1929-1939

The Great Depression and the New Deal

Ch.25 & Ch.26

Causes of the Depression1929-1933

Wall Street Crash:Rising stocks hit an all time high (September 3)

Black Thursday: (October 24, 1929)Extreme amounts of selling on Wall StreetStock prices plungedBankers tried to stabilize the market on Friday.

Black Tuesday: (October 29, 1929)*Investors panicked and sold while no buyers came.

Why did it crash?

Uneven distribution of income (Mellon Tax Plan)

Stock market speculation (Mellon Tax Plan)Excessive use of creditOverproduction of consumer goodsWeak farm economyGovernment policiesGlobal economic problems.

Effects

U.S Gross National Product- (Value of all goods and services produced by the US in 1 year)-Dropped from $104 billion to $56 Billion in 4 years.

US income dropped over 50%20% of banks closed (10 million savings accounts

lost)1933- 13 million unemployed (25%)

Hoover’s Policies “Do nothing president”

Hoover assumed the tides would turn

Message to Americans:Localism-Local and state gov. responsibilityVolunteerism- Charities take care of the poor and

needy.Rugged Individualism- Hard work, sacrifice, and

determination will get the US out of the depression.

Hoover Policies (Foreign)

Hawley-Smoot Tariff (1930)-Raised tariffs to an all time high.Consequence???

Debt moratorium-1931 (Economy was so bad) Dawes Plan not

working, Hoover suspended all payments of international debts. Tons of loan defaults.

Hoover’s Domestic Programs

Federal Farm Board- Help farmers stabilize prices by storing grain and crops.

Reconstruction Finance Corporation (RFC)-1932 Congress created gov. owned corporation-Help railroads, banks, life insurance companies, and financial

institutions. (Trickle Down Effect) (Business focused)

Farmer unrest- Created Farm Holiday Association in the Midwest. Try to stop banks from foreclosing and try to keep 1932 harvest from the market. (Not Effective)

Bonus March- WWI Veterans (Bonus Expeditionary Force) promised a bonus by 1945. March to D.C demanded an immediate payment.

Hoover ordered the army to break up the encampment.

Hoovervilles

Election of 1932Hoover becomes unpopular(1930 Democrats control House)Hoovervilles1932- Worst year of the Depression so far.

Franklin D. Roosevelt (FDR)- Dominates Hoover“I pledge you, I pledge myself, to a new deal for the

American people.”Blacks started to favor Democrats instead of their

traditional support for Republicans.

Hoover “lame-duck” president:-Four months before FDR would become president. -20th Amendment- Shortened the period to January

20.

FDR

FDR the person

Wealthy only child from NY.Cousins to Teddy RooseveltDisabled from Polio (paralyzed)Sickness HUGE contributor to his

compassion and will power.

Eleanor Roosevelt

Became a strong leaderMost active first lady (speeches, columns,

etc…)Rough marriage

"champion of the dispossessed"

FDR’s New Deal Philosophy

FDR promised to attack the crisis through radical reforms and experimentation.

Congress gave him immense support Biggest problem at first was restoring

confidence

3 R’sRelief- for people out of workRecovery – for business and economy Reform- of American institutions

Brain Trust and other Advisers

Key advisers from his past used during his presidency.

Louis Howe- Chief political adviser Brain Trust (Rexford Tugwell, Raymond

Moley, & Adolph A. Berle Jr.) Appointed record number of African

Americans, Catholics, Jews, and women. (Ex: Frances Perkins)

FDR’s chief “administrator of relief” was Harry Hopkins.

First 100 Days

March 4, 1933: FDR called Congress to aHundred-day-long special session. Congressed passed into law every request by

FDR.More major legislation than any single

Congress in history.

Bank Holiday

Early 1933Banks were failing at insane ratesTo instill faith in the remaining banks, FDR

closed the banks for a 4 day bank holiday on March 6, 1933.

FDR reassured Americans on the radio that the banks would be back when they were sound.

Repeal of Prohibition

Congress passed the Beer-Wine Revenue Act- Legalized the sale

of beer and wine. (use for tax money)

1933- 21st Amendment repealed the 18th Amendment ending prohibition.

Fireside Chats

March 12, 1933 First fireside chatRadio broadcast of the president reassuring

Americans, especially in regard to the safety of the banks.

More money was deposited than withdrawn when banks reopened.

Different types of Programs

“Hundred Days” (Spring 1933-summer 1935)Financial Recovery ProgramsRelief for the unemployed ProgramsIndustrial recovery programFarm production control program

First New Deal (Summer of 1935-1939)Other programs of the 1st New Deal

Second New Deal (1939-1945

Financial Recovery Programs

Emergency Banking Relief Act- Government enabled to investigate banks closed during the Holiday and open those that were sound.

Glass-Steagall Act- Created the Federal Deposit Insurance Corporation (FDIC)- Insured

individuals deposits to banks of up to $5000

Home Owners Loan Corporation (HOLC)- Refinancing of small homes to prevent foreclosures.

Farm Credit Administration (FCA) -Low- interest loans and mortgages to prevent foreclosures on the property of indebted farmers.

Programs for relief for the unemployed

Federal Emergency Relief Administration (FERA)-Federal grants given to states/local governments who ran

soup kitchens and other relief for the jobless. -Ran by Harry Hopkins (friend & adviser of FDR)

Public Works Administration (PWA)-Secretary of Interior Harold Ickes-$ given to state/local governments to build infrastructure.

= more jobs-Industry recovery and unemployment relief

Programs for relief for the unemployed

Civilian Conservation Corps (CCC)-Young men hired to work federal lands and gave families small

monthly payments. *Most popular

Tennessee Valley Authority (TVA)-Massive experiment in regional development & public planning. -Hired thousands in one of the poorest regions in the US-Build dams, operate electric power plants, control flooding &

erosion, and manufacture fertilizer. -TVA sold electricity for cheaper than many private companies. *Most controversial (creeping socialism)

Industrial recovery program

1933- Main aid for immediate and long-term relief. (NIRA)National Recovery Administration (NRA)-Hugh Johnson-Guarantee profits for business and fair wages and hours for

labor. -Suspended antitrust laws-Helped businesses set wages, hours of work, level of

production etc…-Workers allowed to organize and bargain collectively. -Existed for 2 years before the Supreme Court declared the

NRA unconstitutional (Schechter v. US)*Most complex

Farm production control program

Agricultural Adjustment Administration (AAA)-Pushed farmers to produce less. -Gov. paid farmers subsidies for acres they plowed under. -AAA declared unconstitutional in 1935.

Other programs of the First New Deal

After the 100 Days was over, FDR kept going.

Civil Works Administration (CWA)-Created jobs for temporary construction projects made

by the federal government

Securities and Exchange Commission (SEC)-Regulate the stock market and put limits on speculation.

Other programs of the First New Deal

Federal Housing Administration (FHA)-Construction industry and homeowners could

now get insured bank loans for new and old construction.

Law taking the US off the gold standard. “managed currency” helped cause inflation

Great Depression Video

http://www.youtube.com/watch?feature=player_embedded&v=MdaEUFE2Xs4

Second New Deal

First 2 years of FDR’s Presidency were focused on recovery.

Summer of 1935, the Second New Deal began

Relief ProgramsHarry HopkinsWorks Progress Administration (WPA)- Much bigger than relief agencies in the First New Deal- Spent billions between 1935-1940.- Employed 3.4 million men and women who had been

unemployed.- Work on new bridges, roads, airports, & public buildings. - Hired unemployed artists- NYA National Youth Administration- Paid youth to stay in

high school.

Resettlement Administration (RA)- -Rexford Tugwell-Loans to small farmers, sharecroppers, and tenants.

Reforms More focused on industrial workers and farmers National Labor Relations (Wagner Act) 1935- Replaced NIRA or NRA- Protect worker’s right to join union and bargain collectively.- National Labor Relations Board- Protect workers

Rural Electrification Administration (REA)-Loans to electrical cooperatives to provide electricity to urban areas. Federal Taxes –Revenue Act of 1935 increased income tax on

wealthy.

Social Security Act – Taxes taken from employees and employers-Paid retired people over 65.-Paid unemployment compensation-Paid blind or disabled -Paid dependent children and mothers.

Election of 1936

Economy still depletedFDR popular among working classDeeply unpopular among the business sector.

Alf Landon- Progressive governor of Kansas

FDR dominated Landon.

Opposition to the New Deal Liberal Critics- Socialists/liberals wanted FDR to do more for the poor. Conservative Critics- Thought WPA was socialist, opposed business

regulations, union issues, and disliked deficit spending. Demagogues- Used the radio to reach the masses

Father Charles E. Coughlin-Catholic priest, anti-Semantic led to his demise. -Wanted to end the “evil conspiracies” Dr. Francis E. Townsend-Old Age Revolving Pension Plan- Give $200 a month to citizens over 60.-But would have to spend the $, (Influences FDR Social Security Plan)

Huey Long-Immensely popular Senator from Louisiana - “Share Our Wealth” program to give $5000 to every American family. - Tax the wealthy to get the $- -Was assassinated.

Supreme Court

SC already declared unconstitutional the NRA & AAA.

Court-reorganization plan-FDR proposed a judicial-reorganization bill known as the “Court-

packing” bill.-Would give FDR the right to appoint new justice for every justice

over 70.5. (Could have added up to 6)

Reaction- Every party was beyond upset, first bill to be defeated.

Aftermath- The SC interestingly started to uphold many of the Second New Deal legislation. Many justices also retired which allowed FDR to appoint his own anyways.

Unions

National Industrial Recovery Act of 1933 & Wagner Act of 1935 led to huge gains in union power and membership.

AFL (American Federation of Labor) – mostly skilled white male workers.

1935- Group of industrial unions broke off AFL and created the CIO (Committee of Industrial Organizations) 1936- AFL broke suspended the CIO unions and renamed them the

Congress of Industrial Organizations. Became big rivals.

StrikesAutomobile- General Motors , Flint, Michigan. Workers demanded right

to join union. Sit-down strike and gov. refused to send troops. Company backed down and the workers created the UAW. (United Auto Workers)

Steel- US Steel corporation decided to work with CIO, many smaller steel companies refused initially but came to eventually.

Fair Labor Standards Act

1938Minimum wage (40 cents an hour)Maximum workweek of 40 hours and

(overtime)Child-labor restrictions on 16 and under

Last Phase of the New Deal

Recession of 1937-1938 -Economy was getting stronger 1933-1937-End of 1937 economy went down again.

Causes: Social Security tax lessened consumer spending and Roosevelt reduced relief.

Keynesian Economics: John Maynard Keynes influenced FDR’s perspective on economics.

-FDR stopped worrying about balanced budget and started to deficit spend.

-In desperate times deficit spending would “prime the pump” and increase jobs and help the economy.

New Deal weakens

“Court Packing” hurt FDR 1938 elections lessened Democratic control in Congress. Congress started to block New Deal legislation and fear of

Nazi Germany began

Indian Reorganization (Wheeler-Howard) Act of 1934- John Collier helped Native Americans.

- Dawes Act repealed. - Returned lands & control of tribes to Natives.