Chapter 22: The Great Depression

(1929 – 1933)

I. Causes of the Great Depression

Introduction…A. Weakness in the Overall Economy

1. Depressed agriculture w/ drop in farm prices2. High unemployment in RR, coal, textile3. Increase in number of bank failures…4. Summer ‘29: underconsumption in economy…

I. Causes

B. Unequal Distribution of Wealth1. 1% v. 40%2. Economy depend on small % spending3. Masses couldn’t pick up slack when they stopped: underconsumption4. Wages didn’t keep pace w/ inflation: miners, textile workers, farmers

I. Causes

C. Excessive Buying on CreditD. Inadequate Govt Policies

* Laissez faire; tax policies; not enforce antitrust laws* FED: allowed low interest rate: led to stock speculation

E. Weak International Economy* Hawley-Smoot Tariff (1930)

II. The Great Stock Market Crash

Introduction…

Terms:1. “On the Margin”: investor borrows from

stockbroker who borrows from bank.2. Call loans: can be “called” in at any time3. Average American…4. Business Cycle: economy grows, contracts5. Dow Jones Industrial Average: an average of

stock prices of major industries

III. Misery & the Great Depression

A. By the Numbers1. 1929-1933: national income: $87 b to $40 b2. Wages dropped 60% 3. ‘29-’33: 5000 banks closed4. 25% unemployment: 10 million5. 90,000 business failed6. 1 million: homeless7. Marriages, births, colleges: dropped8. “Woman” jobs: less affected

III. Misery & the Great DepressionB. Urban Life

1. Hoovervilles/ Hoover Blankets2. Bread lines & soup kitchens3. Increase in malnutrition, tuberculosis, typhoid4. Relief efforts by Red Cross: limited b/c contributions were down5. Private organizations: overwhelmed

III. Misery & the Great DepressionC. Dust Bowl

1. 1930s: seven year drought hit parts of Texas, OKLA, Kansas, Colorado, N. Mexico2. Drought + poor farming techniques = loss of topsoil… created huge dust storms3. Okies, Arkies, The Grapes of Wrath4. W/ foreclosures, increase suffering of farmers

III. Misery & the Great Depression

D. Culture and the Great Depression

IV. Herbert Hoover’s Response

A. Philosophy1. Hoover the Man2. Philosophy

* Believed in self help and opposed direct govt relief; would destroy “rugged individualism” & initiative

*Laissez faire: no govt; eco will fix itself (bus. cycle)

* Preferred balanced budget & cut taxes* Relief: responsibility of local govt, private

groups* “Prosperity is Just Around the Corner”

IV. Hoover’s Response

B. Actions1. Reconstruction Finance Corporation2. Business Agreements3. Government Projects4. Hawley-Smoot Tariff ( 1930)5. Moratorium on European Debts

IV. Hoover’s Response

C. Bonus Army

V. Mandate for Change: FDR

Chapter 23: The New Deal

I. FDR’s Policy Strategies

A. Introduction…Fireside Chats… Brain Trust… 100 Days

B. Practical ApproachesDeficit Spending… Keynes

II. The New Deal in Action: Relief, Recovery, Reform

A. Relief1. Emergency Banking Act (1933)

* Bank Holiday2. Federal Emergency Relief Act/ Ad: chart3. Public Works Administration: chart4. Civilian Conservation Corps: chart5. Works Progress Administration: chart

II. The New Deal

B. Recovery1. Home Owners Loan Corporation (HOLC)

*Provided money to pay off mortgages2. Federal Housing Administration (FHA)

* Insured bank mortgages

II. The New Deal

B. Recovery3. National Industrial Recovery Act

* Chart* Suspended anti-trust laws to revive

business and reduce unemployment* Business: agree to fair wages and

hours; unions can organize* Not popular: raised prices and

favored BB* Declared Unconstitutional

II. The New DealB. Recovery

4. First/ Second Agricultural Adjustment Act

* Chart* Goal: raise income by cutting

surplus: crops & livestock* Financed by processing tax on

manufacturers* Public: outraged over destruction

III. The New Deal

C. Reform1. Glass-Steagull Banking Act/ FDIC: chart2. Securities Exchange Act/ Ad: chart3. Social Security Act/ Ad: chart **Important!!4. National Labor Relations/ Wagner Act

* “Magna Carta” of labor* after NRA: unconstitutional

5. Fair Labor Standards Act: chart

III. Constitutional Issues & the New Deal

A. Supreme Court… Introduction1. Schechter Poultry Corp. v. US

* “Excessive legislative powers by the executive branch was unconstitutional”2. US v. Butler3. Court Packing

III. Constitutional Issues

B. Tennessee Valley Authority 1. Federal funded corporation that provided jobs, cheap electricity, flood control to 7 poor states.2. Controversial: “creeping socialism”

C. Third Term Controversy

IV. The New Deal & Human Element

A. Eleanor RooseveltB. Dust BowlC. Native Americans

* Indian Reorganization Act D. AFL & CIO

* Increase in union members: laws*CIO: split: Committee for Industrial Organization: unskilled, minorities, women* Sit down strikes

IV. The New Deal: Human Element

E. “Homegrown Demagogues”Francis Townshend… Father Coughlin… Huey Long

V. Criticisms of the New Deal

1. The New Deal Put the Country Into Debt.2. The Federal Government was too large.3. Welfare and Govt assistance would

destroy people’s initative