CHAPTER 9The Great Depression

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Chapter 9 The stock market crash of 1929 was as

big a shock to President Hoover as it was to other Americans.

Before the crash, the economy seemed strong. Before 1929, less than 4 percent of American workers did not have jobs.

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One year later, 9 percent of the workforce was unemployed.

As sales of their products decreased, American businesses were forced into layoffs.

A layoff occurs when a company lets workers go because it cannot afford to pay them. Layoffs are often temporary.

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The Ford Motor Company, for example, was forced to cut its number of workers by 44 percent.

By 1931, unemployment increased to 16 percent.

Eight million Americans could not find work.

Many people lost their life savings.

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President Hoover encouraged the American people to be patient.

He believed the Depression would end with time.

He said the nation had seen hard times before, and each time the economy had bounced back.

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President Hoover did not feel the federal government should have to help the unemployed.

He believed state and local governments, private groups, and charities should help people.

A charity is a group that helps those in need.

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According to Hoover, America was a strong democracy because Americans took responsibility for their own lives.

Although Hoover had been president for less than a year, people blamed him for causing the Depression.

Bitter "Hoover jokes" became popular.

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Unable to make loan payments to their banks, many people lost their homes.

In many cities, homeless people built cardboard and tar paper shacks.

These poorly built shelters gave some protection from bad weather.

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But people living in them had to do without heat, lights, or running water.

These slums became known as "Hoovervilles”.

Several factors caused the Depression. The stock market crash was only one of

the causes.

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Businesses had grown rapidly in the 1920s. They had produced many products

quickly and often faster than consumers could buy them.

This overproduction caused big changes in many companies.

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As production was slowed down, workers were laid off.

When the economy was good, people spent a lot of money.

The strong economy encouraged them to buy more than they could pay for.

Many people had bought things on credit.

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Credit is the practice of buying something and paying for it later.

Then, when people lost their jobs, they could not pay their debts.

Banks that "held paper" on unpaid loans went out of business.

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Many foreign countries still in debt from the war were unable to buy products from America.

In some cases, high tariffs were placed on American goods.

The American economy might have grown much stronger during the 1920s if these countries had been able to buy more U.S. goods.

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How Did the Dust Bowl Affect Farm Owners, Tenants, and Sharecroppers?

After World War I, farmers struggled with great financial difficulties.

Prices for their crops continued to go down.

Many farmers were barely able to support their families.

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In an attempt to grow more crops, many farmers plowed up the grasslands of the Great Plains that stretch from Montana to Texas.

In the early 1930s, these western states were hit by drought.

The lack of rain dried out the soil.

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When the wind swept over the plains, it created dust storms.

These weather conditions turned them into a "Dust Bowl" that drove many farmers from their land.

It was an economic and environmental disaster.

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How Did Americans lose Confidence? During the Depression, the American

people lost confidence in themselves and in their country. People lived in fear of the future.

Businesses were afraid to make new investments. Workers thought they could lose their jobs at any time.

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Unemployed workers had little reason to believe that they would ever find other jobs.

Families stood in breadlines for free food. Homeless people slept in subways, parks, and old empty warehouses.

Men who once worked regularly could be seen selling apples on the street.

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Across the country, Americans became very concerned about the nation's future. 

As the economy declined, many African Americans lost their jobs to unemployed white workers.

African American workers, like women workers, were often "last hired, first fired”.

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Many African Americans were sharecroppers that farmed the land in the South.

Thousands of sharecroppers lost their jobs as the farm owners' income declined.

Before the Depression, moving north had been a major way for Southern African Americans to find higher-paying jobs.

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As northern factories closed, these jobs were lost.

Many married women of all races lost their jobs during the Depression.

Many businesses thought that it was more important that unemployed married men be employed than married women.

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The weak economy did not improve as President Hoover had believed it would.

He made plans to help the economy. Hoover proposed the following: • With the Agricultural Marketing Act,

Congress approved $500 million to buy extra, or surplus, crops from farmers.

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Hoover hoped this act would stabilize farm prices.

This plan was unsuccessful because the farm problem was too great.

Farm prices continued to go down. • The Reconstruction Finance Corporation

was established in 1932. This corporation loaned emergency money to

banks, railroads, and insurance companies. Insurance is a plan that protects against loss in return for regular payments.

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• A federal public works program was established and $750 million was approved to create jobs. Some people went to work building dams, highways, and buildings.

States and local communities were encouraged to establish similar programs.

• A moratorium was put on payments of war debts owed to the United States.

This put off payments of debts until later.

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Hoover hoped to ease Europe's financial problems.

Then, he believed, these countries would be able to buy more products from the United States.

How Did President Roosevelt Help the Nation Recover?

Hoover's suggestions for improving the economy were not enough for the American people.

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They wanted a change in the White House.

In the 1932 election, Hoover was defeated in his attempt for re-election.

In a landslide victory, Democrat Franklin Delano Roosevelt became the new president.

Roosevelt said he had a "new deal for the American people."

He promised to act quickly to put the country back on its feet.

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President Roosevelt took the oath of office on March 4, 1933.

In a radio message, he told the American people that the economic crisis would not destroy the nation.

He said with confidence that "the only thing we have to fear is fear itself."

Roosevelt promised a "New Deal" for "the forgotten man at the bottom of the economic pyramid."

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The plan covered three areas: relief, recovery, and reform.

Roosevelt knew that many Americans were in need of immediate help.

He had to find a way to get the economy to recover from its depression quickly.

He believed that America's economic system had to be reformed.

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Basic changes were necessary to prevent another depression in the future.

As a young man, Roosevelt had suffered an attack of polio.

He had to use a wheelchair or leg braces to walk after that.

Many thought that Roosevelt's own illness made him more concerned about the problems of others.

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Before he became president, Roosevelt said that he was willing to try different methods to end the Depression.

"If one plan fails," he said, "admit it frankly and try another.

But above all, try something." The nation wanted action. On March 9, 1933, President Roosevelt

acted boldly.

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In the next 100 days, this Congress passed many important laws.

Many of these early "New Deal" laws were based on ideas of progressive politicians before and during World War I.

Progressives wanted more government regulation of the economy and social welfare programs.

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The period called the "Hundred Days" resulted in the following government actions:

• The national "bank holiday" prohibited people from rushing to banks and taking all of their money out.

The government inspected banks before reopening them.

Banks with problems could not reopen until the problems were addressed.

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• The Emergency Banking Act made federal loans available to banks.

• The Federal Emergency Relief Administration loaned millions of dollars to state agencies for families who needed food, clothing, and shelter.

The Civilian Conservation Corps (CCC) hired people ages of 18 to 25 to plant trees, build roads, and work on flood control in rural areas.

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• The Agricultural Adjustment Act (AAA) paid farmers for crops they destroyed.

This would create a shortage of products that would in turn raise prices.

• The National Recovery Administration (NRA) was established to help businesses recover.

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It encouraged cooperation among business, labor, and government.

It reduced the workweek, established a minimum wage, and ended child labor.

·The Truth-in-Securities Act controlled selling stocks and bonds.

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·The Tennessee Valley Authority (TVA) employed thousands of people to work on environmental problems in the Tennessee River Basin.

They constructed dams to control flooding and soil erosion and to generate hydroelectric power.

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For the first time, rural families in this area had electricity.

In time, inexpensive electricity changed the area and provided stable jobs and a better home life.

Americans were hopeful that the new cooperation between businesses, labor, and the government would bring the Great Depression to an end.

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The Blue Eagle, the symbol for the NRA, began appearing in windows of small shops and gates of large factories.

The NRA stood for the Roosevelt administration's first 100 days of efforts to end the Depression.

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During the first stage of the New Deal, the government focused on giving immediate relief to those most in need.

These steps helped put the nation back on the road to economic recovery.

The second stage, called the Second New Deal, tried to make economic reforms.

These reforms changed the role of the federal government in the lives of Americans.

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In April1935, Congress passed a $4.8 billion jobs program.

It created the Works Progress Administration (WPA) to put every unemployed person to work. The WPA went on to build schools, hospitals, playgrounds, museums, and airports. Actors were hired to put on plays.

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Musicians were paid to give concerts. Artists were employed to paint murals on

the walls of government buildings. Artists also produced hundreds of

posters. They announced many new programs

and encouraged people to travel. Eight million Americans found work with

the WPA.

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The jobs helped restore self-respect and confidence in American workers.

The restoration of the workforce helped ease the Depression.

More stores opened. Factories began to hire workers as

demand for their products increased.

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The Works Progress Administration (WPA) offered millions of Americans jobs working on public projects.

Beginning in 1936, nearly $7 billion was spent on the program.

The program did much to build and repair the nation's public resources.

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Workers paved or repaired 280,000 miles of roads.

They built 29,000 bridges and 150 airfields.

They also built 4,383 new schools and repaired or added on to 30,000 others.

They constructed more than 130 hospitals.

The agency closed in 1943.

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Before the time of the New Deal, the federal government usually sided with business during labor disputes.

However the new National Labor Relations Act, or Wagner Act, gave workers the right to form unions.

Employers could not stop workers from forming a union.

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The National Labor Relations Board, a government agency, made sure the vote whether to join a union was fair.

For the first time, the United States government encouraged unions and employers to discuss wages and working conditions.

Differences could be settled peacefully in a process of collective bargaining.

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This was a way of negotiating between groups of workers and their employers.

One of the most important reforms of the New Deal was the Social Security Act of 1935. Government programs took responsibility for Americans who were elderly, unemployed, or disabled.

Someone who is disabled faces mental or physical challenges.

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Many of the suggestions for this law were made by Secretary of Labor Frances Perkins.

She was the first woman to become a member of a president's Cabinet.

During the Depression, many Americans were in danger of losing their homes because they could not make their loan payments.

The Home Owners Loan Corporation, established in 1933, was designed to help these people.

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Low-interest, long-term home loans became available to more than a million American families. The Federal Housing Administration (FHA), formed in 1934, encouraged low-cost home building and repair.

It also offered banks a guarantee of repayment of loans to lower- and middle-income Americans. Franklin Roosevelt was elected to his second term as president in November 1936.

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Alf Landon, the Republican Party candidate, carried only two states-Maine and Vermont.

It was a historically important election for Roosevelt and the Democratic Party.

This was the first time in American history that three groups-organized labor, farmers, and African Americans-had voted in large numbers for a Democratic Party presidential candidate.

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For African Americans this was a major change. Since the late 1860s, African Americans had generally voted for the Republican candidates, because they belonged to the party of Abraham

Lincoln. Aid from New Deal programs convinced

many African Americans to vote for Roosevelt.

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Roosevelt and his New Deal programs ran into problems with the Supreme Court.

Most of the members of the Supreme Court believed some of the New Deal legislation was unconstitutional.

The Supreme Court declared the National Recovery Act and the Agricultural Adjustment Act unconstitutional.

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This declaration angered President Roosevelt.

He believed that the "nine old men" on the Supreme Court stood in the way of progress.

Six of the justices were over 70 years old. Roosevelt decided to appoint a new justice for every justice over the age of 70.

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The six new justices, Roosevelt thought, would assure that New Deal laws would not be overturned by the Supreme Court.

Roosevelt's decision was not well accepted. Members of Congress denounced it as political "court-packing”.

Many Americans also rejected the plan. However, as the older justices retired,

Roosevelt appointed younger, more liberal justices.

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Liberals favor change. These young justices were some of the

most important justices in American history-Hugo Black, William 0. Douglas, and Felix Frankfurter.

How Did Labor Unions Change? In 1881, the American Federation of

Labor (AFL) had been formed. This labor union was made up of only skilled workers.

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Unskilled factory workers could not belong. Therefore, they had no union to represent them. The skilled workers were organized by occupation.

Each occupation area formed its own union within the AFL. The AFL served as a governing body over all of the smaller unions.

One union leader, John L. Lewis, thought an industry-wide union was necessary.

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He felt that all workers, including factory workers, steelworkers, and autoworkers, should be admitted to one union.

Lewis formed a committee for industrial organizations within the AFL.

However, the more traditional labor leaders were against this committee.

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Lewis broke away and established the Congress of Industrial Organizations (CIO) in 1935.

The CIO united workers from all industries into one organization.

The new union used the National Labor Relations Act to increase its membership to 6 million workers by 1945.

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Unlike traditional unions, the CIO welcomed all workers, skilled and unskilled, including women, immigrants, and African Americans.

In 1955, the American Federation of Labor and the Congress of Industrial Organizations became one organization.

The new union was named the AFL-CIO.

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The Great Depression affected the life of most Americans.

Many people suffered great hardships. In the hard times, though, life went on. People could escape into a theater and

watch a movie for five cents. The public was eager to see a world

different from its own.

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Hollywood provided that world through movies. The movies of the 1930s gave the American public a new world of comedy, musicals, and drama.

Ginger Rogers and Fred Astaire became America's favorite dancing couple.

Child star Shirley Temple usually played an orphan with a big heart and a positive outlook.

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Americans laughed at the crazy comedy of the Marx brothers and their humorous adventures.

A favorite film among children in 1939 was The Wizard of Oz.

A song from this film gave viewers hope that there might be a happier life "Somewhere Over the Rainbow."

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Another popular movie of 1939 was Gone With the Wind.

It told the story of Scarlett O'Hara and the destruction of her family's Georgia plantation during the Civil War.

It described the American South during another period of hard times.

At the end of the movie, Scarlett's world had totally changed; yet she had survived.

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The message of the story seemed to be one that the nation in the hard times of the 1930s wanted to hear.

In 1938, Joe Louis, the heavyweight champion of the world, stepped into the boxing ring.

His opponent was a German boxer named Max Schmeling.

The German government published harsh words that they said came from Schmeling: "I would not

take this fight if I did not believe that I, a white man, can beat a Negro”.

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Schmeling never said these words. Joe Louis had to prove that an American

could defeat a representative of Germany.

Two minutes and four seconds after it began, the fight was over.

Louis had won. On that night, Louis became a national

hero.

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In 1936, over 5,000 athletes met in Berlin, Germany, to participate in the Olympic games.

German leader Adolf Hitler hoped to prove that white German athletes were better than any other athletes.

This hope was shattered by the performance of an African American athlete named Jesse Owens. Owens won four Olympic gold medals.

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In 1928, Amelia Earhart had become the first woman passenger and keeper of the logbook on a transatlantic flight.

She flew from Newfoundland, Canada, to Wales in the United Kingdom.

She went on to write a book about her experiences.

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Then, in 1932, Earhart became the first woman to fly alone over the Atlantic Ocean.

She made the first solo flight from Hawaii to the United States in 1935.

She gave talks to promote flying and to give women encouragement.

In 1937, in an attempt to fly around the world,

Earhart disappeared somewhere over the Pacific Ocean.