Chapter 24 : The Great

Depression and The New

Deal
1929-1940

Flint, Michigan
strikes

Sit down strike at flint

In 1936 GMs net profits had reached $285 million and its
total assets were $1.5 Billion. The average assembly line
worker only made $30 a week

The Great Depression hit Flint very hard. Employment fell from
56,000 (1929) to 17,000 (1932).
The United Automobile Workers (UAW) came to flint in 1936
seeking to organize GM workers in one industrial union. The
previous year Congress passed the National labor Relations Act
also known as the Wagner which made union organization
easier.

Hard
Times

Underlying
Weaknesses of
the 1920s
Economy

Three months before the stock market crash

The crash followed a speculative boom that had taken hold in the late 1920s. During the later half of the 1920s, steel
production, building construction, retail turnover, automobiles registered, even railway receipts advanced from
record to record. The combined net profits of 536 manufacturing and trading companies showed an increase, in fact
for the first six months of 1929, of 36.6% over 1928, itself a record half-year. Iron and steel led the way with
doubled gains.[21] Such figures set up a crescendo of stock-exchange speculation which had led hundreds of
thousands of Americans to invest heavily in the stock market. A significant number of them were borrowing money
to buy more stocks. By August 1929, brokers were routinely lending small investors more than two-thirds of the
face value of the stocks they were buying. Over $8.5 billion was out on loan,[22] more than the entire amount of
currency circulating in the U.S. at the time.[17][23]
The rising share prices encouraged more people to invest; people hoped the share prices would rise further.
Speculation thus fueled further rises and created an economic bubble. Because of margin buying, investors stood to
lose large sums of money if the market turned downor even failed to advance quickly enough. The average P/E
(price to earnings) ratio of S&P Composite stocks was 32.6 in September 1929,[24] clearly above historical norms.
[citation needed]

Sir George Paish

Good harvests had built up a mass of 250,000,000 bushels of wheat to be 'carried over' when 1929 opened. By May
there was also a winter-wheat crop of 560,000,000 bushels ready for harvest in the Mississippi Valley. This
oversupply caused a drop in wheat prices so heavy that the net incomes of the farming population from wheat were
threatened with extinction. Stock markets are always sensitive to the future state of commodity markets and the
slump in Wall-street predicted for May by Sir George Paish, arrived on time. In June 1929 the position was saved
by a severe drought in the Dakotas and the Canadian West, plus unfavorable seed times in Argentina and Eastern
Australia. The oversupply would now be wanted to fill the big gaps in the 1929 world wheat production. From 97c
per bushel in May wheat rose to $1.49 in July. When it was seen that at this figure the American farmers would get
rather more for their smaller crop than for that of 1928, up went stocks again and from far and wide orders came to
buy shares for the profits to come.

Glass Stegall Act

Separated investment
and commercial
banking activities
Passed because
commercial banks were
accused of being too
speculative

http://www.youtube.com/watch?v=OCPg
8fDYq_Q
(1:54)

The Bull
Market and
the Crash

The Bull Market

Crash of 1929

http://www.youtube.com/results?search_query=the+great+depression

The Stock Market, 19191939

Greed similar to
1929 and 2007
Bubbles and
Depression

Their friendshi1929.
Financier Baruch
encouraged Churchill to
get out of the market
before the Crash predated the Stock Market
Crash of 1929

Economist James K. Galbraith wrote in the introduction to his father, John Kenneth Galbraiths,
definitive study of the Great Depression, The Great Crash, 1929:
The main relevance of The Great Crash, 1929 to the great crisis of 2008 is surely here. In both cases,
the government knew what it should do. Both times, it declined to do it. In the summer of 1929 a few
stern words from on high, a rise in the discount rate, a tough investigation into the pyramid schemes
of the day, and the house of cards on Wall Street would have tumbled before its fall destroyed the
whole economy. In 2004, the FBI warned publicly of an epidemic of mortgage fraud. But the
government did nothing, and less than nothing, delivering instead low interest rates, deregulation
and clear signals that laws would not be enforced. The signals were not subtle: on one occasion the
director of the Office of Thrift Supervision came to a conference with copies of the Federal Register
and a chainsaw. There followed every manner of scheme to fleece the unsuspecting .
This was fraud, perpetrated in the first instance by the government on the population, and by the
rich on the poor.

Pecora Report
vs. Levin
Coburn Report

In the earlier period, there essentially was very limited federal regulation -- nothing in securities,
nothing in commodities, nothing in insurance," said Joel Seligman, president of the University of
Rochester and an expert in securities regulation. "To the extent you had economic regulation, a fair
amount was at the state level."
These days, the country has an elaborate regulatory system, albeit one whose failings became
obvious during the current crisis. Obama isn't advocating an entirely new system. He's mostly
trying to repair the current one. His boldest proposals include a new agency that would oversee
consumer financial products such as mortgages and credit cards and expanding the power of the
Federal Reserve to monitor systemic risks throughout the economy.
Whatever regulatory changes ultimately emerge from Congress, they alone may not be enough. In
his book, Pecora -- who went on to become an SEC commissioner under its inaugural chairman,
Joseph P. Kennedy Sr., and later a New York Supreme Court judge -- warned that laws themselves
"are no panacea; nor are they self-executing."
On the day that Franklin Roosevelt signed the Securities Exchange Act into law in 1934, Pecora
was in attendance. At one point, the president turned to Pecora and asked, "Ferd, now that I have
signed this bill and it has become law, what kind of law will it be?"
"It will be a good or bad bill, Mr. President," Pecora said, "depending upon the men who
administer it."

Investors in Clarence Hatry's company lost billions

when it was discovered he used fraudulent collateral
to buy United Steel. A few days later, England's
Chancellor of the Exchequer Philip Snowden, knew
and took his money out of stock market

Among these witnesses were Richard

Whitney, president of the New York
Stock Exchange, investment bankers
Otto H. Kahn, Charles E. Mitchell,
Thomas W. Lamont, and Albert H.
Wiggin, plus celebrated commodity
market speculators such as Arthur W.
Cutten. Given wide media coverage,
the testimony of the powerful banker
J.P. Morgan, Jr. caused a public
outcry after he admitted under
examination that he and many of his
partners had not paid any income
taxes in 1931 and 1932

The government also went after Charles "Sunshine Charley" Mitchell, president of National
City Bank, now Citibank. Mitchell divided National City into a banking arm and an investment
arm, with the latter selling up to $2 billion annually in speculative securities and shaky bonds.
Before the Pecora Commission, Mitchell acknowledged that he knew his salesmen were pushing
bad investments on unsophisticated customers, many of who then borrowed money from his
banking arm to finance their investments. While National City's behavior shocked the nation,
the company's salesmen hadn't broken any laws. (In a dja vu moment, a Goldman Sachs
employee admitted to Congress in April 2010 that he sold investments that he thought were a
"shitty deal.") Mitchell himself resigned his post and was charged with tax evasion for selling
company stock to his wife at a loss, but he got off with a fine. His performance at the Pecora
Hearings led to the Glass-Steagall Act of 1933, which prohibited banking companies from
speculating in the market. The law was repealed in 1999.
The Pecora Commission humiliated others, including Richard Whitney, the head of the New
York Stock Exchange. He would later go to jail for stealing from the NYSE pension fund, but
that was nine years after the 1929 collapse. The legendary J.P. Morgan was forced to admit that
he hadn't paid any taxes whatsoever in three years due to investment losses, but several days of
questioning failed to reveal any illegal behavior

Following the 1929 Wall Street Crash, the U.S. economy had gone into a depression, and a
large number of banks failed. The Pecora Investigation sought to uncover the causes of the
financial collapse. As chief counsel, Ferdinand Pecora personally examined many high-profile
witnesses, who included some of the nation's most influential bankers and stockbrokers.
Among these witnesses were Richard Whitney, president of the New York Stock Exchange,
investment bankers Otto H. Kahn, Charles E. Mitchell, Thomas W. Lamont, and Albert H.
Wiggin, plus celebrated commodity market speculators such as Arthur W. Cutten. Given wide
media coverage, the testimony of the powerful banker J.P. Morgan, Jr. caused a public outcry
after he admitted under examination that he and many of his partners had not paid any
income taxes in 1931 and 1932.
As reiterated by U.S. Securities and Exchange Commission (SEC) Chairman Arthur Levitt
during his 1995 testimony before the United States House of Representatives, the Pecora
Investigation uncovered a wide range of abusive practices on the part of banks and bank
affiliates. These included a variety of conflicts of interest, such as the underwriting of unsound
securities in order to pay off bad bank loans, as well as "pool operations" to support the price
of bank stocks. The hearings galvanized broad public support for new banking and securities
laws. As a result of the Pecora Commission's findings, the United States Congress passed the
GlassSteagall Banking Act of 1933 to separate commercial and investment banking, the
Securities Act of 1933 to set penalties for filing false information about stock offerings, and the
Securities Exchange Act of 1934, which formed the SEC, to regulate the stock exchanges.

Whitney stole over $3 million dollars through inside

trading. Whitney who allowed the bubble of margin
stocks to increase at a danger point. Whitney wanted to
escape with profit similar to 2007 stock brokers.

While Richard Whitney was assumed to be a brilliant financier, he in fact had personally
been involved with speculative investments in a variety of businesses and had sustained
considerable losses. To stay afloat, he began borrowing heavily from his brother George
as well as other wealthy friends, and after obtaining loans from as many people as he
could, turned to embezzlement to cover his mounting business losses and maintain his
extravagant lifestyle. He stole funds from the New York Stock Exchange Gratuity Fund,
the New York Yacht Club (where he served as the Treasurer), and $800,000 worth of
bonds from his father-in-law's estate.
Having retired as president of the NYSE in 1935, Whitney remained on the board of
governors, but in early March 1938, his past began to catch up with him when the
comptroller for the NYSE reported to his superiors that he had established absolute proof
that Richard Whitney was an embezzler and that his company was insolvent. Within
days, events snowballed, and Whitney and his company would both declare bankruptcy.
An astonished public learned of his misdeeds on March 10 when he was officially
charged with embezzlement by New York County District Attorney Thomas E. Dewey.
Following his indictment by a Grand Jury, Richard Whitney was arrested and eventually
pleaded guilty. He was sentenced to a term of five to ten years in Sing Sing prison.[5] On
April 12, 1938, six thousand people turned up at Grand Central Station to watch as a
scion of the Wall Street Establishment was escorted in handcuffs by armed guards onto a
train that delivered him to prison.

Levin Coburn Commission shows the weaknesses of the 2007

morality of Stock market brokers.

Many causes for the financial crisis have been suggested, with varying weight
assigned by experts.[13] The U.S. Senate's LevinCoburn Report concluded that
the crisis was the result of "high risk, complex financial products; undisclosed
conflicts of interest; the failure of regulators, the credit rating agencies, and the
market itself to rein in the excesses of Wall Street."[14] The Financial Crisis
Inquiry Commission concluded that the financial crisis was avoidable and was
caused by "widespread failures in financial regulation and supervision," "dramatic
failures of corporate governance and risk management at many systemically
important financial institutions," "a combination of excessive borrowing, risky
investments, and lack of transparency" by financial institutions, ill preparation
and inconsistent action by government that "added to the uncertainty and panic,"
a "systemic breakdown in accountability and ethics," "collapsing mortgagelending standards and the mortgage securitization pipeline," deregulation of
over-the-counter derivatives, especially credit default swaps, and "the failures of
credit rating agencies" to correctly price risk.[15] The 1999 repeal of the GlassSteagall Act effectively removed the separation between investment banks and
depository banks in the United States.[16] Critics argued that credit rating
agencies and investors failed to accurately price the risk involved with mortgagerelated financial products, and that governments did not adjust their regulatory
practices to address 21st-century financial markets.[17] Research into the
causes of the financial crisis has also focused on the role of interest rate spreads

"Using emails, memos and other internal documents, this report tells the inside story of an economic assault
that cost millions of Americans their jobs and homes, while wiping out investors, good businesses, and
markets," said Levin. "High risk lending, regulatory failures, inflated credit ratings, and Wall Street firms
engaging in massive conflicts of interest, contaminated the U.S. financial system with toxic mortgages and
undermined public trust in U.S. markets. Using their own words in documents subpoenaed by the
Subcommittee, the report discloses how financial firms deliberately took advantage of their clients and
investors, how credit rating agencies assigned AAA ratings to high risk securities, and how regulators sat on
their hands instead of reining in the unsafe and unsound practices all around them. Rampant conflicts of
interest are the threads that run through every chapter of this sordid story."
"The free market has helped make America great, but it only functions when people deal with each other
honestly and transparently. At the heart of the financial crisis were unresolved, and often undisclosed,
conflicts of interest," said Dr. Coburn. "Blame for this mess lies everywhere from federal regulators who cast
a blind eye, Wall Street bankers who let greed run wild, and members of Congress who failed to provide
oversight."
The Levin-Coburn report expands on evidence gathered at four Subcommittee hearings in April 2010,
examining four aspects of the crisis through detailed case studies: high-risk mortgage lending, using the
case of Washington Mutual Bank, a $300 billion thrift that became the largest bank failure in U.S. history;
regulatory inaction, focusing on the Office of Thrift Supervision's failed oversight of Washington Mutual;
inflated credit ratings that misled investors, examining the actions of the nation's two largest credit rating
agencies, Moody's and Standard & Poor's; and the role played by investment banks, focusing primarily on
Goldman Sachs, creating and selling structured finance products that foisted billions of dollars of losses on
investors, while the bank itself profited from betting against the mortgage market.
- See more at: http://www.levin.senate.gov/newsroom/press/release/us-senate-investigations-subcommitteereleases-levin-coburn-report-on-the-financial-crisis#sthash.ofWxhsq0.dpuf

, New York magazine had a different view on Fuld's last three months as CEO before the firm's
bankruptcy. Hugh "Skip" McGee III, then-head of the Investment Banking Division, had earlier
disagreed with COO Joseph M. Gregory's appointment of one of his subordinates, Erin Callan, as
CFO. On June 11, 2008, McGee organized a meeting of the firm's senior bankers, who forced Fuld to
demote Callan and Gregory. Gregory's replacement as president and COO was Bart McDade. While
Fuld remained CEO in title, it has been said that a management coup had taken place and that the
one guy in charge was now McDade.[24] New York magazine's account also stated that Fuld was
desperately searching for a buyer during the summer and even offering to step aside as CEO to
facilitate the sale of the firm, being quoted as saying "We have two priorities, that the Lehman name
and brand survive and that as many employees as possible be saved, and you'll notice our priority
isnt price".[25]
In October 2008, Fuld was among twelve Lehman Brothers executives who received grand jury
subpoenas in connection to three criminal investigations led by the United States Attorney's offices in
the Eastern and Southern Districts of New York as well as the District of New Jersey, related to the
alleged securities fraud associated with the collapse of the firm.[26][27][28]
On October 6, 2008, Fuld testified before the United States House Committee on Oversight and
Government Reform regarding the causes and effects of the bankruptcy of Lehman Brothers.[29][30]
[31] During the testimony, Fuld was asked if he wondered why Lehman Brothers was the only firm
that was allowed to fail, to which he responded: "Until the day they put me in the ground, I will
wonder."
Soon after Lehman filed for bankruptcy, there was a well circulated rumor promulgated initially by
the satirical financial blog "Dealbreaker" and overly excited reporters that Fuld was "punched in the
face" and/or "knocked out cold" by someone while working out in the company gym. According to the
man who was gym manager at the time

Mardoff and
1929 and 2007
Greed is a common
denominator

Bernard Lawrence "Bernie" Madoff (/medf/;[1] born April 29, 1938) is an American
convicted of fraud and a former stockbroker, investment advisor, and financier. He is
the former non-executive chairman of the NASDAQ stock market,[2] and the
admitted operator of a Ponzi scheme that is considered to be the largest financial
fraud in U.S. history.[3]
Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in
1960, and was its chairman until his arrest on December 11, 2008.[4][5] The firm
was one of the top market maker businesses on Wall Street,[6] which bypassed
"specialist" firms by directly executing orders over the counter from retail brokers.[7]
He employed at the firm his brother Peter, as Senior Managing Director and Chief
Compliance Officer; Peter's daughter Shana Madoff, as the firm's rules and
compliance officer and attorney; and his sons Andrew and Mark. Peter has since
been sentenced to 10 years in prison[8] and Mark committed suicide by hanging
exactly two years after his father's arrest.[9][10][11] Andrew died of lymphoma on
September 3, 2014.[12]
On December 10, 2008, Madoff's sons told authorities that their father had
confessed to them that the asset management unit of his firm was a massive Ponzi
scheme, and quoted him as describing it as "one big lie".[13][14][15] The following
day, FBI agents arrested Madoff and charged him with one count of securities fraud.
The U.S. Securities and Exchange Commission (SEC) had previously conducted
investigations into Madoff's business practices, but had not uncovered the massive
fraud

While Madoff hailed from simple roots and attended Hofstra University, Whitney was born on third base, the
scion of a prominent New England family. The Groton and Harvard man had rowed on his schools' crews and
played football. He served for five years as the president of the New York Stock Exchange and played a key role
in helping slow the stock market slide in October 1929. On Black Thursday, as panic reached a crescendo, he
dramatically placed a series of generous bids on shattered blue chip stocks, helping bring confidence back to the
markets. "Richard Whitney Halts Stock Panic," headlines proclaimed.
But Whitney was living a lie. For years, he concealed growing problems at his firm, Richard Whitney & Co.
Finally, in March 1938, the firm collapsed, causing a brief sell-off in the New York Stock Exchange.
Whitney, who like Madoff, took blame for the firm's admitted wrongdoing, went down fast. After the firm's fall it
took just one month for him to be indicted and shipped off to the slammer. He pleaded guilty to stealing $214,000
from funds he supervised. At his sentencing, he received a withering rebuke from the judge.
"To cover up your thefts and your insolvency, you resorted to larcenies, frauds, misrepresentations and
falsifications of books," the judge thundered, adding that Whitney had dealt "the decent forces of America" a
"severe setback."
One of his main victims: The New York Yacht Club.
According to a contemporaneous New York Times account, the disgraced financier was fingerprinted on an April
morning, sent to the showers with the other prisoners, "and his well-tailored blue serge suit, polo coat and gray
felt hat were laid aside for a baggy suit of gray prison shoddy and ill-fitting cap." He was shackled to two
extortionists and escorted out of The Tombs. A crowd of 5,000 people assembled at Grand Central Station to see
Whitney's train off before it headed north along the Hudson River to Sing Sing prison. An auction of his
belongings, which included a pair of pearl studs, and a key-wind watch, brought just $763.
Whitney was paroled in 1941 after serving more than three years of his five-

A pyramid scheme is a form of fraud similar in some ways to a Ponzi scheme, relying as it
does on a mistaken belief in a nonexistent financial reality, including the hope of an extremely
high rate of return. However, several characteristics distinguish these schemes from Ponzi
schemes:[1] In a Ponzi scheme, the schemer acts as a "hub" for the victims, interacting with
all of them directly. In a pyramid scheme, those who recruit additional participants benefit
directly. (In fact, failure to recruit typically means no investment return.)
A Ponzi scheme claims to rely on some esoteric investment approach and often attracts wellto-do investors; whereas pyramid schemes explicitly claim that new money will be the source
of payout for the initial investments.
A pyramid scheme typically collapses much faster because it requires exponential increases in
participants to sustain it. By contrast, Ponzi schemes can survive simply by persuading most
existing participants to reinvest their money, with a relatively small number of new
participants.
An economic bubble: A bubble is similar to a Ponzi scheme in that one participant gets paid
by contributions from a subsequent participant (until inevitable collapse). A bubble involves
ever-rising prices in an open market (for example stock, housing, or tulip bulbs) where prices
rise because buyers bid more because prices are rising. Bubbles are often said to be based on
the "greater fool" theory. As with the Ponzi scheme, the price exceeds the intrinsic value of
the item, but unlike the Ponzi scheme, there is no single person misrepresenting the intrinsic
value.
See also[edit]

Mass
Unemployment

Mass Unemployment

Oct. 29Dies Irae, a 1929 lithograph

by James N. Rosenberg

Hooverville

Unemployed men, lined up at the New York

Municipal Lodging House in 1930.

A Hoovervillea shantytown created by

homeless squattersoutside Seattle

The celebrated photographer Dorothea Lange took this

photograph of an unemployed man on a San Francisco

An unemployed man and woman selling

apples on a city street

Great Depression
Depression

Depression

Depression

Hoover the
Person

Hoover

QuickTime and a
decompressor
are needed to see this picture.

Social interests under Hoover led to:

The deaths of 4 demonstrators in Detroit

labor demonstration at Fords River Rogue factory

Bonus Armys march on Washington

http://www.youtube.com/watch?v=dWvCCxOUsM8

(2:39)

Farmers Holiday Association

Policies under Hoover showed that private charities do

not have the resources to meet massive social problems

Hoovers
Failure

Hoovers Failure

Hoover simply lacked the money, resources and staff to deal

with the worsening situation. In large urban centers like
Detroit and Chicago, unemployment approached 50% by
1932. For the year 1932 one West Virginia coalmining county
with 1,500 unemployed miners had only $9,000 in relief.

Hoovers Plan for recovery centered on restoring business

confidence. His administration most important institutional
response to the depression was the RFC. Reconstruction
Finance Corporation established in early 1932 and based on the
War Finance Corporation. The RFC was designed to make
government credit available to ailing banks, railroad, insurance
companies and other businesses to stimulate economy. There
mistake was that the supply was there; the demand was not. A
need for markets.

Hoover, worsened the situation of

the depression by
1) The Federal Reserve whose
policies of low interest rates and
easy credit in the late 1920s helped
fuel the speculative boom in stock
buying, tightened cred sharply.
That caused interest rates to spike,
putting heavy pressure on the
nations banking system, especially
the smaller banks on which farmers,
merchants and local businessmen
relied. Without any state or federal
insurance more than 5,000 rural
bank and ethnic group oriented
savings and loan failed. Between
1929 and 1932 more than 9 million
depositors lost their savings.

Second Mistake of Hoovers was that he passed the Smooth

Hawley Tariff, raising import duties to their highest level in
American history. Supporters including the president claimed
that this would protect American farers from global
competition and raise farm prices. Other nations responded
by raiding their own tariffs which caused world trade to
decline steeply thus exacerbating the economic collapse.

A Global
Crisis and the
Election of
1932

The 1919 peace settlement had saddled Germany with

$33 Billion in war reparation, owed largely to Great
Britain and France. The United States loaned money t
the British and French during the war and American
banks loaned large sums to Germany.

The total volume of global trade declined from about $36

billion in 1929 to $12 billion by 1932. American banks
badly hurt by both domestic depositors and foreign
withdrawal of capital . In 19313 alone 2,294 United States
banks failed double the number that had collapsed.

Police battling bonus marchers in

Washington,
D.C., July 1932.

Social interests under Hoover led to:

The deaths of 4 demonstrators in Detroit
labor demonstration at Fords River Rogue
factory
Bonus Armys march on Washington

QuickTime and a
decompressor
are needed to see this picture.

http://www.youtube.com/watch?v=dWvCCxOUsM8

(2:39)

Farmers Holiday Association

Policies under Hoover showed that private
charities do not have the resources to meet
massive social problems

Hoover

During the campaign, FDR

accused Hoover of reckless
spending

http://www.youtube.com/watch?v
=MbkMh-XcY88

(1:14)
FDR only focused on the faults of
Hoover

1932 Election:
Roosevelt vs.
Hoover
QuickTime and a
decompressor
are needed to see this picture.

The map of the

election showed
that Republican,
Hoover, carried
most of the New
England states
FDR was not
committed to
either market
driven or govt
driven economic
recovery

Communist Party headquarters in New

York City, 1932.

FDR and
the First
New Deal

FDR the
Man

Roosevelt was educated at private schools Harvard and

Columbia Law School. He married his distant cousin Anna
Eleanor and had five children. The marriage was publically
strong privately weak.

Franklin Delano Roosevelt used the media with the

radio. He was an aristocrat who wanted a more
government control system instead of market driven
society/

The only thing

we have to fear is
fear itself
restoring
confidence

Franklin Roosevelt's speechwriter and legal counsel

Samuel Rosenman suggested having an academic
team to advise Roosevelt in March 1932. This
concept was perhaps based on The Inquiry, a group
of academic advisors President Woodrow Wilson
formed in 1917 to prepare for the peace negotiations
following World War I. In 1932, New York Times writer
James Kieran first used the term Brains Trust
(shortened to Brain Trust later) when he applied it to
the close group of experts that surrounded United
States presidential candidate Franklin Roosevelt.
According to Roosevelt Brain Trust member
Raymond Moley, Kieran coined the term, however
Rosenman contended that Louis Howe, a close
advisor to the President, first used the term but used
it derisively in a conversation with Roosevelt.[1][2]

Columbia Law School

The core of the first Roosevelt brain trust consisted of

a group of Columbia law professors (Moley, Tugwell,
and Berle). These men played a key role in shaping
the policies of the First New Deal (1933). Although
they never met together as a group, they each had
Roosevelt's ear. Many newspaper editorials and
editorial cartoons ridiculed them as impractical
idealists.
The core of the second Roosevelt brain trust sprang
from men associated with the Harvard law school
(Cohen, Corcoran, and Frankfurter). These men
played a key role in shaping the policies of the
Second New Deal (19351936

Bank Holiday

http://www.youtube.com/watch?v=kFvrL_nqx2c

The
Hundred
Days

The Hundred Days

Raise farmers purchasing

power

The AAA Tried to:

Establish parity prices for

basic farm commodities

Displace sharecroppers

by reducing production
Raise prices

All of the following were

established:
AAA
FERA
CCC
TVA
The second 100 days included:
The Resettlement Act
Wagner Act
Social Security Act
WPA

Roosevelts First 100 Days

During the Hundred

Days and the
months immediately
following Congress
pass a great series
of taxes, regulatory
codes of labor.
Spending is what
FDR did to stimulate
the American
economy.

The New Deal

The

New Deal
Coalition included:
Trade unionists
Industrial workers
of all races
First and second
generation Catholic
immigrants
Traditional-minded
white southerners

http://www.booktv.org/Program/9951/Traitor+to+H
is+Class+The+Privileged+Life+and+Radical+Presid
ency+of+Franklin+Delano+Roosevelt.aspx

Problems of the New

Deal:
Criticism by a Catholic
priest
Violent strikes such as
that by teamsters in
Minneapolis
Accusations of
socialism by
businessmen and some
democrats
Protest marches by the
unemployed councils
and the communists

In exchange for an entry fee of $2,500, the BellWray group was awarded the assets of the failed
Yellow Jackets organization. Drawing inspiration
from the insignia of the centerpiece of President
Franklin D. Roosevelt's New Deal, the
National Recovery Act, Bell and Wray named the
new franchise the Philadelphia Eagles. Neither the
Eagles nor the NFL officially regard the two
franchises as the same, citing the aforementioned
period of dormancy. The Eagles simply inherited
the NFL rights to the Philadelphia area. Also,
almost no players from the 1931 Yellow Jackets
ended up with the 1933 Eagles.

National Recovery Administration

tried to promote peace with
employee and employer with its
750 codes dealing with price
controls and a 35 hour work
week

Section 7a was part of the

National Recovery
Administration which
granted unions outlawed
the anti union open house
system

FDIC Insured $5,000 to anyone in

a registered in the banking
system

NIRA: There is a right to collectively bargain with

labor.

Wagner Act
allowed unions
to exist with
NRA section 7a
collective
bargaining

NIRA
The NIRA sparked union
organization and gave the
government more control
It was controversial due to the
constitutionality of the power of
the program
http://www.youtube.com/watch?v=8L7txbm8S5Q

(3:29)

FDRs Brains trust

believed in government
business corporations
It was a reversal of
Coolidge and Mellon in its
free market system

Roosevelt

Roosevelts first act as

president was to
declare a Bank
Holiday
He shut down all
banks in the country
for a week
http://www.youtube.com/watch?
v=kFvrL_nqx2c

(6:52)

Emergency Banking
Act which gave the
president broad
powers over all
banning transaction
and foreign
exchange. Roosevelt
passed the FDIC
which insured over
$5,000 per customer
in banks. Banks
began to attract new
deposits. The bank
crisis had passed.

The distribution of family

income in percent's from 19291944
The lower four-fifths all gained,
while the top fifths lost

Family Income

The AAA Policy was to not have the farmers grow

crops or raise livestock. The costs of the crops and
livestock would increase because of the price of
goods and raise their salaries.

Civil Works Administration (CWA)

employed more than 4 million person in
the construction of high ways tunnels,
courthouses and airports

Other
Programs of
FDRs New
Deal

The ideas
of
Roosevelts
FHA built
thousands
of houses in
1930s

Under Harry Hopkins

leadership oversaw h
employment of more
that 8 million
Americans on
construction projects.
Roads bridges, dams,
airports and sewers.
WPA programs were
community service
projects that employed
thousands of jobless
artist and musician.

Efforts by the New Deal to

sidestep or avoid
discrimination included:
Choice of Robert Weaver
to advise on economic
affairs
Inclusion of blacks by CIO
labor unions
Appointment of May
Mclead Bethune to the
black cabinet
Employment of black
workers in PWA
construction jobs

Racism and
discriminations
appeared in the New
Deal in the following
ways:
The hiring policies of
the TVA
The SS Act excluded
domestic and casual
labors
Lower wages for
blacks were allowed
under NRA labor codes
The separated camps
established by the CCC

The Social Security Act: joined people together in a

mutual aid program
Is a current system today
May be the best legacy of FDRs programs
Money was given to elderly, disabled, and
unemployed

The Social Security Act:

joined people together in
a mutual aid program
Is a current system today
May be the best legacy of
FDRs programs
Money was given to
elderly, disabled, and
unemployed

The AAA:
Paid subsidies to large
landowners
Led to an increase in
evictions of sharecroppers
and tenant farmers
Inspired the founding of
the Southern Tennant
Farmers Union

Roosevelts
Critics Right
and Left

http://www.hueylong.com/programs/education.php

Fr. John Ryan Social

Justice

GlassSteagel
Act

The Glass-Steagal Act:

1)Created the Federal Deposit Insurance
Corporation (FDIC) which provided protection to
individual depositors by guaranteeing accounts
up to $5,000 in case of Bank Failure.
2)Established the Securities and Exchange
Commission (SEC) to regulate sock exchanges
and brokers, require full financial disclosures and
curb the speculative practices which contributed
to the 1929 Crash.

Glass Stegall Act

Separated investment
and commercial banking
activities
Passed because
commercial banks were
accused of being too
speculative
http://www.youtube.com/watch?v=OC
Pg8fDYq_Q
(1:54)

Left Turn and

the Second
New Deal

1934 Vanity
Fair cover
showing how
the Blue
Eagle has
control of
Uncle Sam

The Justices
ruled that New
York could not
establish a
minimum wage
for women and
children

In 1936 the court

found the NRA
unconstitutional in
its in entirety. Butler
versus United
Stated the Supreme
Court in validated
the AAA declaring it
an unconstitutional
attempt at
regulating
agriculture.
Regulation of prices
is unconstitutional.

The regulations at issue were promulgated under the authority of the

National Industrial Recovery Act (NIRA) of 1933. These included price and wage fixing,
as well as requirements regarding the sale of whole chickens, including unhealthy
ones. The government claimed the Schechters sold sick poultry, which has led to the
case becoming known as "the sick chicken case". Also encompassed in the decision
were NIRA provisions regarding maximum work hours and a right of unions to
organize. The ruling was one of a series which overturned elements of President
Franklin D. Roosevelt's New Deal legislation between January 1935 and January 1936

Schlienler
Taylor in
Brooklyn
lowered
prices

Schlienler
Manhattan tailor who
was living in the east
side not as attractive,
sold his services in
altering for 15 cents
per item. The NRA
closed his shopped
since the standard
price was 19 cents
per hour.

Resettlement Act: Led by

Rexford Tugwell RA helped
destitute farm families
relocate t more productive
areas. Due to lack of funds
only 1% of the 500,000 farm
families were relocated.
Suburbs worked relocation of
farms did not

Labor
Upsurge :
Rise of CIO

Workers
in the
steel
industry
use the
wagner
act to see
if they
can
improve
there
value

In Minneapolis where an organization of

businessmen known as the Citizens Alliance
controlled the city government , a four month
strike by truck drivers led to pitched battles in
the streets and the governor declares martial
law

In 1938 CIO unions boasting nearly 4 million members

with drew from the AFL and reorganized themselves as
the Congress of Industrial Organizations. For the first
time ever, the labor movement had gained a permanent
place in the nations mass-production industry Frances
Perkins was the secretary of labor.

Ed McRea a white CIO organizer in

Memphis Tennessee reported that he had
little difficulty persuading black workers the
value of Unionization.

Cleveland Fisher Body

Shop
Sit Down Strike

The New
Deal
Coalition at
High Tide

FDR was popular with Catholics

and Jewish and this was evident
with his Home Owners Loan
Corporation, Social Security and
WPA. In exchange for the
working mans votes they now
looked to the state especially
the federal government, for
relief, protection and help in
achieving the American Dream.
FDR would later go into Maine
and Vermont they only states he
lost and place unneeded
government program to win in
1940 (peers and coastline
reinforcements)

The New
Deal in the
South and
West

In early 1930s only 3% of rural Southerners and access

to electric power. With TVA program built 16 dams and
gave electrical power to hundreds of thousands of
families. Electrification allowed farm families to enjoy
radio, electric lights and conveniences for these farmers.

TVA Sights

TVA Electric Plants

From taxes on
inheritance
(Long) 90% of
Rural people
now have
electricity in
REA

An
Environmental
Dust Bowl

The Dust Bowl

The map of 1935-1940
shows that the Dust
Bowl affected all of
the following states:
Texas
Oklahoma
Kansas
Colorado
The Dust Bowl:
http://www.youtube.com/watch?v=x2CiDaUYr90
(2:58)

The New Deals response

to the Dust Bowl:
Formation of the Soil
Conservation Service and
soil conservation districts
Temporary projects with
the Progress Administration
Direct emergency release
for families by the
resettlement
administration

Crop and seed loans

Dust Bowl
occurred which
displaced 1
million farmers

Water
Policy

In 1935 the Bureau of Reclamation of the Department of the

Interior launched the giant Central Valley Project. The largest
and power and irrigation project of all was Grand Coulee Dam,
northwest of Spokane, Washington. Between 1933 and 1940,
Washington State ranked first in per-capita federal
expenditures. In the longer run Grand Coulee provided the
cheapest electricity in the United States.

Bureau of Reclamation
The projects begun
under the New Deal
included:
Lake Meag
Central Valley project
Grande Coulee Dam
All-American Canal
The Bureau
transformed the West
with huge water and
public power projects

Grand Coulee Dam helped harness the Columbia

River for electricity and crop erosion

A New Deal
for Indians

The Bureau of Indian Affairs led by

John Collier helped the problems
with Indians. The number of Indian
people employed by the BIA from a
few hundred to 4,600.

The Indians were the

poorest people of
America. Alcoholism,
tuberculosis, low
marketable skills
were problems of the
reservation. John
Collier tried to solve
this problems with the
government.

John Collier with

Indians before the
Indian Reorganization
Act

The Limits of
Reform
Court Packing

FDR wants to place 6 more Supreme

Court Justices to Supreme Court to
control the government

The Supreme Court

In 1937 the Supreme
Court upheld the
Roosevelts Supreme Court
constitutionality of
battle of 1937 politically
weakened him.
the:
It was FDRs court packing
NRA
taking away from the
Bureau of
Constitution and enhancing
Reclamation
the powers of the president
Newslands Act
AAA

The Supreme Court

The Womens
Network

The Womens Network

Eleanor Roosevelt became a powerful political figure

fighting for liberal causes. Mrs. Roosevelts closets
political ally was Molly Dewson. A longtime social
workers and suffragist. Dewson used the women
vote to create representative value for women.
Economics, Education and Effects in politics were
their mantra.

A New
Deal for
Minorities

Harold Ickes Sec. of

Interior was able to
minimize lynching and
attacked the principles of
segregation against the
blacks

Segregation in the Services

Mexican Americans /
Indian Reorganization
Act
In the 1930s Mexicans were
deported in large numbers
regardless of their citizenship
status
Sovereignty: the exclusive right to
exercise within a specific territory

The Indian Reorganization Act restored

semi-sovereign status to the tribes
Minorities were taken advantage of through
this act
Education was not equal with minorities

Mexican Americans

More than 400,000 1/5 of the

Mexican origin returned to Mexico
because of the depression.

The Roosevelt
Recession and
the Ebbing of
the New Deal

Depression
Era Culture

The Great depression profoundly

affected American culture, as it
did all other aspects of national
life. Movies, Arts, Radio and
Literature/ There was as strong
celebration of individualism and
nostalgia for a simpler life which
represents American Core
Virtues.

A New Deal
for the Arts

WPA offers
assistants
to the arts

WPA Artisan Important People

New Deals Federal Writers project
included:
Ralph Ellison
Richard Wright
Zora Neale Hurston

Federal Arts Project included:

William de Koonig
Jackson Pollock
Louise Nevelson

Charles E Coughlin denounced a

conspiracy of Jews international
bankers and New Deal

QuickTime and a
decompressor
are needed to see this picture.

WPA gave money to the arts. Macbeth Play was

done by an all black cast

QuickTime
QuickTime and
and aa
decompressor
decompressor
are
are needed
needed to
to see
see this
this picture.
picture.

Popular Themes Ways of Life

Some of the most
popular big band
sounds were
produced by:
Artie Shaw

http://www.youtube.com/watch?
v=zNcPnEc99UE (3:13)

Count Basie
Jimmie Lunceford
Duke Ellington

The most popular

movie themes of the
1930s included:
Those depicting core
American values
Screw ball
comedies
Gangsters
Musicals with song
and dance spectacles

http://www.youtube.com/watch?
v=2cqS_LAEVZM (1:25)

The 1936 election is about

the ideal of freedom. Two
opposing systems of
concepts about liberty
-The needs and purposes
of two opposing parts of the
population
-Freedom for private
enterprises
--The other socialized
liberty based on an
equitability shared
abundance

Popular Front is a coalition of politicians and writers

who believes in communism. Martha Graham was
from the masterpiece American Document

A New Deal for the Arts

The
Documentary
Impulse

Dorthea Langes photography of the

common man. The common man was
to the soul of America according to
FDR

Waiting for
Lefty

Waiting for Lefty is a 1935 play by the

American playwright Clifford Odets. Consisting
of a series of related vignettes, the entire play
is framed by the meeting of cab drivers who
are planning a labor strike. The framing uses
the audience as part of the meeting.
While this was not Odets' first play, this was
the first to be produced. It was staged by the
Group Theatre, a New York theatre company
founded by Harold Clurman, Cheryl Crawford
and Lee Strasberg, of which Odets was a
member. The company was founded as a
training ground for actors, and also to support
new plays, especially those that mirrored the
social and political climate of the day. Waiting
for Lefty was the first real critical and popular
success for the Group Theatre, appearing on
Broadway as well as in cities around the
United States. It had its British premiere in
1938 at the Unity Theatre, whose production
so impressed a visiting contingent of the
American Group Theatre that Unity Theatre
was given the British rights to the play

Popular Front the movement

of Communism in the United
States

During the 1930s, the

Communist party of
the United States
attracted intellectuals,
but usually only for
brief periods of time.

Communism

New Yorks group

theater
WPA art projects
The CIO organization
drives
The Abraham Lincoln
Bridge
Communism was
present in all of the
following ways (but not
limited to) :

Raising Spirits,
Film, Radio
and the Swing
Era

In 1929, Catholic layman Martin Quigley,

editor of the prominent trade paper Motion
Picture Herald, and Father Daniel A. Lord, a
Jesuit priest, created a code of standards
(which Hays liked immensely[11]), and
submitted it to the studios.[7][12] Lord's
concerns centered on the effects sound film
had on children, whom he considered
especially susceptible to their allure.[11]
Several studio heads, including Irving
Thalberg of Metro-Goldwyn-Mayer (MGM),
met with Lord and Quigley in February 1930.
After some revisions, they agreed to the
stipulations of the Code. One of the main
motivating factors in adopting the Code was to
avoid direct government intervention.[13] It
was the responsibility of the Studio Relations
Committee, headed by Colonel Jason S. Joy,
to supervise film production and advise the
studios when changes or cuts were required

Beginning in late 1933 and

escalating throughout the first
half of 1934, American
Roman Catholics launched a
campaign against what they
deemed the immorality of
American cinema. This, plus
a potential government
takeover of film censorship
and social research seeming
to indicate that movies which
were seen to be immoral
could promote bad behavior,
was enough pressure to
force the studios to capitulate
to greater oversight

Conclusion

Photos of share
croppers and
immigrants

The Solid South helped to mold the New Deal welfare

state into an Entitlement of White America

The New Deal was the

most stupendous
invasion of the whole
spirit of liberty that
nation has ever seen