Reference no: EM133573817
FDR's Inaugural Address
In the 1920s, most of the United States experienced enormous prosperity. The industrial boom of the late nineteenth century was still producing a wealth of manufactured goods, and people, for the most part, had stable and reliable jobs. This commercial prosperity led many people to spend money on the new products of the era: radios, cars, etc. But toward the end of the decade, consumer spending began to decline. As people spent less money and the demand for manufactured goods declined, manufacturers began to cut jobs. Unemployed workers could not afford to buy many consumer products, so as more people loss jobs and spent less money, even more people loss jobs. This economic trend combined with growing problems in the stock market. In the late 1920s, stock prices began to soar. To take advantage of this bull market, investors would invest money in stocks that were rising in price and then take it out quickly once they thought the price would plateau. These quick investments are called speculation. Speculators drove the price of stocks up and hyper-inflated the value of stocks. In order to cash in on this trend, many people began to buy as many stocks as they could even when they could not pay. Instead of paying the full price, people began to buy stocks on credit, a practice known as buying on margin. When someone buys a stock on margin, this means that they only put down a portion of the price of a stock and take a loan out for the rest of the amount. If the stock goes up in price, then when a person sells the stock they can pay off the loan and make a little money on the rest. If the stock does not go up, the person merely forfeits the stock which acts as collateral, and they do not owe any more money. This system works fine when stock prices continue to go up, but when the price of stocks go down, banks begin to lose a lot of money when people do not pay back their loans. When consumer spending began to decline, this led to a decline in the stock market, a very dangerous combination. Some wise investors saw this decline before it happened and began betting against stocks, a process known as selling short. As normal investors began to see really smart investors selling short, they began to panic and the price of stocks began to decline even more rapidly. In September and October of 1929 stock prices tumbled. By 1933, forty billion dollars worth of stock value were completely gone.
The Stock Market Crash had a dramatic effect on the U.S. economy. When investors began to cut back from investing in stocks, unemployment began to grow, reaching 25% to 30% at its height. With no jobs and no money to invest, people lost confidence in the American economy. Even people with jobs and money refused to spend money because they were afraid that they would lose it. After the decline in spending, the stock market crash, and a loss in confidence, the banking system in the U.S. began to fail. The banks suffered because of the decline of the stock market because they allowed people to take out loans and buy stocks on margin. Instead of paying back loans, people simply gave the bank back their collateral, the stock itself. Since the stock values were rapidly declining, the banks were left with devalued stocks and no money. When people heard about banks losing money, they began to take their money out of the banks reducing the banks' cash even more. This is called a "run on banks." Most banks did not keep a lot of cash on hand, so when this happened, banks ran out of money. In 1930, over one thousand banks failed, and in 1931 over two thousand banks failed. Once the banking system no longer worked, the U.S. economy was at a standstill and the Great Depression began.
The Great Depression is a term used to describe a period of large-scale economic hardship throughout the United States. From the late 1920s until the early 1940s, millions of Americans were unemployed, starving, and destitute. Many Americans thought there would never be a way out of these economic problems. President Herbert Hoover, elected in 1928, was begged to fix the economy, but Hoover did not believe that the government should give assistance to people who are facing hard times. He enacted policies to help businesses recover but refrained from giving the population direct relief. When thousands of World War I veterans came to Washington D.C. to demand their benefits early, Hoover called the army on the veterans. By 1932, everyone wanted Hoover and his Republican party gone. In the election of 1932, Democrats easily won and Franklin Delano Roosevelt (FDR) became the next president of the United States. FDR's campaign promised a "New Deal" for the American people. This included the promise of direct federal relief to the population, help with agricultural overproduction, and an industrial recovery plan. In March of 1933, FDR spoke directly to the American people for the first time as the president of the United States at his inauguration. FDR had one goal with this speech, to restore confidence in the American public. He reminded the American people that they are strong and the population has been through hard times before and survived. He also stated that he as president would take direct action to help the American people. For FDR's Inaugural Address, make sure to notice how FDR is trying to help normal Americans regain hope and confidence in the government.
Read the above paragraph and FDR's first inaugural address <https://avalon.law.yale.edu/20th_century/froos1.asp> for your Essay Quiz #1.
Answer the following questions in a well-formed essay
Consequences-What are some of the problems the American people are experiencing and how is it affecting them? What are some of FDR's solutions to these problems?
Intercultural Competence-What types of people were hurt the most because of the Great Depression? What types of laws or assistance could have helped them?
Understanding Ethical Choices-The US government had a choice to make when the Great Depression hurt the American economy: should they provide direct relief to the American people or should they do nothing and let it recover on its own. Explain these two choices.
Decision-Making- What are some of the positive and negative aspects of FDR's solution to the Great Depression, i.e. his New Deal policies? Do you think FDR is providing good or bad solutions to the large financial problems in the United States? Why?
Knowledge of Civic Responsibility-If the United States experienced another economic depression in your lifetime, what would you do? Would you expect the government to help you or not? Why? What kinds of resources could you use to help your family and your community?