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The Great Depression and the New Deal (1929-1941)
Causes of the Great Depression:
Background: The Stock Market Boom and the Great Crash
o Stock Market Boom
People were investing in the stock market
Prices of stocks were much higher than their value
Not getting the dividends/returns for the price of the stock
Stock Market Speculation
People are buying on a margin of 10%
Paid 10% of their own money and other 90% get broker loan
Wiser investors realize stock is overpriced and began to sell their
stock
o The Great Crash
Black Thursday
October 14, 1929 Thursday
Almost 13 million shares were sold/traded
Warning sign that there is something going on
Price of stock goes down rapidly with the quick sale
Black Tuesday
October 29th 1929
Steady decline in the prices of stock
Overproduction
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o Cars and household appliances
Too much in the market
Not enough people to buy it
o Prices go down
o Workers get laid off
Post-WWI agricultural depression
o Farmers already suffering
o Weather conditions
The Dust Bowl
Long drought
High protective tariffs
o See Hoover
Collapse of the post-WWI debt payment structure
o People cannot pay off their loans
Banks begin to fail
o Bank fails
Money was unprotected
Now we have FDIC
o People start pulling their money out
Banks didnt have the money to give them
Realize they lost everything
o Dawes Plan Fails
Makes depression international
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Stock market and real estate speculation
Unequal distribution of wealth
o Very rich and Very Poor
o Some wealthy families went unaffected
Economic Effects of the Depression
Worst of the Depression (1933)
More than 22% of banks in the country failed
25% Unemployment Rate
The Human Dimension of the Depression
Lost homes, jobs
o Build shack towns
Known as Hoover Towns
o Lots of hobos roaming the country
100,000+ people became homeless
Psychological effects
o People become very pessimistic
No one will buy things or try to invest
People are trying to hold onto the money they have
Private Charities are overwhelmed
o Cannot handle the demand
Herbert Hoovers Depression Policies:
Background
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o Millionaire
Mining engineer
o Prosperity is just around the corner
o Did not do much but what he did made it worse
o Blame Hoover for not dealing with the Depression
Agricultural Marketing Act
Hawley-Smoot Tariff
o Tariff on manufactured goods
o Worsened the international depression
Voluntarism
o Hoover thought business leaders should voluntarily keep wages high and
not lay people off
o Meet with labor leaders to encourage them not to strike
o Encouraged people to donate to charities
Reconstruction Finance Corporation (RFC)
o Voluntarism isnt working
o Chartered in 1932
o Provides loans for railroads, banks and other financial institutions
Prevents the failure of these basic firms that the economy depends on
o The Bailout
Average citizens angered because the common man has to save, yet the
large, overspending companies get bailed out
Relief for the rich
Opposes Welfare and Unemployment Insurance
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The Bonus March
o Veterans in Washington, DC
14,000 veterans
o Promised bonus by 1945
o Stay there and build a Hooverville outside Washington, DC
o Hoover totally opposes giving them their bonus
o Some have to go home, but 5 or 6,000 stay in these shanty towns
o Clashes with police
Calls them communists and insurrectionists
Forcibly evacuates them
General George Patton
General Douglass McArthur
General Eisenhower
Use tanks, tear gas- to remove veterans
The Election of 1932:
RepublicanHerbert Hoover Democrats Franklin Delano Roosevelt
o Repeal prohibition
o Provide government aid for the needy
o 25% percent cut in federal funds
o Concern for the forgotten man
o Believes in bold, persistent experimentation
o Greatest 3 presidents in US history
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Starts trend toward welfare capitalism (conservatives dont like him)
Roosevelt wins greatest electoral landslide in history
Ends period of Republican Domination
Franklin Roosevelt Background:
Wealthy family
Graduated from Harvard and Colombia Law School
Married Anna Eleanor Roosevelt
o Distant cousin
o One of greatest first ladies
o Champion of civil rights
o Resigned from DNR because wouldnt let black singer sing at the White
House
Pushed for a Federal Anti-Lynching Act
He wouldnt do it because he felt that he would lose the support of
southern democrats
o Transforms role of first lady
Advises him
Stands up for the oppressed
Governor of New York
o Gave aid to the needy
Attracted national attention
Public works projects
Will be aggressive
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Initiated Fireside Chats
o My friends
People felt comforted
Felt he wasnt forgetting him
The Cabinet:
Senator Cordell Hall from Tennessee
o Secretary of State
Frances Perkins
o First woman to be on Cabinet
o Secretary of Labor
The Brain Trust:
Unofficial group of advisors
o Like Andrew Jacksons kitchen cabinet
o Expect mostly university professors
Many of them economists
o More influential than his actual cabinet
o Would sit and listen to them argue
Shaped Depression reforms
Repeal of Prohibition (1933):
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Now people can legally drink away their sorrows
The Banking Crisis:
Almost 11,000 banks failed across the country
o Two days after taking office, he closes all the banks
Forces a bank holiday
Gives people a chance to calm down
Stops the run on the banks
No one can frantically try to withdraw their money
The Inaugural Address:
Bold Experimentation
The only thing we have to fear is fear itself
The First New Deal (1933-1935):
The Hundred Days
o First part of the First New Deal
o
Since FDR the press has started to look at Presidents first 100 days
Three Rs
o Relief
For the people
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o Recovery
Fix the problems
o Reform
The system so you dont end up in the same situation
Historians named The First New Deal
Legislation of the First New Deal (the Hundred Days)
o Banking Holiday
o Emergency Banking Relief Act (1933)
Gave more funds to banks
Liquidated the unsound banks
Supported sound banks with money from the RIC
Number of people put money into the safe banks
o The Banking Act/Glass Steagall Act (1933)
Established FDIC
Insures deposits upto a certain amount
o Took nation off the Gold Standard
o Homeowners Loan Cooperation (HOLC)
Helped people refinance their loans so they wouldnt lose their
homes
o Later Economic Legislation
Securities and Exchange Commission
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SEC
Supervises stock exchange and punishes the fraud
Federal Housing Administration (FHA)
Long term low interest mortgage loans
o Relief Programs of the Hundred Days
Direct Aid to the People
Federal Emergency Relief Act
o Aid to the poor
o Established FERA
Federal Emergency Relief Administration
Supervised by Harry Hopkins
Civilian Conservation Core (CCC)
o Gave jobs to young men (18-24)
o Send people to dams, forest projects, flood control,
conservation
o Could send money back home to their families
o 2.7 million young men served in the CC
Public Works Administration (PWA)
o Public works jobs provided for unemployed
o Building hospitals, schoolsconstruction jobs
o Bigger projects
o Later Relief Efforts
Civil Works Administration (CWA)
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Harry Hopkins
Jobs like paying people to sweep the streets
Makeshift nature
o Received criticism didnt think government should be
paying people to sweep outside federal buildings
o Agricultural Programs of the Hundred Days
Agricultural Adjustment Administration (AAA)
Paid farmers subsidies in order to not produce
Convinces farmers not to over produce
o Government will paid them a subsidy if they will not
produced
Declared unconstitutional
o But the idea we use later
Hurt tenants and sharecroppers
o Money is going to owner of the land, not thesharecroppers and tenants who were already poor
o The National Industrial Recovery Act (NIRA) (1933)
Last day of the 100 Days
Corner stone of the Recovery Programs
Created a board of Industrial leaders and Labor leaders from each
industry
Set a code for each industry
o Work hours, production limits, minimum wages
Workers had the right to join unions
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National Recovery Administration
Intended to enforce the law
NRA was declared unconstitutional
Schechter vs. United States
the sick chicken case
Schechter had gotten in trouble for the way he slaughtered
chickens in New York
Poultry industry prosecutes him
Schechter argues that the law was interfering with interstate
commerce
o The Tennessee Valley Authority (TVA)
Public Cooperation
First Experiment in Regional Public Planning
Build dam in Muscle Shoals
Build 20 more dams to stop flooding and generatehydroelectric power
Gives power to rural areas
Angers private power companies
o Effects of the First New Deal
Measure of improvement
But the economy did not recover
Example: unemployment went from 25% to 20%
o Before had been 2.3%
People had more hope (psychological effect)
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The Second New Deal
Opposition from the Right and Left
o Damned if you do, damned if you dont
Right says, you are going too far. Nearing socialism
Left says, you did not go far enough
o Cannot please everyone
o Problems with Supreme Court
SC is very conservative at this time
o Dr. Francis Townsend
Retired California physician
Proposed a pension for every person over 60
200 per month
But they had to spend it within the month
o Stimulates the economy
Funded by a national sales tax
Old people like this plan
Join Townsend Clubs
o Huey P. Long
Governor/dictator of Louisiana
Gold old boy politician, very smart
Senator in 1930
Supported Roosevelt originally
Share Our Wealth Program
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Government would confiscate all fortunes over 5 million dollars
Anyone who made over a 1 million dollars a year would be taxed
at 100%
Money would be redistributed
o All families in the US would be given
Free education, a home, 5,000 of furnishing, etc.
Every man a king
By 1935, 5 million members
Runs for presidency in 1936
o Father Charles Coughlin
Crazy Catholic priest
Weekly radio program
Supported Roosevelt
Then turned against him
Anti-Semitic
But other religions followed him
Wanted to inflate the currency
Nationalization of banks
Fascist-like program
Legislation and Programs of the Second New Deal
o Steals His Opposes Thunder
Adopt some ideas from all
o WPA
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Works Progress Administration
May 1935
Doing roads, hospitals, playgrounds, parks, ball fields
Had programs for artists, painters, writers, dancers
Federal Writers Project
Pulled together slave narratives
Wrote the story of African Americans
A lot of our social history of the forgotten people was written by
the FWP
Nicknamed We Piddle Around
Made up jobs
o NYA
National Youth Administration
Gave part-time jobs to high school and college students
FDR says they need money too in order to stay in school
o REA
Rural Electrification Administration
Provided Electricity in rural areas
o Wagner Act/ National Labor Relations Act
Passed in 1935
Reaffirmed the right of labor to unionize
National Labor Relations Board (NLRB)
Board that is to oversee labor and manage crisis and conflict
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o Social Security Act
A system of old-age benefits for workers, benefits for victims of industrial
accidents, unemployment insurance, aid for dependent mothers and
children, the blind, and the physically handicapped.
The Election of 1936
Republican Alf Landono Governor of Kansas
o We are going to do the New Deal, but better
Democrats Franklin D. Roosevelt Union Party-
o Francis Townsend, Charles Coughlin,
o Huey P. Longs successor, Smith
Assassinated in 1935
o Go too far on radio shows
Attack Roosevelt
Catholic leaders began to denounce Coughlin
FDR carries all states except Maine and Vermont
The New Deal Coalition:
Immigrants, farmers, union workers, and blacks
o Blacks begin deserting the Republican party and voting
Democrat
FDR in favor of Civil Rights
By 1936, of blacks vote Democrat
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The Last Years of the New Deal
Attacks Supreme Court
o Had been standing in the way of the New Deal
Court Packing
Court Packing
o Judicial Reorganization Bill
Would allow the president to nominate a new federal judge for any judge
over the age of 70 and who didnt retire
Most controversial
Could add up to 6 new justices to the Supreme Court
There were 6 judges over this age limit when the bill was proposed
Wants to appoint 6 judges friendly to the New Deal
Doesnt expect the opposition from both sides
Tarnishes his reputation
Fails to be passed
But the court begins to back down
o Roosevelt is so popular with the people
Supreme Court begins to allow the New Deal legislation
o Social Security Act
The Recession of 1937-38o Including WPA jobs, the unemployment rate had fallen to 9.2%
But the Federal Deficit is strongly increased
o Backs off on relief programs to help the budget
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Leads to the Recession
Unemployment rises to12%
Legislation of The Late New Deal
Wagner-Segal Act
o Allocates money for government housing projects
Fair Labor Standards Act/ Minimum Wage Law
o Minimum wages for people working in major corporations
o Prohibited Child Labor (anyone under 16)
Social Dimensions of the New Deal
Blacks and the New Deal
o Suffered more than most people from the depression
o Excluded from state and local relief efforts
o Subsides given to farmers to not produce
Really hurt black sharecroppers
o FDR would not support Anti-Lynching Act
Need the support of Southern Democrats
o National Recovery Administration
Had a separate and lower pay scale for the blacks
o Positive
More blacks appointed to government positions by FDR
Native Americans
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o Only bright spot with regard to the new deal treatment of minorities
o The Indian Reorganization Act
Overturns the Dawes Act
Provides loans to tribes (economic development)
Created a Native American CCC
Did work especially on the reservations
Mexican Americans
o Very few programs covered them
o Most Mexicans were still in agricultural work
Whites start taking the jobs from the Mexican Americans had done
o Many Mexicans return to Mexico
40% of the Mexican population
Women
o
making due
Had to stretch the budgets
Make their own clothes/ patch them
o 100% of the Household Responsibilities
o Had to find jobs now too
If possible
Heavily criticized, you are taking a job away from a man
Labor Unions
Lost membership during the 20s
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o Corporations had started to take care (no need)
o The Red Scare
Radicalism of Unions
Scared them away
NIRA in the 1930s
o Many of the industrial codes implemented
o Allowed workers to unionize
caused an increase in union members
o Nicknamed National Run Around
AFL (American Federation Labor) vs. CIO (Committee for Industrial
Organization)
o AFL
Crafts (sanitary, plumbing, etc)
o CIO
Industry (automobile, rubber, steal, radio, etc.)
Gaining more members in the 1930s
Develop the idea of the Sit Down Strike
o The two come into conflict
Cultural Changes
Literature
o The Lost Generation from the 1920s
Hemingway, F. Scott Fitzgerald (20s)
Become ex-patriots
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Go live in foreign countries for a while
o Turn to Communism
This would haunt them in the 1950s
McCarthy
o Authors of 1930s
Sin Clair Lewis
William Falkner
John Steinbeck
Grapes of Wrath
o People who are from Oklahoma to California
o Quintessential Great Depression Novel
Popular Culture
o Radio
Main form of daily entertainment
Had bought them in the 1920s
Major source of communication and entertainment
o Film Industry
Did not suffer during the Depression
People would still spend a nickel to see a movie
Musicals were hugely popular
Famous Films
The Wizard of Oz
Gone with the Wind
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Grapes of Wrath
Mr. Smith Goes to Washington
Dancers/Actors
Fred Astaire and Ginger Rodgers Dancing Duo
Shirley Temple child star
Carry Grant
o GWTW
Kathryn Hepburn
Clark Gable
o Rhett in GWTW
Music
o The Big Band Era
Swing music
o Famous Band Musicians
Duke Ellington
Benny Goodman
Harry James
o Most Popular Singer of the Day
Bing Crosby
Comic Strips/Comic Books
o Dick Tracey, Tarzan, Superman
o Buck Rodgers
Space exploration in the 1930s
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