Great Depression and the New Deal (1929-1939)

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Great Depression and the New Deal (1929
-
1939)




Ca
uses/Effects of Great Depression



Hoover


FDR


Great Depression Presidents



People believed that is was just part of economics


standard depression



Took two presidents and 12 years


ended with WWII

o

Wall
Street Crash



Stockmarket was symbol of wealth in the 20s



‘the decade of the boom and the bust’ = 1920s



US Stock Exchange and NY Stock Exchange rose continually for 18 months

o

Sept. 3


DOW reached all
-
time high



Millions of people invested


get rich quick

o

Weren’t informed, educated



2 weeks up to crash, stock prices had fluctuated greatly

o

Panic to sell began on Oct 24
th
, Black Thursday

o

Prices plunged when too many people tried to sell



Group of bankers tried to trick market and purchased millions of dollars,
only
worked one day


Friday, Oct. 25
th



Selling resumed on Monday and the bottom fell out on Tuesday



Black Tuesday = Oct. 29



DOW was at 41, roughly 1/9 of what it had been

o

Causes of Crash



Uneven distribution of income


di
s
proportionment of wealth



Wages we
ren’t rising as much as prices



Top 5% had 1/3 of all the money



Speculation in the Stock Market



People expected quick profits and didn’t care for health of the company



Used buying on margin

o

Borrowing money to purchase stock


debts repaid by profits made by

stock



Excessive use of Credit



People were buying large things on installments



Believed that prosperity was permanent



Saturation of Key industries



Business grew and productivity increased
-

people bought more



Consumers didn’t demand something because the
y already had products



Companies had to cut back production and lay off workers



Government Policy



Leaders did not pay attention to economists



Government had faith in business, didn’t regulate it, passed tariffs that hurt US

o

Hawley
-
Smoot Tariff



Hurt farmer
s and international trade



Weak Farm Economy



Prosperity never reached farmers



Suffered from overproduction, excessive debt, low prices, surplus.



Weather didn’t cooperate



Global Economy was in bad shape



Nations had grown very interdependent



Great Depression was a world issue



US made programs, rest of world built ‘war machine’

o

Effects



Maslow’s Hierarchy of Needs



Self
-
Actualization

o

Self
-
esteem



Safety and Security



Essentials (shelter)



Depression Mentality


can be seen in the elderly today



Depression ended when American was employed to provide supplies for WWII



Gross national product was cut in half



National incomes declined by 50%



1/5 banks clothes down

o

10 million dollars in savings accounts was completely gone



Unemployment



25% of workforce
, not including farmers



Politics



The Republicans were doomed



The federal government got huge


New Deal


agencies and programs

o

People accepted this


government was seen as a way to help people



Lifestyle



People had to move to find work



Hoovervilles

o

People

were evicted and had to live in shanty towns



Hoover’s Policies

o

Tariffs /Debt Moratorium



Hoover didn’t believe in direct relief



He was in denial; tried to prevent the panic



Thought government would make it out alright



Response



Hoover raised tariffs to hel
p economy and foreign trade

o

Hawley
-
Smoot just made it worse



Moratorium



‘payment holiday’


extension of debt time limit

o

Hurt the banks

o

Federal Farm Board and RFC



Created in 1929


expanded during Compression



Helped to stabilize prices



Reconstruction Financ
e Corporation



Government loans money to big business



Said profits would trickle down to the average people


but it was slow



Boulder Dam



Built it

Hoover Dam



Government paid people to build dams and work on them to give people jobs and
create electricity i
n the area

o

Farm Holiday Association and Bonus Army



FHA



Farmers wanted to retaliate



Were trying to prevent the 1932 crop from reaching the market



But not everyone agreed, so organization collapsed



Bonus Expeditionary Force



Not an army


large group of
people who were WWI vets



Were told that they would receive a pension from the government

o

Petitioned for Hoover to give them their bonus early, he said no



They went to DC


million man march

o

Camped out, were turned away with tanks



Several people were kille
d; an infant was killed

o

Turned many people against Hoover


cold and callous

o

1932 Election and Lame Duck



Republicans renominated Hoover



Vaccum sucks, and Hoover sucked too



Democrats nominated Franklin Delano Roosevelt



When he was nominated, pledged a ‘New
Deal’ for the people

o

Wanted to repeal prohibition

o

Aid unemployed

o

Cut government spending



Voters



Who could end the Depression?

o

3/5 voters chose FDR



Socialists


nominated President Norman Thomas

o

Abandoned Thomas to vote for FDR



Democrats also won both
Houses by a large majority



Lame Duck Amendment


20
th

Amendment



January 20
th

was the new date for the president to take office



FDR’s New Deal

o

FDR and Eleanor



New Deal didn’t solve all of the problems of the Depression



Though it helped, it was mainly the

war economy of WWII that saved the country’s
economy



Eleanor



Married Teddy’s niece


Eleanor, his 5
th

or 6
th

cousin



Most active first lady in history

o

wrote a news column

o

traveled the country and reported to FDR about what the country needed

o

spoke to many

audiences



FDR



Expanded executive branch; dominated presidency 12 years and 2 months

o

Was elected 4 times

o

Most influential world leader of the 20
th

century



Born in a wealthy NY family

o

Admired older cousin Teddy

o

Had many similarities


but Teddy was R and
Franklin was D



Got polio

o

Worked hard to hide it

o

Founded the ‘March of Dimes’



Great orator, charismatic, had a warm personality



Wanted to remember the forgotten man

o

Made vague promises

o

Three R’s and Brain Trust



Three R’s



Relief for unemployment



Recovery fo
r businesses and the economy in general



Reform


long
-
term



Brain Trust



Relied on this group of smart academia types for advice



Had most diverse cabinet at the time

o

Appointed blacks; first female Cabinet member


Frances Perkins

o

First 100 Days



Congress turn
ed to President for help



Called emergency meeting


1
st

100 days



Congress passed nearly all of his programs



Enacted more programs in 100 days than a 2 year Congress



There were so many agencies


Alphabet soup of agencies



Run on the Bank



People ran to get
their money, but it wasn’t there



Over
5,000 banks failed



Bank Holiday



Closed banks down for long weekend

o

Wanted to stop ‘Run on the Bank’



Investigators went in:

o

Determined health of the bank

o

Reorganized system and reopened stable banks



Fireside Chats



Used

radio to convey messages to the public

o

Used to invoke coziness; reassurance to American people



People tuned in to hear the President speak

o

Told the public what was going on, how things worked



Public responded by depositing more money in the banks than t
hey took out



Prohibition



Used 21
st

amendment to repeal the 18
th

o

Any liquor could be sold and consumed



Recovery



Emergency Banking Relief Act

o

Law that created the Bank Holiday



Followed it up with the FDIC

o

Guaranteed
everyone’s accounts up to 5,000 dollars



Created HOLK

o

Home Owner’s Loan Cooperation

o

Provided for refinancing of homes on existing mortgages, lowered rates


backed by government



Farm Credit Association

o

Provided low interest loans and mortgages for farmers to refinance



Relief



FERA


Federal
Emergency Relief Act

o

Fed gov gave block grants to state and local governments

o

Governments spent the money however they thought it was necessary



Project Works Administration (PWA)

o

Directed by Harold Ickes, secretary of the interior

o

Gave money to state and l
ocal governments to build roads, bridges, and
dams


other public works

o

Many needs, employed many people



CCC


Civilian Conservation Core

o

Cleared land, fixed up areas, conserved land

o

Men 18
-
25 were able to work for CCC



TVA

o

Huge regional development experim
ent


TN Valley Authority

o

Took TN Valley and the Southeast and made it worth something



Built a series of 45 dams


NC, TN, AL, KY, GA



Water was used for hydroelectric power

o

Made huge dams and lakes


entertainment, tourism

o

Was used for erosion control,
cheap electric power, transportation



Bank Holiday



Closed banks down for long weekend

o

Wanted to stop ‘Run on the Bank’



Investigators went in:

o

Determined health of the bank

o

Reorganized system and reopened stable banks



Fireside Chats



Used radio to convey mes
sages to the public

o

Used to invoke coziness; reassurance to American people



People tuned in to hear the President speak

o

Told the public what was going on, how things worked



Public responded by depositing more money in the banks than they took out



Prohibi
tion



Used 21
st

amendment to repeal the 18
th

o

Any liquor could be sold and consumed



NIRA



National Industrial Recovery Administration



Communism/Socialism


supposed to guarantee profits for businesses and fair
conditions for labor



Suspended anti
-
trust laws
to do this

o

NIRA evaluated separate industries, studied them, and said how much a
company could produce, how many workers should be hired and what the
wages were

o

Set fair codes of competition


wages, employment, levels of production,
final product’s price



First time that the government recognized unions legally

o

Gave workers right to bargain collectively, rights to organize



Later declared unconstitutional; did help economy

o

Because government cannot regulate business



AAA



Agricultural Adjustment Administration



Encouraged farmers to decrease products

o

Paid farmers by the acre to farm their crops under and kill livestock



Declared unconstitutional 2 years later

o

Controversial because farmers had to kill things, but weren’t able

to sell
them



Helped farm prices increase

o

Other Programs of first New Deal



Congress adjourned briefly and then returned



Late 1933



CWA



Civil Works Administration



Hired workers to do temporary construction projects paid by government



SEC



Designed to regul
ate the stockmarket; supposed to end speculative practices



Securities and exchange commission



FHA



Federal Housing Administration



Homeowners would get people loans to build new homes and replace old homes



Gave construction industries a boost



Country was ta
ken off the gold standard



Fed. Reserve Board placed country back on the gold standard



First two years were just getting the country back on its feet



The Democrats won by even more in the next election



Second New Deal

o

Relief Programs (WPA, Resettlement
Adm.)



WPA



Created in 1935, Works Progress Administration



Spent billions of dollars btw ’35 and ’40 to provide 3.4 million men and women with
jobs



Paid double the relief rate, but didn’t pay as much as if you were working at a
private company



Much bigger v
ersion of PWA, CWA


more direct from federal government



Built new bridges, roads, airports, zoos, public buildings, stadiums, schoo
ls, gutter
and culvert systems



Federal Project # 1

o

Music project, artists project, theater project, writer proect



Employed p
eople of such professions to contribute to community



National Youth Administration (NYA)

o

Students would have part
-
time jobs after school to clean up and do chores
around the school



Resettlement Administration



Provided loans to sharecroppers, tenants, and s
mall farmers



Created migrant camps on the way to CA where migrants could stop on the way

o

Reforms (Wagner Act, REA, Taxes
)



NLRA


National Labor Relations Administration (Wagner Act)



Major labor law placed that was supposed to replace the labor parts of the NIRA,
which was declared unconstitutional



Outlawed busin
ess practices that were unfair
to labor



Created a National Labor relations board to investigate working conditions at
busine
sses

o

Enforced law



REA


Rural Electrification Act



Provided electrical cooperatives to deliver power to rural areas



Revenue Act of 1935



Raised taxes on the wealthy



Added a tax on luxury items and an inheritance tax



Started taxing stocks

o

Social Security Act



Automatically collect money out of your paycheck which is supposed to go to your
retirement

o

Election of 1936 and Solid South/Coalition



Economy was improved, though econ was still weak and unstable



Democrats



FDR

o

Still popular, showing leadership, working h
ard

o

The public adored him, though businesses and the rich disliked him



Republicans



Landon



Wanted to cut back on spending



Roosevelt won all but two states



Democratic party could now count of votes from New Democratic Coalition



Solid south, African Americans, laborers



New Deal Critics

o

Liberals/Conservatives



Opinion polls and elections results showed that majority liked FDR



Liberals



Socialists, extreme liberals in D party



Said FDR didn’t do enough for the people


working poor,
unemployed, elderly,
women, foreigners



Conservatives



More numerous than liberals



Said federal government had way too much power and that the Wagner Act was
too much like socialism and communism



Didn’t like regulations, union help, the fact that the governm
ent borrowed money to
pay for programs

o

Demagogues



Individuals came from both parties



Strong
-
willed individual that manipulates the public



Offers simple solutions and messages and sayings



Used radio



Tried to use evil conspiracies, economic security for the
elderly



Charles Coughlin


said gov. should inflate currency and nationalize all banks



Said FDR was scheming with rich Jews; Catholic superiors told him to shut up and
get off the air



Francis Townshend



Retired physician



Proposed single plan to guarantee se
cure income for the elderly



Said everyone over 60 were supposed to get 200 a month from government

o

They were supposed to spend it



FDR created Social Security as a result



Huey Long



Very popular in Louisiana



Proposed a ‘share our wealth’ program

o

Tax
ed

the bejeesus out of the wealth
y

and give everyone 5,000 a month,
a car, and a home.



1935


announced his plans to challenge Roosevelt for president; but was
mysteriously assassinated while walking through the Louisiana State Capitol

o

Supreme Court




Roos
evelt’s Challenge



He was determined to fix the SC to where it wouldn’t be an obstacle in his eyes



Didn’t have the opportunity to choose justices; many were left over from
conservative era



Submitted Court Reorganization Plan, ‘Court Packing Bill’



Tried to g
et president to appoint an additional justice for each justice over 70 and
half



Declared some of his agencies unconstitutional; said they were old and were still
in the past



he could have added 6 new justices



Never passed



many Republicans and Democrats
were outraged



said he was trying to become a dictator; go against the Constitution



Reorganization Plan was defeated



Roosevelt’s first major defeat



His popularity decreased somewhat



Meanwhile, many of the justices backed off in their resistance, some did
resign in his
second term



He was able to appoint his own justices



Rise of Unions

o

CIO Forms



Unions had flourished in the progressive era, and then went down in the 20s



Two major things changed the situation btw the workers and management:



NIRA



Wagner Act



W
hen depression began, union size tripled



AFL was still biggest union

o

Underwent strains and factions


rival unions within AFL

o

Some groups wanted to extend membership to anyone regardless of sex,
age, etc


CIO



CIO



Led by John L. Lewis who initiated the eff
ort

o

AFL suspended CIO



CIO


Congress of Industrial Organizations

o

Made their own union

o

Strikes



General Motors Plant


Flint Michigan



1937


strike



Companies refused to recognize unions so the workers had a sit
-
in



Government did not support company with troo
ps



Company had to yield and recognize the United Auto Workers Union



Ford Plant



Strikers were driven away and beaten


Battle of the Overpass



Steel Industry



Recognized the CIO



By 1941, nearly all companies dealt with the CIO

o

FLSA



1938


Fair Labor Standards

Act



Regulated interstate businesses



Est. first federal minimum wage



40 hour work week



Overtime


time and a half pay for over 40 hours



Restricted child labor for those under the age of 16



Last and only major reform in Roosevelt’s Second term



End of New De
al

o

Recession, 1937
-
38



Major recession



’33
-
’37


banks were stabilized, employment was better



In winter of ’37, economy got worse because of:



Social Security

o

Reduces spending because the people have less to take home and spend



Roosevelt cut back on relief p
rograms


WPA, etc.

o

Wanted to reduce national debt



John Maynard Keynes



British economist who was consulted by Roosevelt

o

Said he made a mistake by trying to cut spending

o

Said at this point it time, deficit spending was acceptable to be used in
desperate
times and in order to give people jobs

o

Known as ‘priming the pump’



Keynesian theory was adopted in 1938

o

Spending, employment, and industrial production went up

o

Weakened New Deal



Republicans and conservative democrats started to block ambitious reform legis
lation



New Deal was diverted by changing moods and WWII



Depression Mentality



People were insecure



Life During the Depression

o

Women



Women kept families together



Still had to feed and clothe their families



More had to work; percentage in workforce increased



Still earned less than men

o

Farmers



Drought made things worse


Dust Bowl



Dust Bowl



Included Texas, AK, MI, OK, KA



Collectively called Okies

o

Trying to go west and find work because they had borrowed money and
lost their farms

o

African
-
Americans



Faced
discrimination; got worse



African Americans were the last
-
hired and the first
-
fired



Unemployment exceeded national average



Despite poverty, many were left out of New Deal and relief programs

o

TVA had early affirmative action



Suffered more lynchings



FDR neve
r did anything for Civil Rights



Didn’t want to lose southern votes



Got moral support from individuals
-

Eleanor Roosevelt and Ickes



Efforts to get blacks into elections were increasing



Blacks supported FDR and the Democrats



Federal Council of Negro Affai
rs to advise the president

o

Native
-
Americans



John Collier


NA Advocate



Appointed commissioner of bureau of Indian Affairs



Passed IRA


Indian Reorganization Act

o

Got rid of Dawes Act



Supported preservation of cultures



New Deal was accused of withholding
control from NAs

o

Mexican
-
Americans



Main source of labor


farming



US Road to War, 1939
-
41

o

Poland Invaded



Btw the wars, the US had taken a stance of neutrality



Munich was where French, British, and Hitler signed a pact



Munich

Pact


where Hitler would take no more land



Hitler didn’t honor this



War is unavoidable


Germany was very aggressive



Poland was next in line to be attacked



British pledged that they would help if Germany attacked Poland



1939



Hitler and Stalin signed non
-
aggression pact



Said the two countries would not fight each other



Secretly agreed to divide Poland



Sept. 1, 1930



Poland was blitzkrieg
-
ed

o

Lightning war; overwhelmed Poland



Britain and France declared war against Germany the next day and WWII began



German
y attacked Scandinavians to the north and the French to the west.



Denmark and Norway surrendered, French also did



GB was only European power that wasn’t overrun by Germans



FDR felt that British security was vital



Began chipping away at neutrality



By 1940, most Americans were seeing the need to help Britain



British navy still controlled the waters



US used an embargo with other countries

o

US Policy Changes (cash and carry, Selective Service, destroyers
-
for
-
bases)



Cash and Carry



Anyone fighting in the war could travel to America and pay cash for arms



Technically neutral, but favored the British



Selective Service Act



All men btw ages of 21 and 35 had to register



Trained 1.2 million men in one year

o

Draft was reinstated



Battle of Bri
tain



German subs threatened to take control of the Atlantic



FDR arranged a trade

o

Destroyers
-
for
-
bases



British received 50 old naval ships in exchange for the rights to
build bases in the Caribbean

o

Election of 1940



FDR broke two
-
term tradition



Stated tha
t in critical times, he would accept the nomination if chosen



Said in his campaign, ‘your boys are not going to be sent into any foreign wars’



Republicans chose Windle Willke



Lawyer and utility executive



Wealthy and a New Deal critic



Never elected to publi
c office



Criticized breaking the two term tradition



Econ was improving, FDR had experience



People were happy and wanted experience



FDR viewed Germany as trying to defeat all of Europe

o

Threat to democracy and US

o

Arsenal of Democracy (four freedoms,
Lend
-
Lease, Shoot on sight)



1940


FDR said US had to be great Arsenal of Democracy



Told Congress that they had to assist GB:



Said they needed to protect nations who followed the 4 freedoms:

o

Speech

o

Religion

o

From want

o

From fear



Wanted to loan cash to
Britain



Lend
-
Lease Act was passed

o

Pearl Harbor



Home Front

o

Industrial Production

o

Impact on Society/Prop.

o

Election of 1944



Battle Front

o

North Africa/Western Europe/Germany

o

Fighting Japan/Pacific