Ch 24: The Great Depression and the New Deal 1929-1940.

Ch 24:The Great Depression and

the New Deal

1929-1940

Hooverville Nation

A. The Bull Market

1. Dreams of becoming Rich via Stocks

2. Speculation

3. Buying on margin

4. Corporations invest in market instead of research

B. BLACK TUESDAY! OCTOBER 29, 1929

1. What happened? 2. “The bottom fell out of the market!”3. loss of confidence in market = some investors

sell4. prices dropped = thousands sell their shares5. Savings lost =$30 Billion/16 million shares6. How does Hoover and Mellon respond?

C. Causes of the Depression

1. Overproduction

2. Farmers in debt

3. Low wages; high debt

4. Unequal distribution of income

5. Trickle-effect…

soup kitchens and bread lines(psychological effects)

D. Hoover’s Presidency during the Depression

1. “Business as usual”a. no deficit spending!b. State and local gov’t and

charities responsible

2. Negotiated w/businesses and unions

3. Reconstruction Finance Corporation (RFC) & Emergency Relief Act (ERA)

a. emergency financing to large businesses & states

b. trickle-effect?

Shantytowns/Hoovervilles

E. Bonus Army Camp

1. Who were they and what did they want?

2. Want bonus now not in 1945 ($500/$1000)

3. Patman Bill rejected

F. Election of 1932

24.2:FDR and the First New Deal

A. The New Deal (3R’s)

1. Policies developed by FDR that would give:

a. relief to the needy,

b. economic recovery,

c. financial reform

2. First 100 Days: Passed 15 bills!

3. Power of the federal gov’t?

B. Early On…

1. Bank Holidaya. Closed banks before

bank runs bankrupt them

b. Emergency Banking Relief Act = Inspected by gov’t to ensure they were secured

c. Restores confidence to the people

2. Fireside Chats

a. Talking directly to Americans

b. Informing them of plans/policies

c. Build confidence in banks

C. Glass-Steagall Banking Act

Est. Federal Deposit Insurance Corporation (FDIC)$5,000 $100,000 $250,000

D. Reforming Banking and Finance

Finance/Stockmarket– Securities and Exchange commission (SEC):

regulate stock market, “insider trading”

E. Helping America’s Farmers 1. Agricultural

Adjustment Acta. Price setting and gov’t

subsidiesb. Crops and livestock

destroyed by farmersc. Sharecroppers and

tenant farmers lost jobs and homes (AA)

2. Later ruled unconstitutional -taxing users to pay farmers

Background1. The AAA paid farmers not to grow crops and not to

produce dairy produce such as milk and butter. It also paid them not to raise pigs and lambs. The money to pay the farmers for cutting back production of about 30% was raised by a tax on companies that bought the farm products and processed them into food and clothing. The AAA also became involved in trying to help farmers destroyed by the creation of the dust-bowl in 1934.

2. In 1936 the Supreme Court declared the AAA unconstitutional. The majority of judges (6-3) ruled that it was illegal to levy a tax on one group (the processors) in order to pay it to another (the farmers). In 1938, another AAA was passed without the processing tax. It was financed out of general taxation and was therefore acceptable to the Supreme Court.

F. Helping Industry:

1. National Industrial Recovery Act

a. Self-regulating: established “codes of fair compition” and regulations; price fixing

b. Allowed for unions = increase in membership

c. Considered unconstitutional - Why?

24.3: Left Turn & The Second

New Deal

A. Critics on both sides

1. Gov’t too big

2. Socialistic

3. Not doing enough

4. Huey Long: “Every man a king” Annual min. income

Share the wealth!

Senator Huey Long (La)

“Share our Wealth” club;

take from the rich, give to the poor

B. The Second New Deal

1. Jobs, retirement, housing

2. Social Security Acta. Pension/spouse

b. Unemployment benefits

c. Disability insurance

d. Farmers/domestic workers not covered

Lathrop Homes

3. National Labor Relations Act AKA Wagner Act - Legalized unions

24.4:The New Deal in the South

& West

A. Southern Farmers

1. New Deal does little for sharecroppers and tenant farmers

B. Rural Electrification & Public Works

1. Modernizing the regions

a. Tennessee Valley Authority

b. Rural Electrification Administration

C. Dust Bowl:1933-1936

C. Dust Bowl(1933-1936)

1. drought, overproduction, windy conditions added to hardships of depression

2. Resulted in a westward migration

“Okies”

3. New Deal and the Dust Bowla. Resettlement

Administration

b. Crop and seed loans

c. Gave direct aid to sharecroppers and tenant farmers

d. Conservation techniques: water, soil

e. Crop rotation

D. Southwest FarmersWho was the worst affected?

Mexicans who ended up being deported.

24.6:The Limits of Reform

A. “Court-Packing Bill”

1. Wanted more judges and place age criteria on Supreme Court Justices

2. Didn’t pass – considered a political mistake

3. Both parties stopped supporting New Deal proposals

B. 1933: 21st Amendment

1. Taxes applied to raise revenue for federal government

2. Repeals the 18th amendment

C. Anna Eleanor Roosevelt

1. Social Reformera. Anti-lynching

b. Health ins

c. Child labor

d. Discrimination

2. Advantage/influence?

D. People of Color and the New Deal

1. FDR cautious

2. Gainsa. Mary M. Bethune

b. Robert Weaver

c. PWA

d. CIO

3. Setbacks: eligibility requirements for PWA

(noncitizens)

E. Roosevelt Recession

1. Initially worked

2. Tried reducing deficit by cutting programs and constricting credit = recession

a. Stock collapse again

b. Decreased industrial output

c. Farm prices decrease

d. Unemployment up 20%

3. Ultimately, what ends the depression?