Download The Great Depression

The Great Depression
1928 Election
• Herbert Hoover (R)
• Alfred E. Smith (D)
The Campaigning Issues
• Prohibition
– Hoover wanted ban, Smith did not
• Religion
– Smear campaign was launched against Smith
b/c he was Catholic
• Prosperity of the 20’s
– Republicans took full credit
• Hoover won in a landside
The Stock Market
• A system for buying and selling shares of
companies
• Bull Market vs. Bear Market
• Buying on margin
• Margin call
• Speculation
• No research and poor investments
Black Tuesday
The Roots of the Depression
• Overproduction
• Uneven distribution of wealth
– Top 5% earned 30% of countries income
– 2/3 of U.S. families earned <$2,500/year
• Low consumption = low wages/decrease
in jobs/low prices = vicious cycle
• Installment plan = high debt/less money
• Hawley-Smoot Tariff (raised tariffs)
• Federal Reserve lowered interest rates
• Money in the bank was not guaranteed
The Depression Worsens
• 1933, thousands of banks closed, millions
out of work
• Bread lines
• Soup Kitchens
• Shantytowns/Hoovervilles
• Hobos
• Dust Bowl
• Many moved to CA
Escaping the Depression
• Movies and radio helped people forget
• Walt Disney
– Snow White and the Seven Dwarfs (1937)
• Movies: The Wizard of Oz, Mr. Smith
Goes to Washington, Gone With the Wind
• Radio: George Burns (comedy), The Lone
Ranger, Soap Operas
Art During the Depression
• Artists tried to capture the drama of the
Depression
– Thomas Hart Benton
– Grant Wood
• Authors wrote of poverty, misfortune, and
social injustice
– John Steinbeck’s The Grapes of Wrath (1939)
– William Faulkner (exposed race issues in the
South)
Promoting Recovery
• Hoover met w/ heads of banks, RR, big
business, labor and gov’t to keep factories
open and stop cutting wages
• These pledges failed
• Public works
• Refused deficit spending
• Republicans were blamed for the
Depression and in 1930 they lost the
majority in the H of R
Pumping Money into the Economy
• Federal Reserve Board refused to put more $
into circulation
• National Credit Corporation (NCC)
– Pool of money t rescue banks (failed)
• Reconstruction Finance Corporation (1932)
– Federal loans to banks, RR and agriculture
– Too cautious and failed
• Denied relief
• Emergency Relief and Construction Act (1932)
– $ for public works and direct relief
Violence Erupts
• Looting, rallies and hunger marches
occurred
• Foreclosures
• Farmers kamikaze themselves
• Bonus Army
Time for Change
• Herbert Hoover (R)
• Franklin Delano
Roosevelt (D)
Roosevelt is Inaugurated
• Lame duck period
– Unemployment rose
– Bank runs increased
– $ converted into gold
• Fear of an end to the gold standard
• 4,000+ banks collapse by March 1933
• Bank holidays
The First Hundred Days
• The First New Deal
• Advisors in the fields of: academia,
business, agriculture, government, law
and social work
• New Nationalism: gov’t and businesses
work together to manage economy
• Government planners run key parts of the
economy
• New Freedom: gov’t should restore
competition to the economy
Fixing the Problems
• National bank holiday
• Emergency Banking Relief Act
– Licenses to sound banks
• Fireside chats (first one ended the bank
crisis)
• Securities Act of 1933
– Companies that sold stock had to provide
info. to investors
Fixing the Problems (cont’d)
• Glass-Steagall Banking Act
– Commercial vs. investment banking
– Created the Federal Deposit Insurance
Corporation (FDIC)
• Government insurance for bank deposits up to a
certain amount
• Securities and Exchange Commission
– Regulated the stock market and prevented
fraud
Managing Farms and Industry
• Agricultural Adjustment Act
– Paid farmers not to raise certain crops
– Administered by the Agricultural Adjustment
Administration (+/-)
• National Industrial Recovery Act (NIRA)
– Suspended anti-trust laws
– Codes of fair competition b/w business, labor
and gov’t
– Section 7(a)
– Run by the National Recovery Administration
– Found Unconstitutional in 1935
Providing Debt Relief
• Home Owners’ Loan Corporation (HOLC)
– Bought mortgages and restructured them
– Only applied to the employed
• Tennessee Valley Authority (TVA)
– Government sponsored regional development
and public energy
• Farm Credit Administration (FCA)
– Helped farmers refinance mortgages
– May have prolonged the depression
Work Programs
• Civilian Conservation Corps (CCC)
– Unemployed men 18-25 could: work with
national forestry service planting trees,
fighting forest fires, and building reservoirs
– Employed 3M men by the time it closed
• Federal Emergency Relief Administration
(FERA)
– Channeled $ to state and local agencies to
fund relief projects
Work Programs (cont’d)
• Public Works Administration
– Construction projects
• Civil Works Administration (CWA)
– Workers placed on the gov’t payroll
– Later shutdown b/c of costs
• Prohibition repealed
• People became hopeful and optimistic,
and there was a renewed faith in America
Challenges of the New Deal
• New Deal policies were ? by the right and
left
• Deficit spending
• American Liberty League
– Created to oppose the New Deal
• Huey Long
• Father Charles Coughlin
• Dr. Francis Townsend
– Proposed an early form of Social Security
The Second New Deal
• Programs and reform to speed up
recovery
• Hoped it would improve the chances of reelection in 1936
• Works Progress Administration (WPA)
– Offered work to artists, musicians, theatre
people and writers
• Schechter v. United States
– NIRA was found unconstitutional
– Congress could not delegate powers to the
executive branch
The Rise of Industrial Unions
• Roosevelt believed in higher union wages
to allow for more spending power
• Wagner Act
– Workers had to the right to organize w/o
interference
– Est. the National Labor Relations Board
• Organized factory elections by secret ballot
– Binding arbitration
• Committee for Industrial Organization
– Formed to organize industrial unions
The Rise of Industrial Unions
(cont’d)
• General Motors sit-down strike
• The plant in Flint, Michigan followed suit
• Violence broke out and the company
gave-in
• United Auto Workers (UAW) was formed
– One of the most powerful unions in the
country
The Social Security Act
• Provided security for:
–
–
–
–
Elderly
Unemployed
Women with dependent children
Others in need that qualified
• Provided monthly retirement benefit and
unemployment insurance
• Benefits were received by paying premiums
• Helped many but left out farmers and domestic
workers among others
Roosevelt’s Second Term
• Millions owed their jobs to the New Deal
• To win women’s support Frances Perkins
was appointed to a cabinet post
• Roosevelt won the 1936 election in a
landslide over Alfred Landon (R)
• The Supreme Court began to find New
Deal programs unconstitutional
• Court-packing
– Split the Democratic party
Roosevelt’s Second Term (cont’d)
• 1937 unemployment rose
• FDR cut spending and the economy
plummeted and 2M were out of work
• Henry Morgenthau wanted to balance the
budget
• John Maynard Keyes: gov’t spending to
jump start the economy
• 1938 Roosevelt asked for $3.75B for the
WPA, PWA and other programs
The Last New Deal Reforms
• National Housing Act (1937) promoted by
Eleanor
– United States Housing Authority: rebuilt slums
• Farm Security Administration
– Loans to tenant farmers
• Fair Labor Standards Act of 1938
– Protection for workers, abolished child labor,
40 hr. work week
• Congress began to vote against New Deal
• New Deal era ended by 1939
The Legacy of the New Deal
• The New Deal had limited success but
was a psychological boost
• New Deal balanced competing economic
interests
• Broker state: gov’t worked out conflicts
among different interests
• The gov’t became a safety net