The Great Depression and the New Deal

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17 Feb 2011
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HIS271 The Great Depression and the New DealFebruary 16th 2011
๎€What were the causes of the Great Depression?
๎€How did Americans respond to the crisis? Did their responses change over time?
๎€Was the New Deal a success?
The Election of 1928
๎€1928 election between Al Smith and Herbert Hoover
๎€Smith, Democrat, was a 4 time governor of New York, liberal in his thinking, very
urban, Catholic, decedent of German/Irish/Italian, came to embody the modern side
of the US (the side that emphasized change, difference, foreign, urban, etc.)
๎€Hoover represented more of a traditional side, came from a rural Quaker
background, believed in industry, thrift, and self-reliance
๎€He wanted free enterprise and small government and was what one may call a
businessmanโ€™s candidateโ€ฆ he wanted to balance federal regulation without direct
intervention
๎€In the election itself, Hoover won by a landslide
๎€One of the first radio campaigns
๎€Smith, because of his background and accent, threatened the traditional American
identity and made him unappealing
๎€The election thus reflected the split in American societyโ€ฆ urban vs. rural,
traditional vs. modern, wet vs. dry
๎€But while Hoover won, it didnโ€™t resolve these debates
๎€While many Americans recognized that these conflicts existed, they werenโ€™t really
equipped to deal with them at that time ,and it was made worse by the market crash
of 1929
Black Tuesday
๎€October 20th 1929, the day that the stock market crashed
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HIS271 The Great Depression and the New DealFebruary 16th 2011
๎€Over the past previous year, Wall Street had been on a boom, but by the fall it
became clear to many traders that the market was beginning to fall
๎€Stock prices were declining and it hit rock-bottom by October
๎€This was followed by panic selling and further complicated by the fact that much of
the stock that had been purchased in the 20s and been purchased on loans
๎€This worked to devalue what little was left
๎€This wasnโ€™t the first time the States had experienced this kind of economic crisis
๎€But, this was different
๎€The crash of 1929 was far more severe and lasted a lot longer than anyone
anticipated
โ€ขThe Causes
๎€The crash undermined business confidence, it saw decreases in manufacturing
followed by job losses which then led to a decrease in consumer spending
๎€international elements
๎€Argued that dependence on international trade had played a significant
๎€Since the War, there was an international decline in the demand for
American goods, meaning there were fewer markets for American
๎€There was also a crises of debt repayment in Europe, the European
countries were having a hard time paying back America
๎€Lack of diversification in the economy
๎€The economy in the 1920s was dependent on a small number of large
industries, and when these industries began to struggle the decline
effected the entire economy
๎€Over production
๎€Part of the problem was that these big firms were overproducing more
than could be consumed
๎€Unequal distribution of wealth
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HIS271 The Great Depression and the New DealFebruary 16 th 2011
๎€Although the 20s is characterized as a period of prosperity, this wasnโ€™t evenly
distributed
๎€Much of this prosperity was centralized in the cities, as well
๎€Many Americans thus didnโ€™t have the buying power to become consumers,
feeding into the problem of overproduction
๎€Unchecked growth of combinations and trusts
๎€No one was checking big business
๎€Without any kind of regulation, we begin to see things like
overproduction, the sale of items on instalment programs (basically
loans)
๎€Consumers couldnโ€™t pay their debts
๎€Instability in the Banks
๎€Like Big Business, Banks werenโ€™t being regulated
๎€Throughout the 20s theyโ€™d been making risky investments, in
particular in the stock market
๎€They made risky loans
๎€Once the crash hit, people started emptying their savings and Banks
couldnโ€™t handle it
๎€A lot of people lost their money
๎€There was no one single cause, but they all shared deregulation in common
๎€Initially, the crash only had a major impact on the upper crust of the economy, but
between 1931-33 a second financial crisis sank the nation even deeper
๎€Ultimately, one of the problems was that at the local and state level, infrastructure
couldnโ€™t deal with this (begin to see school closures, bank closures, job loss, wage
cuts etc.)
๎€This was followed by a national decline in income
๎€Between 1929 and 1933, national income dropped by half
๎€This meant that peopleโ€™s wages were going down too
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Document Summary

1928 election between al smith and herbert hoover. smith, democrat, was a 4 time governor of new york, liberal in his thinking, very urban, catholic, decedent of german/irish/italian, came to embody the modern side of the us (the side that emphasized change, difference, foreign, urban, etc. ) hoover represented more of a traditional side, came from a rural quaker background, believed in industry, thrift, and self-reliance. he wanted free enterprise and small government and was what one may call a businessman"s candidate he wanted to balance federal regulation without direct intervention. In the election itself, hoover won by a landslide. smith, because of his background and accent, threatened the traditional american identity and made him unappealing. The election thus reflected the split in american society urban vs. rural, traditional vs. modern, wet vs. dry. but while hoover won, it didn"t resolve these debates.

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