The Great Depression, Roosevelt, and the New Deal Brinkley Ch.
23 and 24
Slide 2
General State of the Economy Leadership: Harding, Coolidge,
Hoover, Roosevelt World War I placed the US in the role of a
Creditor Nation European Allies owed US $10.5 Billion Dawes
Circular Debt loans to Germany for repayment of war reparations
Funding demonstrated international interdependence Kellogg-Briand
Pact (1927): illegalizes wars of aggression
Slide 3
General State of Economy Federal Government more involved in
Economy Think trust busting of T. Roosevelt Tax Cuts for rich and
corporations (Revenue Act of 1926) Output of factories on the rise
Industrialism Consumerism, Planned Obsolescence Stock market
acceleration
Slide 4
Hardings Administration Corruption Isolationism The Washington
Conference and the Far East Teapot Dome Scandal Oil reserves in
Wyoming and California Bribery at the national level highlighted
Reflected poorly on the entire administration
Slide 5
Coolidges Characteristics Silent Cal- not particularly chatty
Restores faith in President Congress runs the country The Business
of America is Business Andrew Mellon, Sec. of Treasury: Tax Revenue
Act of 1926: free the wealthy from taxation so they can develop
resources and create jobs through wise investing
Slide 6
Hoovers Political Philosophy Rags to Riches story: born in Iowa
in poverty, became a mining millionaire Elected President in 1928
after serving Harding and Coolidge as Treasury Secretary Efficiency
and Scientific Solutions to problems Missionary of the Capitalist
system Equality of Opportunity and Individualism Laissez-faire
economics Business and government working cooperatively to abolish
poverty
Slide 7
The Economy Spirals Downward Pre-Depression Red Flags decrease
in construction increase in unsold inventories Cut backs and
lay-offs (rise in unemployment/mechanization) Decrease in farm
prices Stock market speculation increases (margin buying) 10:1 =
highest safe price, ready to fall 1929, 16:1= average stock ratio
Isolationism from Europe prevented them from being able to repay
debts
Slide 8
THE CRASH All through October 1929, as the smart money was
quietly selling off shares of stock, market prices steadily
declined. On October 24 the volume of shares sold reached 13
million and stock prices nosedived. Banks began calling in payment
for loans they had issued to cover stock purchases. Borrowers
scrambled to try to sell the shares they had bought with borrowed
money, so that they could repay their bank. The massive sales drove
stock prices down further. On October 29, Black Tuesday, the market
lost 1/3 its overall value. The market would not rise even a point
for the next 4 years.
Slide 9
The Results of the Depression Destruction of stored capital
Wages drop more than 50% on average Unemployment Rises Imports drop
sharply Investment in new capital plans cease 1/5 Banks Close and $
is lost Farmers lose their land Middle class loses savings People
cant repay credit buys Hoover-villes (shanty towns) Breadlines and
Soup kitchens
Slide 10
Hoovers Response Saw collapse as a natural event in the market
Saw himself as a cheerleader: Prosperity is just around the corner
Saw the solution in cooperative, voluntary actions by businessmen:
reduce profits- keep men on payroll Donate to charity, so they can
provide for the poor
Slide 11
Congress and the RFC Reconstruction Finance Corporation
(1931-32) Govt aid to failing banks, RRs, Insurance Companies, etc.
$1.5 billion to help them stay open Strategic blunder Congress
appropriates $750 million for public-works projects (dams, bridges,
streets repair, etc.) to raise employment
Slide 12
Hoovers Fall Neither the RFC or the public works programs were
successful Criticized for being an enemy of the working man
Safeguarding the free-enterprise system Protecting US from
socialism/communism Democrat Reaction: Depression is a political
lever Increase income tax on wealthy and corporations
Slide 13
FDRs Background Personal Background (find 3 facts for yourself
[HW]) Inauguration sets the tone: The only thing we have to fear is
fear itself Problems facing FDR Massive unemployment (25% of the
population) Banking system in chaos City Welfare Programs are out
of $$$
Slide 14
Roosevelts Philosophy Progressive Sense of the American
Community Sympathized with Suffering/Fireside Chats NOT a radical
or a socialist Distrusted selfish individualism Willing to
experiment
Slide 15
The New Deal TWO PHASES: Phase One: 1933-1935 Problem:
OVERPRODUCTION Solution: Reduce output by Centralized Direction
Phase Two: 1935-1938 Problem: UNDERCONSUMPTION Solution: Provide
Jobs (increase purchasing power)
Slide 16
The New Deal FDR gathered a gifted cabinet Sen. Cordell Hull
(Dem, TN) Henry Wallace Harold L. Ickes Frances Perkins (first
female in Presidential Cabinet) Unofficially, he gathered business
advisors known as the brain trust
Slide 17
The New Deal No firm plan at the time of Inauguration Much was
ad hoc made up on the spot FDR was flexible, willing to experiment
or retool when things werent working A Keynesian approach to the
economic issues
Slide 18
FDR and the Banking Crisis Week 1: Asks and receives (from
Congress) broader executive powers than any other President (even
Lincoln) had taken Launches 4 day Bank Holiday- an investigation of
the Banks Use of the term Holiday made the action palatable to
Americans Halts all trading in Gold (stops people from withdrawing
$$$ and putting it in other places)
Slide 19
3-Pronged Approach to Banks Solid Banks (Good) What investments
did they make? These were re-opened Bankrupt Banks (Bad) Imprudent
investments = loss of $$$ Beyond repair; closed or liquidated to
pay off investors Questionable Banks (Borderline) Loaned them $$$
using Hoovers RFC
Slide 20
The First 100 Days AKA The First New Deal Business and National
Recovery Administration (NRA) Businesses allowed to set prices and
production limits Unions could collectively bargain over
hours/wages Owners/Mgmt HAVE TO acknowledge unions Workers won
specified max. hours and min. wages
Slide 21
CLOSE-UP: The NRA RESULTS of NRA Creation of approx. 2 million
jobs Extended protection of Workers Problems of the NRA
Progressives are unhappy (monopolies) Small businesses are
sometimes squeezed out Enforcement difficulties Schecter v. US,
1935: declared NRA unconstitutional Highly conservative SCOTUS
delivers blow to FDR
Slide 22
The First 100 Days The Agriculture Adjustment Administration
(AAA) Agricultures problem construed as OVERPRODUCTION AAA called
for Federal Controls over Production How much & What is
produced Producers of basic commodities (grain, wheat, dairy,
cotton) received federal payments (subsidies) for limiting
production
Slide 23
CLOSE-UP: The AAA Basic Goals of the AAA: Raise income by
limiting production Refinance farm mortgages (through land banks)
Problems with the AAA: Accusations of Socialism Agricultures most
destitute were left out Tenants and Sharecroppers **In order to get
land, you must own land**
Slide 24
The First 100 Days Regional Planning: The Tennessee Valley
Authority (TVA) Building dams (Pickwick) and bridges Provided
electricity to rural South Reclamation (reclaiming land)=
productive use of previously unused land
Slide 25
CLOSE-UP: The TVA Different from other New Deal Programs
Established with a board made up of private citizens, not
politicians Created Jobs (specifically in Construction)
Slide 26
The First 100 Days Relief Programs Civilian Conservation Corps
(CCC) Used for conservation of natural resources (timber, soil,
water) AKA the Rangers Federal Emergency Relief Administration
(FERA: 1933- 38) Relieved hardships caused by poverty and draught
Taken over by WPA in 1938 Civil Work Administration (CWA) Hired
actors to give free shows Librarians to Organize Books
Slide 27
The First 100 Days First New Deal began the recovery, but didnt
complete it Unemployment dropped to about 25%, still extremely high
(had been 3.2% in 1929) Bank deposits grew by about $6 billion,
stabilizing the bank industry GNP rose to over $91 billion, from a
1932 low of $74 billion
Slide 28
Roosevelt and Shifting Ideas Roosevelt was the Power Center
First Great Media President (FIRESIDE CHATS) Communicated w/ people
as a real person Done through radio, allowing him to bypass the
press Guarded his power jealously (did not delegate authority)
Informal one man rule
Slide 29
CRITICISM OF THE NEW DEAL By 1935, FDR was criticized by
Republicans for having done too much, and by Democrats for having
done too little. Conservatives founded the American Liberty League
in 1934, to generate anti-New Deal advertisements. Tried to field
anti-FDR candidates, unsuccessfully From the Socialist Wing: Huey
Long and the Share Our Wealth Program Govt confiscates income above
a certain level Redistributes it to less fortunate Popular in
extremely poor, Southern states (like LA) Never passed by
Congress
Slide 30
CRITICISM OF THE NEW DEAL FDR HATES deficit spending Criticized
for too much cooperation with Business (NRA) Keynesian Principles
Huge govt spending for jobs ($$ from taxes, borrowed, etc)
Increased purchasing power Put banks under public control RESULT:
Works Progress Administration (WPA) Appropriation of $5 billion for
work relief Govt funneled more than $11 billion through the WPA for
small-scale projects Provide jobs and beautify America at the same
time MEMPHIS ZOO was a WPA project
Slide 31
The Second Hundred Days AKA The Second New Deal Social Security
was the lynchpin of the Second New Deal. It was not a work relief
program, but a tax/pension program that guaranteed a living income
for senior citizens whose adult children could not support
them
Slide 32
SOCIAL SECURITY Social Security was criticized by the American
League as being communistic, but the political capital FDR gained
by helping the country look after grandma was undeniable. Social
Security quickly became an expectation in the minds of
Americans
Slide 33
EFFECTS OF THE NEW DEAL The New Deal established a welfare
society DEFINITION: a society in which the government expects to,
and is expected to, provide a safety net below the welfare of the
citizens. Government will always take up any slack in individual
safety and well- being when the economy fails.
Slide 34
REALIGNMENT IN 1936 1936 was a re-aligning election, bringing
new voters into the Democrat party: Midwest farmers in large
numbers, helped by the AAA Unions, and large numbers of urban
factory workers Black people, who had traditionally voted
Republican
Slide 35
ROOSEVELTS ATTACK ON SCOTUS FDR attempts to pack the court Fill
the court with his supporters 1937 Judicial Reorganization Bill
Defeated by Congress Seen as an overstep of Presidential
authority/violation of separation of powers between branches But
the Court began to look more gently on FDRs programs The
Congressional challenge to the court scheme had make FDR more aware
of his boundaries.
Slide 36
THE NEW DEAL FDR slowed government spending in 1937 in response
to partial recovery, and the fragile successes collapsed. 2 nd
recession began in 1937. FDR proposed new WPA spending in 1938 and
the recovery sputtered to life again.
Slide 37
THE NEW DEAL Other Second New Deal programs to know: Farm
Security Administration lent money to farmers to buy land and
equipment A second AAA to prop up farm prices FLSA, which
established a minimum wage
Slide 38
THE NEW DEAL FDR signed the Fair Employment Practices Act
guaranteeing consideration to minority businesses in obtaining
government contracts John Collier of Bureau of Indian Affairs
pressured an end to the Dawes Act and restored tribal ownership of
Indian lands
Slide 39
THE NEW DEAL Mexican-Americans benefited least The USA ended
its lax enforcement of cross-border migration, heavy during the
20s, as jobs became scarce. Mexican-Americans in large numbers
moved back to Mexico; M/A population dropped by 40% during the
1930s
Slide 40
THE NEW DEAL Women in all but the pink-collar jobs were left
largely out of New Deal programs. Protective legislation was more
popular for women than equality of opportunity legislation; they
protected women out of practices such as overtime, which might
actually have earned them more pay.
Slide 41
THE NEW DEAL NRA codes were complicated, causing critics to
call the New Deal the National Run-Around Recovery not happening
fast enough to suit many factory workers Thus labor union
membership actually increased, especially after NLRA was
passed.
Slide 42
THE NEW DEAL CIO was founded in 1935 by John L. Lewis, to
organize unskilled industrial workers on a scale similar to AFL.
CIO organized by industry, not by skill: all auto workers of
whatever level, all electrical workers, all teamsters, all steel
workers, etc. Strong challenge to AFL strength
Slide 43
THE NEW DEAL CIO pioneered the sit down strike General Motors
recognized the CIO as workers official bargaining agent in 1937, a
huge victory for CIO CIO membership tripled that year By 1940, CIO
membership outnumbered AFL (the two merged in mid-1950s)
Slide 44
THE NEW DEAL in RETROSPECT THE CONSERVATIVE VIEW (1950s) Did
not like the New Deal Thought it was a dangerous revolution Allowed
for too much govt control and Executive Power
Slide 45
THE NEW DEAL in RETROSPECT THE NEW LEFT or LIBERAL VIEW (1960s)
Too tame; way job New Deal was not enough H-A-R
Slide 46
THE NEW DEAL in RETROSPECT MILLENIAL VIEW (2000s) Crucially
important transformation in government Greatly enlarged the role of
the Federal Government Instilled in Americans a sense of security
that the government would act in times of crisis
Slide 47
POPULAR CULTURE during THE NEW DEAL All about ESCAPISM Let
people forget their troubles Little Rascals (the Originals), Bob
Hope, Bing Crosby, The Marx Brothers, Musical comedies SWING MUSIC
and BIG BANDS (well come back to this) Movies were cheap and
popular Saturday serials (Buck Rogers, Flash Gordon) Comic books
(Dick Tracy, Superman) Literature: Faulkner, Hemingway,
Steinbeck