1929 to 1940

Causes:◦ Overproduction: ◦ Many different industries were overproducing

products based on product demand for WWI. ◦ Farmers: high demands during WWI, fell after WWI,

and crop prices declined by 40%. Produced more in hopes to sell more crops, but failed.

◦ The McNary-Haugen Farm Relief Act: It would subsidize American agriculture by raising the domestic prices of farm products. The plan was for the government to buy the wheat, and either store it or export it at a loss.

◦ President Coolidge vetoed the bill twice.

C Causes:under consumption: Americans did not have the money to buy products. Prices of goods rose. The difference between the rich and the poor rose. Credit and the installment plan: Credit: an arrangement in which consumers agreed to buy now and pay later for purchases.Installment plans: monthly payments that included interests. Easy credit allowed Americans to pile up a lot of consumer debt, which they couldn’t pay back.

Causes:◦ Uneven distribution of income: 1920 to 1929

the income of the wealthiest 1% of the population grew by 75% compared with 9% of the whole U.S.

◦ 70% of American families earned less than $2,500 per year and could not afford different household products. The prosperity of the era depended on a small % of the population.

Stock market was a clear sign of prosperity. DOW Jones Industrial Average: based on

the stock prices of 30 representative large firms trading on the New York Stock Exchange.

Bull Market- stock are up Bear Market- stock are down.

1924- 4 million Americans owned stocks- a lot were average Americans wanted to get rich.

People were buying on speculation- buying stocks and bonds on the chance of a quick profit, ignoring the risks.

Buying on the margin: where people pay a small % of stock’s prices as a down payment and borrowed the rest.

Government did nothing to regulate the market.

In1927: Houses prices began to fall, a bad sign of the American economy.

Many Americans put their life savings into stocks hoping to make a huge profit.

1929 September 29: stocks prices peaked and fall. October 24: “Black Thursday” market took a

plunge, investors were unloaded their shares, about 13 million shares.

October 29: “Black Tuesday”: bottom fell out of the market. 16.4 million shares were dumped.

November 30: investors lost $30 million

Run on the bank- people withdrew all of their money from the bank, but the bank had no money to pay back the people. People lost their savings.

In 1929 600 banks closed, by 1933 11,000 out of 25,000 national banks failed. Only 28 states had banks.

Gross national product- nation’s total output of goods and service, was cut in half from $104 billion to $59

Unemployment went from 3% to 25% by 1932. World Wide Event: Countries had to pay their

debt from WWI and limit America’s ability to import European goods and export goods.

Hawley-Smoot Tariff: a protective tariff to protect farmers and business owners from foreign competition.

In the cities: Building Shantytowns: build towns out of wasted material.

Soup Kitchens: offer free or low cost food Bread lines: stand in line and wait for food by different charitable

organizations or public agents. In 1933 24 African Americans died because of lynching. Rural Areas: People could grow their own food. 1929 to 1932 400,000 farms were lost through foreclosure. Dust Bowl: Drought, which the wind would blow dust for hundred

of miles. States: Kansas, Oklahoma, Texas, New Mexico, and Colorado.

Okies: people who left the Dust Bowl region. Negative term. Families: stayed home, listen to the radio or played board games. Men: looked for jobs or left their jobs become hoboes. They stood

in the bread lines. No direct relief: government support in the form of food or cash. Women: canned food and sewed clothes. Looked down upon if

they had a job.

Children: They suffered malnutrition. Child welfare programs were slashed.

By 1933 2,600 schools closed and 300,000 students were out of school.

Teenagers (Hoover Tourists) travel around the country looking for jobs.

Many riders were jailed or killed by freight yard patrolmen or murderous criminals: 1929 t0 1939 24,647 were killed and 27,171 were injured on the railroad.

Social and Psychological Effects: 1928 to 1932 suicide rose from more than 30%. 3 times the amount of people were admitted into mental hospitals.

Became President in 1928 Hoover’s philosophy: he believed that the government should

play a limited role in helping with the depression. Rugged Individualism: the belief that people should succeed

through their own efforts, and not through government intervention.

Cautious Steps: Brought key figures from business, banking, and labor to find solution to the nation's economic problems.

Hoovervilles were shantytowns; Hooverhotels- cardboard homes Hooverblankets were newspapers; Hooverflags were empty pockets.

Boulder dam (Hoover Dam): On the Colorado River. Paid by the electric power to would create. Passed with $700 million public works project in 1929. It provides electricity, flood control and water supply.

1930 Congressional elections: Democrats take over. No seats in House of Representatives and 1 vote in Senate.

Farmers Revolt: Burn their corn and dumped their milk because their products were not selling.

Federal Farm Board: keep crops off the market until prices raised, and bought each other’s products.

National Credit Corporation: larger banks loaned money to smaller banks to stave off bankruptcy.

Direct Intervention: He wanted to reform banking, provide mortgage relief and federal money into business investment.

Federal Home Loan Bank Act: (1932) lowered mortgage rates for homeowners and allowed farmers to refinance their farm loans and avoid foreclosure.

Glass- Stegall Banking Act: separated investment from commercial banking. Reconstruction Finance Corporation (RFC) (1932): Congress passed

$2billion for emergency financing for banks, life insurance companies, railroads, and other large businesses. “trickle down effect”

The Bonus Expeditionary Forces Army led by Walter Waters

In 1932, 10,000 to 20,000 WWI veterans and their families went to Washington, D.C.

The Patman Bill: authorized the government to pay a bonus to WWI veterans who were not properly paid during WWI.

Approved in 1924, Paid by 1945. Congressman Wright Patman believed the money should

be paid immediately. June 17: Hoover told them to leave, but 2,000 stayed July 28 General Douglass MacArthur with his aide Major

Dwight D. Eisenhower were ordered to remove the soldiers and their families

1,000 people were gassed.

The election showed the people were ready for a change

FDR: (democratic nominee) 23 million of the popular vote

Hoover: (republican nominee)16 million 20th Amendment: moved the inaugural date

from March to January. Approved February 1933.

Brain Trust: A group of professors, lawyers, and journalists that worked with FDR on how to improve the state of the America.

His program for change was called the New Deal It focused on three goals RELIEF for the needy, Economic RECOVERY and

Financial REFORM First Hundred Days: it was a period of intense

activity that lasted from March to June 16, 1933. Congress passed 15 major pieces of legislation

that will expand the power of the federal government

Fireside chat: (March 12, 1933) informal talks that discussed different issues that bother the public in simple language.

Reform Emergency

Banking Act FDIC Federal Securities

Act Securities and

Exchange Commission

NIRA NRA 21st Amendment

Relief FERA CCC TVA

RecoveryAAACWA

1933 Emergency Banking Relief Act (EBRA)◦ Banks were inspected by Treasury department and those stable could

reopen NIRA or National Industrial Recovery Act (1933)

◦ A law enacted to establish codes of fair practice for industries and to promote industrial growth

◦ Provided money to states to create jobs in construction of schools and other community buildings.

◦ The Supreme Court found it unconstitutional stating that the law gave legislative powers to the executive branch and that the enforcement of industry codes within states went beyond the federal government’s constitutional powers to regulate interstate commerce.

1933 Federal Deposit Insurance Corporation (FDIC)◦ Protected bank deposits up to $5,000◦ Reassured millions of bank customers that their money was safe 1932 21st Amendment: Passed to repeal the prohibition of alcohol.

1933 National Recovery Administration (NRA) ◦ Established codes for fair competition◦ Set prices of many products and establish standards.◦ Was also found unconstitutional with the NIRA, due to it being an unfair

advantage to small business owners compared to big business. Federal Securities Act (1933)

◦ Required corporations to provide complete information on all stock offerings and made them liable for any misrepresentations.

1934 Securities and Exchange Commission (SEC)◦ Supervised the stock market and eliminated dishonest practice◦ It was created to help prevent people with inside information about

companies from “rigging” the market 1935 Banking Act of 1935

◦ Created seven-member board to regulate the nation’s money supply and the interest rates on loans

 1938 Food, Drug and Cosmetic Act (FDC)◦ Required manufacturers to list ingredients in foods, drugs, and cosmetic

products.

1933 Civilian Conservation Corps (CCC) ◦ Provide jobs for single males on conservation projects◦ Men between 18- 25 to work◦ Develop parks, plant trees, and helped in soil-erosion and flood control

projects. ◦ By 1942 3 million men went through the CCC.◦ $30 a month, $25 sent straight to families. ◦ Supplied free food and uniforms, plus a place to stay. ◦ Helped to cure the dust bowl by planting 200 million trees.

1933 Federal Emergency Relief Administration ◦ Helped states to provide aid for the unemployed◦ To be able to maintain a certain standard living

1933 Public Works Administration (PWA)◦ Created jobs on government projects◦ Revive American industry: tri-borough bridge, Lincoln tunnel, grand coulee

dam in Washington state. ◦ It built more than half a million miles of roads.

1935 Works Progress Administration (WPA)◦ Quickly created as many jobs as possible- from construction jobs to

positions in symphony orchestras◦ Headed by Harry Hopkins◦ Create jobs as quickly as possible between 1935 to 1943. ◦ It spent $11 billion to give jobs to more than 8 million unskilled workers. ◦ Built 850 airports, repaired 651,000 miles of roads, 125,000 public

buildings. ◦ Women workers created sewing groups and made 300 million garments for

the needy. ◦ Wrote guides to cities, collected historical slave narratives, painted murals

on the walls of schools,. And other public buildings and performed in theater troupes around the country

1935 National Youth Administration (NYA)◦ Provided job training for unemployed young people and part-time jobs for

needy students◦ Provide aid to high school, college, and graduate students. ◦ Provided part-time jobs, working on highways, parks and the grounds of

public buildings.

1933 Agricultural Adjustment Administration (AAA) ◦ Aided farmers and regulated crop production◦ Lowered crop prices by lowering production, which the government would

pay farmers to leave a certain amount of every acre of land unseeded. ◦ Government paid $200 million to cotton growers to plow under 10 million

acres and paid hog farmers to slaughter to 6 million pigs. ◦ The Supreme Court decided that it was unconstitutional on the grounds

that agriculture is a local matter and should be regulated by the states rather than by the federal government.

◦ It was replaced with the Soil Conservation and Domestic Allotment Act: this act paid farmers for cutting production of soil-depleting crops and rewarded farmers for practicing good soil conservation methods.

◦ In 1938 it was brought back by did not include a processing tax to pay farm subsidies, a provision that the Supreme Court declared unconstitutional.

1933 Tennessee Valley Authority (TVA)◦ Developed the resources of the Tennessee Valley◦ Renovated five existing dams and constructed 20 new ones,

created thousands of jobs, and provided flood control, hydroelectric power and other benefits.

◦ It also created the Oak Ridge Facility, which will later provide research for the atomic bomb.

1935 Rural Electrification Administration (REA)◦ Provided affordable electricity for isolated rural areas.

1933 Home Owners Loan Corporation (HOLC)◦ Loaned money at low interest to homeowners who could not meet

mortgage payments 1934 Federal Housing Administration (FHA)

◦ Insured loans for building and repairing homes 1937 United States Housing Authority

◦ Provided federal loans for low-cost public housing

1935 National Labor Relations Board (Wagner Act)

Defined unfair labor practices and established the National Labor Relations Board (NLRB) to settle disputes between employers and employees

Prohibited unfair labor practices such as threatening workers, firing union members, and interfering with union organizing.

The board to hear testimony about unfair practices and to hold elections to find out if workers wanted union representation.

1938 Fair Labor Standards Act◦ Established a minimum hourly wage and a maximum numbers of hour in the

workweek for the entire country. Set rules for the employment of workers under 16 and banned hazardous factory work for those under 18

◦ Maximum hours a week of 44 hours. ◦ Minimum wage: 25 cents an hour, creasing to 40 cents by 1945.

1935 Social Security Administration Provided a pension for retired workers and their spouses and aided

people with disabilities Old Age Insurance for retires 65 or older and their spouses: it was a

supplemental retirement plan; half from employers, half from the employees.

Unemployment compensation system: funded by federal tax, a payment every week: $15-18.

Aid to families with dependent children and the disabled: the aid was paid for by federal funds made available to the states.

Deficit Spending: spending more money than the government was receiving.

FDR believed it was evil, but necessary in times of trouble.

Liberal critics argued that the New Deal did not go far enough to help the poor and to reform the nation’s economic system.

Conservative critics believed 3 things:◦ 1.) FDR was spending way too much money◦ 2.) Used New Deal Policies to control business and

socialize the economy. ◦ 3.) Gave the federal government too much control.

NIRA (1935) was claimed unconstitutional because it gave the federal government too much power to regulate interstate commerce.

AAA (1936) was claimed unconstitutional on the grounds that agriculture is a local matter and should be regulated by the states rather than by the federal government.

Court Packing Plan: (February 1937) Congress passed a bill to allow FDR to appoint 6 new judges.

Father Charles Coughlin, a Roman Catholic Priest, who broadcast radio sermons from Detroit. He was against FDR because he favored guaranteed annual income and nationalization of banks.

Dr. Francis Townsend, a physician and health officer in Long Beach, California. He believed FDR was not doing enough to help the poor and elderly. He devised a pension plan that provided monthly benefits to the aged.

Senator Huey Long, he wanted to win the Presidency. Share the wealth program, “Every Man a King”. Wealth redistribution through a net asset tax.

Long was very popular; 27,000 Share our Wealth clubs with 7.5 million members.

In 1935 Long was assassinated.

The Second New Deal was under way when FDR was up for re-election in 1936.

The Republicans are going to nominate Alfred Landon, the governor of Kansas, while the Democrats are going to nominate FDR.

It was an overwhelmingly victory for FDR.

Motion Pictures and Radio: provided an escape from the realities of the Great Depression.◦ By the end of 1930’s, 65% of Americans were

attending the movies per week. ◦ 15,000 movie theatres◦ Radio sales went up 13 million in 1930 to 28 million by

1940. 90% of Americans had a radio◦ Famous Movies: Gone with the Wind, Flying Down,

Wizard of Oz, Snow White, Public Enemies, and Duck Soup.

◦ Famous Radio Programs/Personalities: Orson Welles, Bob Hope, and George Burns and Gracie Allen. Famous Programs: Soap Operas and “War of the Worlds

Expanding the government’s role in the economy

The government went into deeper debt Protected worker’s rights. Helped stabilized the country’s finances. Set quotas on the production of crops and

gave loans to farmers. Helped protect national resources.