farmers not to grow crops

Congress created the Tennessee Valley Authority(1933). The TVA built hydroelectric dams to bring electricity to new parts of the South, including northern Alabama, and to provide employment and cheap electricity. The Social Security Act, (1935), provided retirement income for all workers once they reach age 65. The Wagner Act of 1935 created a board to monitor unfair management practices such as firing a worker who joined a union. The Fair Labor Standards Act,(1938), raised the minimum wage to 40 cents.

Congress established the Civilian Conservation Corps in Congress established the Federal Deposit Insurance Corporation (FDIC) in Congress established the Works Progress Administration (WPA) (1935) to provide jobs for unskilled workers.

Cultural Developments Movies- Movie makers tried to revive people’s faith in the nation. Movies told positive, uplifting stories about happy families in affluent households. Radio- Households listened with great enthusiasm for the latest news and entertainment.

Totalitarianism In a totalitarian government one political party or group maintains complete control under a dictatorship and bans all others. The fear of communism caused people in Italy to support Benito Mussolini and his political ideas, which he called fascism. Japan- Japan responded to the growing popularity of democratic ideals by granting the right to vote to all males. Germany- As Germany suffered through the Great Depression, its people turned to the National Socialists also known as the Nazi Party, led by Adolf Hitler. The Union of Soviet Socialists Republics- Joseph Stalin forced many peasants from their own land to work on collective farms.

Rejection of Peace Sixty-three nations signed the Kellogg-Briand Peace Pact. The ratifying countries promised to use negotiations rather than war to resolve political differences, except for cases of self defense Italy, Germany, and Japan formed the Axis powers. Britain, France, and later The United States would become the Allied Powers.

World War II Begins Hitler invaded Czechoslovakia. In 1939 Hitler signed a non aggression pact with the USSR. Hitler invaded Poland.

United States Involvement In 1935 Congress passed the Neutrality Act. The Lend Lease Act gave the president the power to lend, lease, or sell war supplies to countries whose survival was vital the United States defense.