He also began addressing the public directly over the radio in a series of talks, and these so-called “ fireside chats” went a long way toward restoring public confidence.ĭuring Roosevelt’s first 100 days in office, his administration passed legislation that aimed to stabilize industrial and agricultural production, create jobs and stimulate recovery. Roosevelt took immediate action to address the country’s economic woes, first announcing a four-day “bank holiday” during which all banks would close so that Congress could pass reform legislation and reopen those banks determined to be sound. Nonetheless, FDR (as he was known) projected a calm energy and optimism, famously declaring "the only thing we have to fear is fear itself.” Treasury didn’t have enough cash to pay all government workers. state had ordered all remaining banks to close at the end of the fourth wave of banking panics, and the U.S. Roosevelt won an overwhelming victory in the presidential election.īy Inauguration Day (March 4, 1933), every U.S. In 1932, however, with the country mired in the depths of the Great Depression and some 15 million people unemployed, Democrat Franklin D. secretary of commerce, believed that government should not directly intervene in the economy and that it did not have the responsibility to create jobs or provide economic relief for its citizens. Hoover, a Republican who had formerly served as U.S. In the face of this dire situation, Hoover’s administration tried supporting failing banks and other institutions with government loans the idea was that the banks in turn would loan to businesses, which would be able to hire back their employees.
In the fall of 1930, the first of four waves of banking panics began, as large numbers of investors lost confidence in the solvency of their banks and demanded deposits in cash, forcing banks to liquidate loans in order to supplement their insufficient cash reserves on hand.īank runs swept the United States again in the spring and fall of 1931 and the fall of 1932, and by early 1933 thousands of banks had closed their doors. The “ Dust Bowl” inspired a mass migration of people from farmland to cities in search of work. Farmers couldn’t afford to harvest their crops and were forced to leave them rotting in the fields while people elsewhere starved. In 1930, severe droughts in the Southern Plains brought high winds and dust from Texas to Nebraska, killing people, livestock and crops. Bread lines, soup kitchens and rising numbers of homeless people became more and more common in America’s towns and cities.
Meanwhile, the country’s industrial production had dropped by half. By 1930, 4 million Americans looking for work could not find it that number had risen to 6 million in 1931. Bank Runs and the Hoover Administrationĭespite assurances from President Herbert Hoover and other leaders that the crisis would run its course, matters continued to get worse over the next three years. The global adherence to the gold standard, which joined countries around the world in fixed currency exchange, helped spread economic woes from the United States throughout the world, especially in Europe. Many Americans forced to buy on credit fell into debt, and the number of foreclosures and repossessions climbed steadily. For those who were lucky enough to remain employed, wages fell and buying power decreased. Millions of shares ended up worthless, and those investors who had bought stocks “on margin” (with borrowed money) were wiped out completely.Īs consumer confidence vanished in the wake of the stock market crash, the downturn in spending and investment led factories and other businesses to slow down production and begin firing their workers. A record 12.9 million shares were traded that day, known as “Black Thursday.”įive days later, on October 29, or “Black Tuesday,” some 16 million shares were traded after another wave of panic swept Wall Street. On October 24, 1929, as nervous investors began selling overpriced shares en masse, the stock market crash that some had feared happened at last. Nonetheless, stock prices continued to rise, and by the fall of that year had reached stratospheric levels that could not be justified by expected future earnings. The American economy entered a mild recession during the summer of 1929, as consumer spending slowed and unsold goods began to pile up, which in turn slowed factory production. Additionally, wages at that time were low, consumer debt was proliferating, the agricultural sector of the economy was struggling due to drought and falling food prices and banks had an excess of large loans that could not be liquidated. By then, production had already declined and unemployment had risen, leaving stock prices much higher than their actual value.
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