The Great Depression and the New Deal

Chapter 25Pages 656-681

Roaring 20’s

The 1920’s was a time known for wealth and prosperity

People were living their dream

Lots of jobs, money, and happiness

Stock Market Crash

October 29, 1929

Known as “Black Tuesday”

Investors began selling their stocks at any price

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Stocks Lost All Value

U.S. Steel went from $262 per share to $22

Montgomery Ward went from $138 per share to $4.00

Example

Say that you owned 500 shares of Montgomery Ward

Before the Crash your stock value was $69,000(500 x 138)

After the Crash, your stock value was $2,000 (500 x 4)

Beginning of Great Depression

The Wall Street Crash marked the beginning of the Great Depression, but it did NOT cause it

Causes of Great Depression

Biggest cause of the Great Depression was the unequal distribution of wealth

The richest 0.1% of American families had as much total income as the bottom 42%.

Limited Purchasing Power

With more than half the nation’s people living at or below the poverty line, there was a lack of purchasing power

People couldn’t afford to buy anything, therefore, companies went out of business

2. Oligopolies

Markets or industries dominated by a small number of sellers

Prices were kept artificially high, not determined by supply and demand

3. Agriculture

Agriculture was suffering from overproduction

This led to lower prices and heavy debt

Why would lower prices be a problem?

4. Banks

Poorly managed and regulated

Disappearing money

People were fearful and pulled their money out of banks…bad why?

5. International Problems

Stock market crash ended the flow American dollars to Europe

Industries collapsed

Stopped buying American goods

This was a global depression

The Depression Spreads

An average of 100,000 workers a week were fired in the first three years after the crash

By 1932, the unemployment rate was 25%

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The Economy effected people of all ages

Hoovervilles

Most urban families who lost their homes gathered together in Hoovervilles

Collection of wooden or cardboard shacks, tents, and boxes located in public areas

Called “Hoovervilles” as a jab at President Hoover

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Charities

Soup kitchens and charities tried to assist, but there were simply too many people that needed help

“Women’s Jobs” and “Men’s Jobs”

There was an effort made to stop hiring women, especially married women

“They are holding jobs that rightfully belong to the God-intended providers of the household”

Why?

School systems refused to hire married women

Banks and insurance companies fired married women

Few men sought these jobs, so it just made the problem worse

Great Depression Families

Families

Divorce declined…why?

Desertion increased

Marriage rates fell

Birthrates fell

Sacrifice vs. Burden

Some parents starved themselves to feed and protect their children

Other parents saw their children as burdens, often leaving home and abandoning them

Last Hired, First Fired

Effects on Minorities

Black unemployment rates were twice as high as whites

Whites took jobs that were usually reserved for blacks such as street cleaning and domestic service

Discrimination

In Atlanta, white citizen paraded with banners denouncing the hiring of black workers until “every white man has a job”

Religious and charitable organization often refused to care for blacks

Protest

Examples of Protest

Ranged from small desperate gestures like stealing food and coal to more dramatic needs

One hundred women held the city council of NJ hostage to demand assistance, “bloodless battle of Pleasantville”

Help from Communists?

Communists staged hunger marches and blocked evictions

Mothers facing eviction told their children to “run quick and find the reds”

Hoover and the Depression

Herbert Hoover

Biggest problem in fighting the Depression is that he believed private relief was preferable to federal intervention

Thought the role of the national government was to advise and encourage the voluntary efforts of private organizers, and local communities

The Government Wasn’t Helping

In NYC families got $2.39 to live on/ week

Hoover failed in relying on this and not admitting they were inadequate

Story of the “Bonus Army”

“Bonus Army”

Hoover’s treatment of the Bonus Army symbolized his unpopularity and set the stage for the 1932 election

Thousands of unemployed veterans came to Washington demanding bonuses that were due to them

They Were Early

Bonuses were not due until 1945

Hoover refused to meet with them, and they constructed a shanty town at the edge of Washington and stayed

Hoover wanted them gone immediately

Bad Move

Hoover ordered Gen Douglas MacArthur to get rid of them

MacArthur disobeyed orders and led a cavalry, infantry, and tanks against them

Set the camp on fire and destroyed it

Outrage

This provoked widespread outrage

They tried to paint the Bonus marchers as Communists and criminals, but it wasn’t true

Made Hoover look harsh and insensitive

Election of 1932

Hoover ran for re-election representing the Republican Party, but he had little hopes of winning

Democrats nominated Gov Franklin D. Roosevelt of NY who promised “a new deal for the American people”

Franklin Delano Roosevelt

FDR Distant cousin of TR

FDR

In 1921 he had contracted polio and had been paralyzed from the waist down

He didn’t disclose what his New Deal involved, usually spoke in general terms

He knew he was likely to get votes just because Hoover wasn’t liked

Worst Defeat Ever for Rep. Candidate

March Inauguration

Hoover would continue to be President for 4 more months and things got worse

Final blow came in 1933 when panic struck the banking system

Bank Failures

6 thousand banks had failed, robbing 9 million people of their savings

Americans rushed to withdraw their money, Hoover had to shutdown all the banks

The New Deal

New Deal

“The only thing we have to fear is fear itself”

http://www.youtube.com/watch?v=MX_v0zxM23Q

“Action Now!”

First 100 days many new laws were passed

Number one priority was to deal with the banking crisis

Issued a Bank Holiday closed all remaining banks

Emergency Banking Act

extended government assistance to sound banks and reorganized the weak ones

Had to Restore Confidence

Spoke in an informal way to explain everything to the public

FDIC

Federal Deposit Insurance Corporation Guaranteed bank deposits up to $2500

Relief for the Public

FDR also provided relief for the unemployed

The Federal Emergency Relief Administration (FERA) furnished funds to state and local agencies

CCC

Civilian Conservation Corps

FDR’s favorite program

combined work relief with conservation

What Did it Do?

Employed 2.5 million young men to work on reforestation and flood control projects, build roads and bridges in national forests and parks, restore Civil War battlefields, and fight forest fires

CCC

CCC

Advantages of CCC

The men lived in camps and earned $30 a month, $25 of which had to be sent home

Guaranteed work

“I’d go anywhere, I’d go to hell if I could get work there.”

Agricultural Assistance

Agricultural Adjustment Administration (AAA)

subsidized farmers who agreed to restrict production

A subsidy is a payment from the government

Controversial

Object of the program was to boost prices

Restricting production in hard times caused public outrage

“We have an overproduction of empty stomachs and bare backs”

Successful?

Harmed poor farmers while aiding larger commercial growers

In 1936 the Supreme Court declared the AAA unconstitutional

NIRA

Attempted to revive American industry

Guaranteed workers the right to organize unions and to collective bargaining

New Deal Critics

Conservatives

Father Charles Coughlin

Senator Huey Long

Conservatives

Complained that the expansion of government weakened the autonomy of American business

Called it “socialistic”

Father Coughlin

Father Coughlin

Catholic Priest in Detroit

Had own radio show

Originally supported the New Deal

Franklin “Double-Crossing” Roosevelt

Anti-Semitic

Was issuing openly anti-Jewish statements and actually praising Adolf Hitler

Church officials took him off the radio

http://www.youtube.com/watch?v=IS9_gqCytV4

Huey Long

Senator from Louisiana “Share Our Wealth”

Share Our Wealth

limit individual income to 1 million and inheritance to 5 million

Mathematically impossible, but people liked the idea.

Influenced FDR to tax the rich in the 2nd new deal.

2nd New Deal

By 1935, FDR thought that not enough had been done

Still wanted to do more

Focused on creating Social Security program

Social Security

Other nations had established national social insurance systems much earlier, but it took the Great Depression for the United States to do the same

Purpose?

Provided unemployment compensation

old-age pensions

aid for dependent mothers and children and the blind

Some Left Out

Did not include farm laborers and domestic service

Left out about 25% of the American workforce

One of the most important laws in American history despite its weaknesses

The Dust Bowl

Since WWI, farmers stripped the land of grass in order to plant wheat

Drought and high winds caused crops to fail and nothing was left to hold the soil

Consequence?

Dust storms blew away millions of tons of topsoil

Darkened the sky 1,000 of miles away

Families were forced to abandon their farms

Dust Bowl Clip

http://www.youtube.com/watch?v=x2CiDaUYr90

TVA

Tennessee Valley Authority built dams to control floods and

generate hydroelectric power

agricultural development and conservation

Schools and health systems

Resettlement Administration

Focused on land reform and help to poor farmers

Attempted soil erosion projects and helped poor farmers find better land

Problem was too widespread to fix

Election of 1936

FDR (D) vs. William Landon (R)

African Americans overwhelmingly voted Democratic for the first time

So did women

FDR 528 – Landon 8

Labor Relations

Many unions joined together to form the CIO, led by John Lewis.

Gained 4 million members in 2 years.

Their most powerful form of protest was the strike

Sit Down Strikes

* Sit down strike, laborers stop working but refuse to leave the building

Supporters sit outside and form picket lines

this prevented them from bringing in scabs

“Sitting” on Inventory

General Motors Strike

12/31/1936

Executives turned off the heat and blocked entry so no food could be brought in

Police were called to the picketers outside, eventually a fight broke out.

Result?

women got involved in lines and providing food.

Governor and Roosevelt refused to battle the pickets and GM had to give in.

Memorial Day Tragedy

Republic steel in Chicago

Police guarding the plant fired on strikers and their families

Ten people were killed

Long Way Left to Go

A sign that labor, despite few success, faced obstacles

1939 Supreme Court outlawed sit-down strikes

Women and the New Deal

Mixed Impact

Mostly did “women’s work” and were paid less than men

Frances Perkins became first female cabinet member of FDR

Eleanor Roosevelt

Pushed for women’s rights Travelled and campaigned constantly

Minorities and the New Deal

Mostly discriminated against early on

FDR didn’t want to anger Southern Democrats which he needed

Eleanor Roosevelt pushed for appointment of black officials and supported racial equality

Benefits to Minorities

Improved literacy due to public education

Black college students and graduates more than doubled

Reduced infant mortality rates and raised life expectancy rates

Court Packing Fiasco

Supreme Court had shut down many programs

No specific number of judges ever set in the Constitution

Had just always been 9

Court Packing

Roosevelt said he just wanted to lighten the burden on the existing aging judges

He asked congress for permission to appoint up to 6 more judges, one for each judge over 70 years old.

“His Guys”

Wanted to appoint judges who supported New Deal programs

Huge backlash from critics who thought he wanted to be a dictator

Withdrew his plan

Last days of New Deal

New Deal was no miracle cure for the Depression

in 1937 the economy collapsed again and went into a recession

Social security tax had a lot to do with this. Since it was automatically deducted, Americans had less money in their pockets to spend.

National Debt on the Rise

National debt rose from 21 billion in 1933 to 43 billion in 1940.

Modern Day Critics

Most have now found the new deal to be lacking

Hindered economic progress and threatened America’s core beliefs in free enterprise

America wasted precious resources in the AAA

Deficit Spending

paying out more money from the annual federal budget than the government receives in revenues

New Deal required the government to borrow money

Entertainment During Depression

Americans used movies to escape Depression

25 cents for two movies

Inspirational and comedies were most popular (Can you guess 3 most popular films/characters?)

Lasting Achievements

Voters began to expect President to formulate programs to solve problems

Accepted more government intervention

Grew used to larger governments

Most Important Achievement

Restored a sense of hope to Americans

New Deal did NOT solve the Depression, but it gave people hope that the end was near

Economic Recovery would not come until World War II