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
 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 didn’t have the money to give them

 Realize they lost everything

o Dawes’ Plan Fails

 Makes depression international

 • 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 Town’s

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 Hoover’s Depression Policies:

• Background
 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 isn’t 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

 • 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:

• RepublicanHerbert 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

  Starts trend toward welfare capitalism (conservatives don’t 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 wouldn’t let black singer sing at the White
House

 Pushed for a Federal Anti-Lynching Act

• He wouldn’t 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
 • Initiated Fireside Chats

o “My friends”

 People felt comforted

 Felt he wasn’t 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 Jackson’s “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):

 • 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 President’s first 100 days

• Three R’s

o Relief

 For the people

 o Recovery

 Fix the problems

o Reform

 The system so you don’t 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 Homeowner’s Loan Cooperation (HOLC)

 Helped people refinance their loans so they wouldn’t lose their

homes

o Later Economic Legislation

 Securities and Exchange Commission

 • 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, schoolsconstruction jobs

o Bigger projects

o Later Relief Efforts

 Civil Works Administration (CWA)

 • Harry Hopkins

• Jobs like paying people to sweep the streets

• Makeshift nature

o Received criticism didn’t 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 the

sharecroppers 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

  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 generate

hydroelectric 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)

The Second New Deal

• Opposition from the Right and Left

o Damned if you do, damned if you don’t

 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”

 • 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
  Works Progress Administration

 May 1935

 Doing roads, hospitals, playgrounds, parks, ball fields

 Had programs for artists, painters, writers, dancers

 Federal Writer’s 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

 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 Landon

o 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. Long’s 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, ¾ of blacks vote Democrat

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 ½ who didn’t 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

 Doesn’t 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 1937-38

o 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

  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
 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
 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
  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

 • 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