Transcript The Great Depression


Rising stock market symbol of
prosperity during 1920s




“conspicuous prosperity”
 Paper wealth (credit) masked rot
in American Economy
 Before crash:

Stocks steadily increased from
March 1928 to September 1929
September 3, 1919 the Dow Jones
Industrial Average of major
stocks reached an all-time high
of 381
October 24, 1929
Unprecedented volume of selling
 13 million shares


 Unemployment already high due to
mechanization in factories
 Housing starts feel in 1927
 Internationally production up and
demand down

Black Thursday
Stock prices plunged
Next day, bankers bought
millions in stocks to stabilize
prices
 Led by J.P. Morgan Jr.

Black Tuesday



October 29, 1929
Bottom fell out
Investors wanted to sell stock
 16 million shares

By November average down to
198, in three years hit all time
low of 41
 Wealth “vanished”


America survived through other depressions b/c people
lived on farms and could provide for themselves
This depression different since America was now
urbanized

Uneven distribution of
income


Wages rose little
compared to
productivity and
corporate profits
Stock market speculation

Overproduction of goods

Weak farm economy


Excessive use of credit

Belief that boom would
last
Government policies
Little business regulation
 High tariffs

Get rich by “playing”
market mentality
 Buying on the margin


Prosperity of 20s never
reached farmers
 Hurt US farmers and trade

Global economic policies

War reparations crushing
Europe’s economy

GNP


Nation’s income


Dropped from $104 billion to
$56 billion in four years
Declined over 50%
Banks

20% closed
 Not that uncommon
 Rural banks with low funds the
problem


10 million savings accounts
wiped out
Unemployment


1933 = 13 million people
25% of the workforce

Thought prosperity would
return

Urged Americans to
exercise voluntary action
and restraint
 “best education in the world
for wandering men, women,
and children traveling around
the world”
Urged businesses not to cut
wages, unions not to strike,
etc.
 Didn’t ask Congress for
legislative action until
summer of 1930

 Believed in self-reliance

1931- called for tax increase
 Feared budget deficit

Hawley-Smoot Tariff 1930
Schedule of tariff rates
Highest in history
31 to 49% on foreign imports
Thought it would protect U.S.
business
 Europe responded
 Trade declined for ALL

Created 1929, powers expanded
1931
 Authorized to help stabilize
prices
 To modest to handle massive
overproduction





Debt Moratorium

No more payment of Dawes
plan
Federal Farm Board


Reconstruction Finance
Corporation (RFC)

Created early 1932 (election
year)
 Went against Hoover’s
conservative beliefs
Measure to prop up faltering
railroads, life insurance
companies, etc.
 Gave emergency loans to major
economic institutions

 $1.2 billion

Suicide rate 30% in 1932

Unrest on farms



Farmers banded together to stop
banks from foreclosing farms
Farm Holiday Association
Bonus march

Summer 1932
 One of the worst years of depression

1,000 unemployed WWI vets marched
to Washington to demand payment of
bonuses
 Bonuses scheduled to be paid in 1945



Joined by thousands more
Violent clash
MacArthur called in to “disperse”
crowd
 1,000 troops
 Eisenhower, Patton there

Negative pubic reaction
 More than 100 casualties
 2 babies

Depression’s worst year

Republicans

Re-nominated Hoover
 Promised to repeal prohibition,
keep tariff high, balance budget


Warned Dem. victory would
worsen depression
Democrats

Nominated NY governor
Franklin D. Roosevelt
 Barely, lots of criticism


Exuded confidence
Pledged a “new deal”
 Repeal Prohibition
 Aid for unemployed
 Public works, aid to farmers
 Cuts in government spending




Only real issue to
voters the depression
60% choose Roosevelt
ticket
Congress won large
democrat majority in
both houses
Hoover a “lameduck”

20th amendment
passed to shorten
time between election
and inauguration

The Man

Only child

Philosophy

 Wealthy background


Suffered from Polio as an
adult
 Couldn't walk unaided

Strengths
 Warm personality
 Gifted speaker
 Ability to inspire people

 Relief: for people out of work
 Recovery: for business and
economy
 Reform: of U.S. economic
institutions
Experienced politician
 NY legislator
 U.S. assistant to Navy
 1920 Dem. Nominee for Vice
President
Eleanor
Most active first lady in
history
 Social conscience

 Wrote newspaper column
Three R’s

The Brain Trust
 Group of advisors from NY
 Louis Howe
 Chief political advisor
 Professors
 Rexford Tugwell
 Raymond Moley
 Adolph A. Berle Jr.
 Appointments
 Most diverse in U.S. history
 African-Americans, Catholics, Jews,
and women
 Frances Perkins
 1st female cabinet member
 Secretary of labor


Sworn in March 4, 1933

Called congress into a
special 100-day long session



 Beer-Wine Revenue Act
 Repealed 18th amend.
March 9- June 16
Congress passed every law
Laws

Bank Holiday
 1st act of business
Financial recovery
 Emergency Banking relief Act
 Federal Deposit Insurance
Corporation
 Designed to protect savings up to
$5,000
 Banks closed March 6
 Nationwide, holiday
 1st fireside chat
 Home Owners Loan Corporation
governments reorganized
 Farm credit Administration
 Banks would reopen after

Fireside chats
 Started March 12, 1933
 Reassured Americans
 Explained legislation


Repeal of Prohibition
Emergency Banking Act
 Permitted healthy banks to
reopen
 Procedures for failed banks
 Refinanced loans, prevented
foreclosures
 Loans to farmers

Relief for the unemployed


Federal Emergency Relief
Administration
Industrial recovery

 1st welfare program
 Grants of federal money to states
and local governments for soup
kitchens, other relief
 1st National Recovery Act
 Government control of production,
labor and costs
 NRA would enforce it
 Attempt to guarantee reasonable
profits for business and fair wages
and hours for labor
 Gave workers right to organize
 Used by Frances Perkins to ban
child labor
 $500 million to state and local agencies

Public Works Administration
 Money to build roads, bridges,
dams, other pubic works

Civilian Conservation Corps
 Employed young men on projects
on federal lands (18- 25)
 Worked relief with environmental
programs
 By 1935- 500,000 employed

Tennessee Valley Authority
 Hydroelectric power program
National Recovery
Administration 1933

Farm production control

Agricultural Adjustment
Administration
 Encouraged to reduce production,
raise farm prices
 Paying farmers not to plant

Civil Works Administration



Created jobs
Hired laborers for
temporary construction
projects for government
Federal Housing
Administration

 FDR worried about creating a
permanent underclass
dependent on welfare

Securities and Exchange
Commission 1934

Created to regulate the
stock market and to place
limits on speculative
practices that led to crash in
“29
 Placed Joe Kennedy in charge
 Would know all the tricks

Gave construction industry and
homeowners a boost by
insuring bank loans for
building new houses and
repairing old ones
Off the Gold Standard

Looked at in an effort to halt
deflation (falling prices)

NRA
Lots of violations,
complaints
 1935 Supreme court
declared unconstitutional
in Schechter v. U.S.

 Regulatory powers belonged
to Congress not President
 NRA regulated commerce
within states

AAA
Did not help farm
laborers/ migrant workers
 Found unconstitutional in
1936

 Illegal use of the
governments power to tax

Democrats re-elected to
congress in 1934



 Picked up slack of AAA
 provided loans to sharecroppers,
Increased congressional
majorities
New legislation focused on
relief and reforms
Resettlement Administration
1935
tenants and small farmers
 established migrant worker camps

Reforms
 National Labor Relations (Wagner)

Act 1935 replaced NRA
Relief

 guaranteed right to join union
Works Progress Administration
 Spent billions to provide jobs
 Work not handouts

 1st year employed 3.4 million
 loans to electric cooperatives
 Total over 8 million
 Construction, writing, art
 Offered youth money to stay in
school
Rural Electrification
Administration

Federal taxes
 Revenue Act 1935 increased taxes
of wealthy few

Most important of all new deal
laws


Created federal insurance
program based on automatic
collection of taxes from
employees and employers
throughout working career



Drafted by Frances Perkins
Caused brief recession in 1937
Trust fund would pay monthly
payments to retired over age 65
Establishe the principle of
federal responsibility for social
welfare

Laid foundation

Also receiving benefits under
law:



Unemployed
Disabled
Dependent children and
mothers

Economy had improved but
still weak and unstable

Results

Landslide victory for F.D.R.
 Greatest asset ability to

Democrats


Re-nominated F.D.R.
Enormously popular among
workers and small farmers
 “one issue, its myself, and the
people must either be for me or
against me”

Republicans

Nominated Alf London
 Supported by Business
 Part of American Liberty League
 Group of business leaders that
opposed F.D.R.
 Fiscal conservative
restore confidence

New coalition of democratic
voters
 African-Americans
 VERY important!!

Liberal Critics

Socialists, extreme liberals

Demagogues

 Clifford Odet -Waiting for Lefty
 Weekly radio broadcasts
1935


Said N.D. did too much for
business and too little for
unemployed and working
poor
 From Detroit
 Wanted to nationalize banks
 Called F.D.R. the “great
betrayer” and a liar

Socialist

pay retired $200 a month
Thought government had too
much power
 Relief programs bordered on
American Liberty League
 Al Smith
Dr. Francis Townsend
 Hero to senior citizens
 Proposed 2 % federal sales tax to
Conservative Critics

Father Charles Coughlin
 Required to spend $ within 30
days

Huey Long
 “Kingfish” Gov. from Louisiana
 “Share our wealth”
 100% income tax over 1 million
dollars
 Everyman would be a King
 Ran for Presidential nom.
 Attempted assassination

Most difficult challenge in
F.D.R.’s first term


Called “court-packing” bill
 Both Republicans and
Democrats upset
 1st major congressional
defeat

Killed NRA and AAA
 Plus 9 other measures
 All conservative judges

Reaction
 Opened floodgates
Court-Reorganization
Thought re-election
meant he could solve
court problem
 Proposed bill 1937
 President be allowed to
appoint additional justice
for each justice over age
70.5


Aftermath
Negative reaction
 Court already changing
views before bill

 1937 upheld Wagner Act and
Social Security Act

National Industrial
Recovery Act 1933 and
Wagner Act 1935





Legalized unions
Membership increased
 Sit-down strike, organized by
CIO
 Strike successful United Auto
Workers union organized
 Not so lucky at Ford plant

Committee of
Industrial
Organizations 1935
 Leader John L. Lewis
 Broke off from A.F.L.
 Welcomed all workers in
a particular industry
regardless of gender,
skill, or race
Automobiles
 GM Plant Michigan 1937
Formation of C.I.O.

Strikes
Steel
 1936
 Memorial day 1937 Chicago
 Republic Steel Company

Fair Labor Standards Act

Minimum wage, max
workweek of 40hrs, childlabor restrictions

New deal slowed down

Weakened New Deal


Recession 1937-1938

Causes
 Government policy
 Social Security reduced
consumer spending
 Withdrew $2 billion from
circulation

Keynesian Economics
 Mistake trying to balance
budget
 Deficit spending needed to
initiate economic growth
 Worked- late 1938
 Unemployment declined,
industrial output increased
Economy improved but:
 Court-packing left distrust
with congress and people
 New coalition formed to block
new deal legislation
 Fears of Nazi Germany

Women


Added pressures
More women sought work

African Americans

 Unemployment rate higher
 Often excluded from relief
 More government positions


Still paid less than men
programs


Severe drought early 1930s
Region became a dust bowl
 “Black rollers”
 Called “dirty thirties”
 Nine teenage boys accused of rape in
Alabama
 Framed, all-white jury

and save each others farms

Thousands of “Okies”
migrated to California
 John Steinbeck’s “The Grapes of
Wrath”
 Also called “exodusters” or
“Arkies”
Improvements
 WPA, CCC = jobs
 Government positions
 Neighbors came together to try
 Called “penny auctions”
Racial tensions in South
 Anti-lynching bill defeated
 Scottsboro 8
Dust Bowl Farmers

Discrimination continued

Fair Employment Practices
Committee
 Executive order 1941
 F.D.R. appointed African-
Americans to government
positions

Native Americans
Granted citizenship and
voting rights in 1924
 Indian Reorganization
Act 1934

 Repealed Dawes Act of
1887
 Returned lands to control
of tribes and supported
preservation of native
culture
 Enabled natives to buy back
land

John Collier
 Commissioner of Bureau of
Indian Affairs 1933
 Improved life on
reservations
 Conservation and CCC
projects to employ natives

Mexican Americans
Two million in U.S.
Suffered from discrimination
Principal source of labor in
1920s
 During depression high
unemployment and drought
caused dramatic growth in
white migrant workers
 Thousands returned to
Mexico



 500,000
 Voluntary and forced

Popular Actors
Shirley Temple
 Clark Gable
 Carol Lombard
 Mae West


Comedians


Jack Benny
George Burns

Literature


Grapes of WrathSteinbeck
Music


Gershwin- “Porgy and
Bess”
Swing dancing, music

What ended the
depression?

FDR’s 1st term
 Annual growth up 9%
 Unemployment down
from between 25-33% TO
9-14%

2nd term
 Unemployment up again
 Would not go down until
after 1941