1930s – 1940s

http://www.ganzelgroup.com/movies/thompson.html

This is an image of Florence Owens Thompson (seated) with her three daughters, Katherine McIntosh (standing on the left), Ruby Sprague (standing on the right), and Norma Rydlewski (leaning on her mother's lap). The image was taken forty-three years after the Migrant Mother image , a notable image of conditions during the Great Depression.

The Stock Market Crash of 1929

As stock prices plummeted with no hope of recovery, panic struck. Masses and masses of people tried to sell their stock, but no one was buying. The stock market, which had appeared to be the surest way to become rich, quickly became the path to bankruptcy.

many banks had also invested large portions of their clients' savings in the stock market, these banks were forced to close when the stock market crashed.

Seeing a few banks close caused another panic across the country. Afraid they would lose their own savings, people rushed to banks that were still open to withdraw their money.

This massive withdrawal of cash caused additional banks to close. Since there was no way for a bank's clients to recover any of their savings once the bank had closed, those who didn't reach the bank in time also became bankrupt.

Businesses and industry were also affected. Having lost much of their own capital in either the Stock Market Crash or the bank closures, many businesses started cutting back their workers' hours or wages

In turn, consumers began to curb their spending, refraining from purchasing such things as luxury goods.

This lack of consumer spending caused additional businesses to cut back wages or, more drastically, to lay off some of their workers.

The Dust Bowl

In previous depressions, farmers were usually safe from the severe effects of a depression because they could at least feed themselves. Unfortunately, during the Great Depression, the Great Plains were hit hard with both a drought and horrendous dust storms, creating what became known as the Dust Bowl.

Years and years of overgrazing combined with the effects of a drought caused the grass to disappear. With just topsoil exposed, high winds picked up the loose dirt and whirled it for miles. The dust storms destroyed everything in their paths, leaving farmers without their crops.

Small farmers were hit especially hard. Even before the dust storms hit, the invention of the tractor drastically cut the need for manpower on farms.

These small farmers were usually already in debt, borrowing money for seed and paying it back when their crops came in.

When the dust storms damaged the crops, not only could the small farmer not feed himself and his family, he could not pay back his debt. Banks would then foreclose on the small farms and the farmer's family would be both homeless and unemployed.

http://www.pbs.org/kenburns/dustbowl/watch-videos/#2284398428

Hoover and FDR

In early 1933 nation needed immediate relief, recovery from economic collapse, and reform to avoid future depressions, so relief, recovery and reform became Franklin D. Roosevelt’s goals when he took the helm as president.

At his side stood a Democratic Congress, prepared to enact the measures carved out by a group of his closest advisors — dubbed the “Brain Trust” by reporters. One recurring theme in the recovery plan was Roosevelt’s pledge to help the “forgotten man at the bottom of the economic pyramid.”

The term "New Deal" was coined during Franklin Roosevelt’s 1932 Democratic presidential nomination acceptance speech, when he said, "I pledge you, I pledge myself, to a new deal for the American people."

Roosevelt summarized the New Deal as a "use of the authority of government as an organized form of self-help for all classes and groups and sections of our country."

In his first 99 days, he proposed, and Congress swiftly enacted, an ambitious "New Deal" to deliver

relief to the unemployed and those in danger of losing farms and homes.

recovery to agriculture and business.

reform, notably through the inception of the vast Tennessee Valley Authority (TVA).

The president called a special session of Congress on March 9. Immediately he began to submit reform and recovery measures for congressional validation. Virtually all the important bills he proposed were enacted by Congress. The 99-day (March 9-June 16) session came to be known as the "Hundred Days."

On March 12, 1933, Roosevelt broadcast the first of 30 "fireside chats" over the radio to the American people. The opening topic was the Bank Crisis. Primarily, he spoke on a variety of topics to inform Americans and exhort them to support his domestic agenda, and later, the war effort. During Roosevelt`s first year as president, Congress passed laws to protect stock and bond investors.

Emergency Banking Act 1933:

The Federal government insured people's deposits in banks against losses caused by public panic. This helped restore the public's confidence in the nation's banking system

This act had three parts to it.

Public Works Administration (PWA) to manage public works projects; The PWA spent $7 billion and employed millions of men.

National Recovery Administration to set up codes of practices for such things as hours worked, wages, unfair competition and outlawing child labor. 16 million workers were covered by these code and child labor was outlawed. Workers went on to a 8 hours week and a minimum wage of $1.25 was introduced.

The third strand of the NIRA was to give trade unions the legal right to bargain with employers. Membership of trade unions increased after the introduction of this act.

NIRA was declared unconstitutional in 1935.

This act paid farmers to limit the amount of crops they grew or simply to dig back into the ground crops already grown. The federal government bought farm animals and then slaughtered then to raise the price of farm products. Between 1933 and 1937, farm prices doubled but in 1936 the AAA was declared unconstitutional.

This set up the Tennessee Valley Authority (TVA). Its sole task was to re-develop the Tennessee Valley which encompassed 7 states and 40,000 square miles. HEP stations were built, flood control was introduced as was soil conservation. The valley was regenerated.

Forced employers to deal with trade unions. Workers were also given the right to form and join

trade unions and to take part in collective bargaining.

A board was set up to investigate and punish those companies’ bosses who did not abide by the rules of the NLRA.

In 1935 trade union membership stood at 3.6 million. By 1941 it was 8.6 million. In 1935 the CIO (Congress of Industrial Organizations) came into being.

This act set up the first national old age pensions scheme. Workers and employers had to

pay into a federal pension fund.

Each state was also expected to work out a plan for unemployment insurance.

This one act covered 35 million people despite opposition from Republicans who felt the whole idea smacked of socialism.

The federal government paid subsidies to farmers who agreed to leave land fallow or planted crops that put nitrogen back into the soil. The federal government also financed research into soil conservation.

The FLSA sort to cut the maximum hours someone could work and to raise the minimum wage for those who worked in inter-state trade.

This act gave protection to over 13 million people. It introduced a 40 hour week and a minimum wage of 40 cents an hour.

The act introduced the Federal government subsidizing the price of many farm products. The aim was to gradually increase the subsidy until farm prices reached their pre-1914 figure to give all farmers a guaranteed minimum income.

Civilian Conservation Corps of 1933 This employed jobless

single men between the ages of 18 and 25. They worked for 6 months in mountains and forests where they were taught forestry, flood control and fire prevention. Nearly 3 million men took part in the scheme which ran from 1933 to 1941.

The WPA coordinated all public works schemes. It spent over $10.5 billion of Federal money and employed 3.8 million men from 1935 to 1941. It had built 77,000 bridges, 24,000 miles of sewers, 664,000 miles of road, 285 airports, 122,000 public buildings and 11,000 schools.

This agency loaned money to state and local governments to assist the poor. It also lent money to firms which were in debt or wanted to invest.

This agency used Federal money to pay off farm creditors and save farmers from bankruptcy.

This agency used Federal money to pay of mortgages so that home owners did not lose their homes.

One of the most striking benefits of the New Deal was that it restored the confidence of a deeply discouraged population. FDR's use of the media, particularly his mastery of radio communication with the American people through his "Fireside Chats," restored the spirit of the nation as he worked to lift the economy out of the Great Depression.

This first phase of the New Deal was also characterized by fiscal conservatism and experimentation with several different, sometimes contradictory, cures for economic ills. Fiscal conservatism: politicoeconomic philosophy

with regards towards fiscal policy and the advocating of fiscal responsibility. Fiscal conservatives advocate and often consider avoiding deficit spending and the reduction of overall government spending and national debt as well as ensuring balanced budget of paramount importance.

The consequences were uneven. Some programs, especially the National Recovery Administration (NRA) and the silver program, have been widely seen as failures.

Other programs lasted about a decade; some became permanent.

The economy shot upward, with FDR's first term marking one of the fastest periods of GDP growth in history. Though a downturn in 1937–38 raised questions about just how successful the policies were, the great majority of economists and historians agree that they were an overall benefit.