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Cause and effect of great depression
Franklin D Roosevelt Response to Great Depression
Cause and effect of great depression
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1. The road to rock bottom ostensibly began with the stock market crash on Black Thursday, October 24, 1929. Discuss the causes of the Great Depression and how the Hoover administration responded to the developing crisis. Then turn to Franklin Delano Roosevelt and the New Deal. Historians sometimes characterize FDR's program as one of relief, recovery, and reform. Discuss the problems that FDR encountered when he took office and the evolution of the New Deal down through the end of his first term.
The so-called Second New Deal began after FDR's and the Democrat's Congressional landslide in 1934. Discuss what factors lay behind the Second New Deal, what did it accomplish, and what did it fail to accomplish? In your final analysis, discuss how
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the New Deal in all its aspects altered American life. America’s most devastating financial crisis happened on October 24, 1929, also known as Black Thursday when the stock market crashed. The roaring twenties had most of America sitting pretty with significant wealth and low unemployment rates. This devastation in 1929 caused many Americans to lose everything. There are a few key factors that led to the Great Depression.
The most obvious and well known being the crash of the stock market. In late September and early octobver investors watched as stocks declines. On October 18th they began to fall more dramtically causing the panic to set in. A record number of shares were traded and the market couldn’t support all the panic. Two months after the original crash in October stockholders had collevctively lost more than $40 billion. While the stock market was able to regain some of these losses by the end of the following year, there was too much damage done leading to the great …show more content…
depression. The second factor that led to the Great depression was the failures the banks struggled with. In the 1930s over 9,000 banks failed. Back in the 1930s there was no such thing as the FDIC. Deposits weren’t insured so as banks continued to fail, people lost their savings. Banks that were still up and running were unsure of the future economic standing of America, Making them less willing to issue new loans. The third major cause of the Great Depression was the reduction in spending and purchasing across the board. After the market crashed Americans feared furher economic trouble, causing many consumers to stop purchasing items. This turned into a spiraling web, as the economy relies on all it’s components. As the consumers declined, the number of products declined, as the number of products declined the number of producers declined. Meaning, that when people stopped spending money, people started losing their jobs. Employment rates were over 25%, which in turn ads to the everlasting spiral in the economy. As the president at this time, Herbert Hoover attempted to stimulate the economy.
Unemployment relief ran against Hoover’s belief in the limited role of government, so instead of directly granting relief Hoover strived to get people back to work. In 1930 President Hoover started a Committee for Employment, which later became the President’s Organization for Unemployment Relief. The goal of this committee was to coordinate the efforts of local welfare.
When this didn’t work and the depression worsened, Hoover tried the Reconstruction Finance Corporation, which provided railroads, banks, and other financial institutions with money for loans. He also passed the Glass-Steagall Act in 1932. This act made getting commercial credit easier and released $750 million in gold reserves for additional business loans. The Emergency Relief and Construction Act of 1932 provided the funds to the Reconstruction Finance Corporation to make loans for relief to the states. It also included additional money for local, state, and federal public works projects.
While hoover put his best efforts into restabilizing the economy, however the America people still blamed him for the Great Depression. This devastation caused the republicans to lose control of congress as well as the white house for almost 2
decades. After the American public scrutinized Hoover for the Great Depression, Franklin Delano Roosevelt took office. With a swarm of problems, he decided the best way to relieve America from its current struggles would be to enact the New Deal. In FDR’s presidential acceptance speech, he pledged to a new deal for the American people. Roosevelt believed that in order to get the country out of the depression, he power of the federal government would be required. His idea was to initiate a “New Deal” which was a succession of economic actions to relive some of the pressures of the depression. So, in his first days as president, he passed bank reform laws, emergency relief programs, and agricultural programs. The most famous act of the New Deal was the 1935 Social Security act. The passing of this act lead to the creation of the Social Security Administration, as well as set up the system for pensions and retirement benefits.
In the Roaring Twenties, people started buying household materials and stocks that they could not pay for in credit. Farmers, textile workers, and miners all got low wages. In 1929, the stock market crashed. All of these events started the Great Depression. During the beginning of the Great Depression, 9000 banks were closed, ending nine million savings accounts. This lead to the closing of eighty-six thousand businesses, a European depression, an overproduction of food, and a lowering of prices. It also led to more people going hungry, more homeless people, and much lower job wages. There was a 28% increase in the amount of homeless people from 1929 to 1933. And in the midst of the beginning of the Great Depression, President Hoover did nothing to improve the condition of the nation. In 1932, people decided that America needed a change. For the first time in twelve years, they elected a democratic president, President Franklin D. Roosevelt. Immediately he began to work on fixing the American economy. He closed all banks and began a series of laws called the New Laws. L...
1929 - stock market crash was the largest economic crisis that the world had experienced
President Herbert Hoover was the conservative Republican president of America when the Great Depression occurred, and was given the burden of rebuilding the economy. He believed the federal government should not intervene, and instead believed that helping the needy was the obligation of private organizations and donors, whom he pressured. In addition, Hoover granted loans to big businesses, hoping that the money would “trickle down” and that more employees would be hired.
It was this that created Hoover’s conservative image. Moreover, Hoover's opinions changed from being against any government interference in the economy to being in support of the government encouraging employment by creating more jobs. Hoover differed from most presidents represented in Schlesinger's theory because touched upon private interest, transition, and public purpose, all within the one term of his presidency. Roosevelt was falsely credited with ending the Great Depression as a result of the success of his many programs instituted with the purpose of fighting against unemployment.
The stock market crash of 1929 set in motion a chain of events that would plunge the United States into a deep depression. The Great Depression of the 1930's spelled the end of an era of economic prosperity during the 1920's. Herbert Hoover was the unlucky president to preside over this economic downturn, and he bore the brunt of the blame for the depression. Hoover believed the root cause of the depression was international, and he therefore believed that restoring the gold standard would ultimately drag the United States out of depression by reviving international trade. Hoover initiated many new domestic works programs aimed at creating jobs, but it seemed to have no effect as the unemployment rate continued to rise. The Democrats nominated Franklin Roosevelt as their candidate for president in 1932 against the incumbent Hoover. Roosevelt was elected in a landslide victory in part due to his platform called "The New Deal". This campaign platform was never fully explained by Roosevelt prior to his election, but it appealed to the American people as something new and different from anything Hoover was doing to ameliorate the problem. The Roosevelt administration's response to the Great Depression served to remedy some of the temporary employment problems, while drastically changing the role of the government, but failed to return the American economy to the levels of prosperity enjoyed during the 1920's.
President Hoover tried designed to jump-start the economy and add jobs. He wanted to reform banks to provide mortgage relief and spend more $423 million federal money into business investment. Congress decided to pass the Federal Home Loan Bank Act, whi...
One main cause of the depression was the overproduction of farming and factory goods. The nation was so over-productive that its citizens couldn't afford to pay for these goods because all of the money was going into production fees, and not salaries When Hoover enacted the Hawley-Smoot Tariff, U.S. goods acquired an enormously high 60% tax rate, this was part of the reason for the depression, since no other countries wanted to pay the high tariff rate just to buy goods from the United States. While Hoover thought that he was helping the economy with this tariff, it turns out that all he did was isolate the U.S. from Europe and other parts of the world that would normally trade with the United States. President Hoover also thought that the government shouldn't give the citizens any direct help, when in fact, that was exactly what they needed to do. Instead of going out into the community and directly helping people, Hoover thought that if he created “public works” like the Hoover Dam, he could create jobs, and help citizens ...
The New Deal sought to create a more progressive country through government growth, but resulted in a huge divide between liberals and conservatives. Prior to the New Deal, conservatives had already begun losing power within the government, allowing the Democratic Party to gain control and favoring by the American people (Postwar 284). With the Great Depression, came social tensions, economic instability, and many other issues that had to be solved for America’s wellbeing. The New Deal created a strong central government, providing the American people aid, interfering with businesses and the economy, allowing the federal government to handle issues they were never entrusted with before.
Hoover is also vilified repeatedly for his inaction with the Depression. His personal policy and his party’s policy were designed to let the country find its own way, for if it became dependent on government aide, it would be a weaker nation that if it found it’s own way. This was a flawed assumption on their behalf though, because even in the 1920’s, there was a movement from many of the nation’s younger voters advocating change.
After nearly a decade of optimism and prosperity, the United States took a turn for the worse on October 29, 1929, the day the stock market crashed, better known as Black Tuesday and the official beginning of the Great Depression. The downfall of the economy during the presidency of Herbert Hoover led to much comparison when his successor, Franklin D. Roosevelt, took office. Although both presidents had their share of negative feedback, it is evident that Hoover’s inaction towards the crisis and Roosevelt’s later eccentric methods to simulate the economy would place FDR in the positive limelight of fixing the nation in one of its worst times. Herbert Hoover was sworn into office when the economic status of the country stood at its highest and the nation was accustomed to a prosperous way of living. When the stock market plummeted and took its toll on the citizens from coast to coast, it was out of his control.
There was a Great Depression in the 1930's. During this time President Hoover was trying to fight against unemployment. The percentage of unemployed people rose 25 percent during this time. With unemployment continuing to rise, President Hoover urged congress to provide up to 150 billion dollars for public works to create jobs.
On October 24th, 1929 one of the most devastating events in American history occurred. Nearly half of America’s banks had failed and over 13 million people were unemployed. As a result of the Stock Market Crash of 1929, America spiraled downward into the Great Depression. Many people believed that Herbert Hoover was to blame for the Depression, because Hoover believed that the government should not do anything to the economy because the economy would eventually fix itself.
One of Hoover’s famous quotes was “if a man has not made a million dollars by the time he is forty, then he is not worth much” (Egan, 2006) before the Great depression. How disheartening this would be to hear as a farmer struggling to make ends meet being sold worthless land provided within the United States and then less than a year later the depression starts. Hoover during the depression believed in patience and self-reliance. He felt that the depression and the change in the economy was something that will come and go and it wasn’t the government’s responsibility to intervene. Luckily when a leader was elected, President Roosevelt came up with the new deal. The new deal effected American history by setting forth programs between the years 1933-1938. Roosevelts addressed that there wasn’t enough circling money. While on the radio for the first time which changed the way America does business he told listeners “they could pull their savings out of mattresses and beneath the floor. The government would back there dollars”, If they put it in the bank. He also advocated for the local farmers and ended free-market agriculture economics which would put money back into the farmer’s pockets and less wasted food. Roosevelt would have the government buy a surplus of corn, meat and distribute it to the poor, unlike Hoover. Roosevelt didn’t want to take away the American peoples dignity so he came up
The cause of this was the Stock Market crash in 1929. Many investors in the stock market panicked and sold all their stocks. The results of this include frightened Americans withdrawing all their savings, causing and hoarding it in their homes, many banks to shut down and less money to circulate in the economy. Although the economy had taken a dramatic blow, there was hope. A new program was administered by the government to help people suffering from the depression.
In response to the Stock Market Crash of 1929 and the Great Depression, Franklin D. Roosevelt was ready for action unlike the previous President, Hubert Hoover. Hoover allowed the country to fall into a complete state of depression with his small concern of the major economic problems occurring. FDR began to show major and immediate improvements, with his outstanding actions during the First Hundred Days. He declared the bank holiday as well as setting up the New Deal policy. Hoover on the other hand; allowed the U.S. to slide right into the depression, giving Americans the power to blame him. Although he tried his best to improve the economy’s status during the depression and ‘pump the well’ for the economy, he eventually accepted that the Great Depression was inevitable.