THE GREAT DEPRESSION AND THE NEW DEAL

Ch 32 and Ch 33

1929 Stock Market Crash

October 24, Black Thursday, a record 12,894,650 shares were traded. Investment companies and leading bankers attempted to stabilize the market by buying up great blocks of stock, producing a moderate rally on Friday.

On October 29, 1929, Black Tuesday hit Wall Street as investors traded some 16 million shares on the New York Stock Exchange in a single day. Billions of dollars were lost, wiping out thousands of investors.

The Great Crash

Bank Panic

US Gross Domestic Product

Economic figures: unemployment-24.9% in 1933-15 million without work

Bank Failures-more than 5000 by 1933-savings accounts wiped out

The Human Impact

The Dust Bowl-key facts

An 150,000-square-mile area, encompassing the Oklahoma and Texas panhandles and neighboring sections of Kansas, Colorado, and New Mexico

The Dust Bowl

Due to drought, farming practices, the soil lacked the stronger root system of grass, so the winds easily picked up the loose topsoil and swirled it into dense dust clouds, called “black blizzards.”

Causes of the Great Depression Uneven distribution of wealth-Top 1% had total

income of bottom 42% Overproduction of key industries and farmers Easy credit led to Increasing levels of consumer

debt Monetary policy caused deflation International Policies on debt weakened Europe and

Banks Tariff policies hurt world trade Stock market speculation and margin buying-RCA

multiplied by nearly 5 times Stock market crash caused panic

Herbert Hoover

Sec of Commerce under Coolidge Great Humanitarian-organized food

relief in Belgium Philosophy of Rugged individualism

Hoover-Measures to fight the GD 1. Called on business leaders to not lay off workers

or cut wages 2. 1930-Hawley-Smoot Tariff Act 2. Called for public works programs to spend

millions of dollars-”Hoover Dam” 3. Expansion of the Federal Farm Board (FFB) to

help raise prices by buying excess crops 4. 1932- The Reconstruction Finance

Corporation (RFC) which provided financial support to state and local governments and made loans to banks, railroads, mortgage associations

Hoovervilles

Bonus Army Invades Wash DC 1924, Congress voted to give a

bonus to WW1 vets - $1.25 for each day served overseas, $1.00 for each day served in the States. The catch was that payment would not be made until 1945. 

The Bonus Army-1932

Some 15,000 veterans, many unemployed and destitute, descended on Washington, D.C. to demand immediate payment of their bonus. Congress rejected

A month later, on July 28, Attorney General Mitchell ordered the evacuation of the veterans President Hoover ordered the army to clear out the veterans. Used Tear Gas and bayonets, thousands of casualties

General Douglas MacArthur in command. Major Dwight D. Eisenhower served as his liaison with Washington police and Major George Patton led the cavalry.

Eisenhower later wrote, "the whole scene was pitiful. The veterans were ragged, ill-fed, and felt themselves badly abused. To suddenly see the whole encampment going up in flames just added to the pity."

1932 Election

GOP-Herbert Hoover re-nominated Democrats-Franklin Delano Roosevelt-

Governor of New York

Experimented with progressive policies in NY state

Called for direct relief to help poor and unemployed

Called for a “New Deal” for the American people

FDR key facts

Wealthy upstate NY family 1905-Married Eleanor Roosevelt Former Assistant sec of the Navy VP candidate in 1920 Suffered Polio in 1921-paralyzed

from waist down-wheelchair Difficult recovery and therapy to

recover 1928-Governor of New York

Results! Landslide!

FDR

March 4, 1933-FDR Inaugurated as president-“The only thing we have to fear is fear itself

Hoover still president until March 4, 1933-Lame Duck Period for Hoover

Economy continued to decline until Inauguration Day-poor relations between Hoover and FDR

25% Unemployment when FDR took office

The first 100 Days-(March 9-June 16, 1933) National Banking holiday from March

6-March 10 Congress passes Emergency Banking

Relief Act-March 9, 1933 Special Session of Congress to deal

with crisis

The 3 “Rs” of the New Deal Called for 3 Rs-Relief, Recovery, and

Reform-Progressive legislation Relief-direct aid to people who were

suffering Recovery-Programs that created jobs Reform-Long range changes to

prevent another depression

Alphabet Soup

Glass-Steagall Banking Reform Act Established FDIC Insured deposits up to $5000 Took the nation off the gold

standard-ordered all private holding of gold to be surrendered to the treasury in exchange for paper currency-caused more dollars into circulation and inflation

CCC-Civilian Conservation Corps employed 3 million men doing

conservation projects

FERA-Federal Emergency Relief Administration run by Harry Hopkins-gave 3 billion

to states to give direct relief to unemployed. Also set up Civil Works Administration-run by Hopkins, employed people in boondoggle jobs

AAA-Agricultural Adjustment Act paid farmers to reduce surpluses of

ag products by placing a tax on processors, extremely controversial and declared unconstitutional in 1936, 2nd AAA passed in 1938

NRA-National Recovery Administration Complex new deal program

regulation business, industry, and labor-set prices, est. codes of fair competition, floor for wages, maximum hours of work, declared unconstitutional in 1935 by SCOTUS in the Schechter “sick chicken” case

PWA-Public Works Administration run by Harold Ickes, 4 billion spent

on 34000 projects, also set up relief programs

TVA-Tennessee Valley Authority Huge government project to dam up

the Tennessee river with a series of dams and create hydroelectric power plants that would revitalize the Tennessee Valley Area

Reelection of FDR in 1936

Results?

Modest recovery by 1936 1937-“Roosevelt recession”-

unemployment back to 19% New payroll taxes and income taxes Uncertainty caused by government

policies Cutback in government spending

over desire for balanced budget

2nd New Deal-1934-1936

Social Security Act (1935)-system of unemployment and old age insurance as well as payment to disabled and orphans-paid for by payroll tax

WPA(1935)-Works Progress Administration- created jobs by spending $11 billion

on public buildings, bridges, and roads, also the Federal Art Project

National Labor Relations Act-(1935) (Wagner Act)- right for unions to organize and

collectively bargain as well as set up National Labor Relations Board

Fair Labor Standards Act(1938) set up first national minimum wage

and maximum 40 hour work week

New Deal Opposition

Right (Conservatives) New Deal doing too much and represents an unconstitutional p0wer grab. New deal moves us towards Socialism

Left -New Deal not doing enough!!! The new deal is too tepid…FDR should move to nationalize industries for the good of the common man.

The Liberty LeagueWealthy industrialists, business leaders, and the rich that opposed the size and scope of Federal government intrusion in the economy, called FDR a “traitor” to his class Governor Al Smith and former President Hoover called for “a holy Crusade for Liberty”

The Supreme Court of the US1936-Schechter Poultry v United States Court rules that NRA Unconstitutional 1936-US v Butler Court rules that the AAA is unconstitutional

The Court Packing Scheme

For every judge over 70 who did not retire FDR could appoint a new judge

Maximum number could be 15 justices Congress and the country outraged-defeats

plan FDR accused of trying to be a dictator-

suffers first big political defeat Court upholds minimum wage, Wagner act,

and SS act FDR outlasts judges who start to retire,

replaced by new Deal judges

Dr Francis Townsend

Called for the federal government to provide $200 a month to all citizens over the age of 60 funded by a national sales tax

Father Charles Coughlin

radio priest listened to by millions that called for nationalization of major industries and eventually ranted on anti-Semitic topics and attacked FDR

Senator Huey Long

 Senator Huey Long- charismatic governor of LA and Senator that called for a “Share the Wealth” program that raised income and inheritance taxes on the wealthy and guaranteed a minimum income for all American families-(assassinated in 1935)

Legacy of the New deal

Modest recovery by 1936 1937-“Roosevelt recession”-unemployment back to

19% New payroll taxes and income taxes Uncertainty caused by government policies Cutback in government spending over desire for

balanced budget April 1937-FDR adopts policies of john Maynard

Keynes Keynesianism-use of government deficit spending

and fiscal policy to stimulate growth

Legacy continued

1938-loss of momentum as GOP made gains in Congress-shift to focus on international affairs

National debt skyrocketed because of government spending

Tremendous growth in the size and scope of federal government bureaucracy

Criticism of “creeping socialism” and class warfare by big business

Criticism of dictatorship of FDR-attacks on SCOTUS Defenders argued that it saved capitalism and American

democracy at a time when both were under assault Powerful presidential leadership in a critical time to raise

morale and lift spirits GD finally ended by lend lease act and WW2