Herbert Hoover (R) defeats Al Smith (D)

Hoover wins in response to the economy

1. Stock Buying Spree• Faith in the “Bull” market (strong economy)

• People buying stock on margin – people would only have to put a small amount down to buy stock

• Example – Buy $100 worth of shares for $10 down, and pay back when the stock rises

• In Sept 1929, GE stock was $391 per share…by Oct 1929 - $180 per share…1932 - $9 per share

2. Business• Overproduction of consumer goods

• Profits went into market instead of wages (less money for consumers to buy goods)

3. Gap Between the Rich and the Poor

• Shrinking middle class• Unequal distribution of wealth

4. Weak Banking System• Banks invested depositor’s funds into risky

stocks

• Runs on banks (panics where investors withdrew all their money at once)

5. Risky European Loans

• Some 10 billion dollars loaned to European nations during WWI and years after to help in the rebuilding

6. Farmers

• Overproduction due to drop in world demand (WWI over, no need to feed the world population anymore)

The stock market CRASHED on Tuesday October 29, 1929 – a.k.a. “Black Tuesday”

The Roaring ’20s came, literally, to a screeching halt!

1. Hoover’s Response (or lack thereof)

Hawley-Smoot Tariff – High tariff that seals off American markets from other nations

Made more than $1.5 million in loans to businesses to keep them running.

Bonus Army – a group of unemployed U.S. WWI veterans who set up camp in Washington D.C. demanding the government pay their promised bonuses immediately instead of 1945. Hoover orders the army to disband the protest (hurts his reputation even more)

Hoover believed in Rugged Individualism where people help themselves – pull themselves up by their own boot straps.

By 1932, Hoover’s popularity is at an all-time low

“Hoovervilles” – group of shacks near city dumps

“Hoover blanket” – old newspaper for “hobo” blankets

“Hoover flag” – an empty pocket turned out (no money)

Franklin D. Roosevelt wins the 1932 election easily over Hoover

FDR immediately puts into place his plan for getting the United States out of the Depression (photo of Franklin

and his wife Eleanor)

2. FDR believed government should help people over come economic hardship unlike Hoover who believed everyone would benefit if business did well.

3. Roosevelt was inclined to help people directly by giving them government jobs Federal money would give people hope Would also put money into the economy

4. All FDR’s programs together are called the New Deal

Promises action with strong emergency powers of the president

Gives fireside chats with radio audiences to calm people down and to give them hope