Transcript Great Depression

Great Depression
• EQ’s:
– What are the contributing factors to the G.D.?
– Which political philosophy was more effective in
combating the economic downturn of the
depression?
Problems with the Economy: the
Liberal Perspective
• Key industries start to flounder
– Railways, steel, mining
• Consumers have less money to spend
– Buying less, higher prices for goods
– Living on credit, installment plans
• Trickle down theory
• Uneven distribution
– Rich got richer, poor got poorer
– 70% of country earned less than $2,500
Trickle Down Example
Stock Market in 1929
• Dow Jones Industrial was in a Bull Market
– Up 300 points from the last five years
– S&P 500 and Russell 2000 index also increasing
• But, Stocks were over-inflated
– Speculation
– Buying on Margin
– Prices didn’t reflect the true value of the
companies
Black Thursday
• October 24, 1929
• Investors sell a lot of shares
• Lack of confidence, prices drop
– Dow closes at…
• At the end of the day, leading bankers buy
stocks to prevent further drop
Black Tuesday*
• October 29th 1929
– Prices significantly drop off as investors try to sell
• Dow drops to ….
– Margin-buyers now in huge debt
– Loss of approx. $30 Billion
• Banks and business failures
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People panic and withdraw their money
Were owed $ and not being paid back
Had invested in the stock market
90,000 companies go bankrupt
9,000 Banks close with 27 million accounts unpaid
Natural Business Cycle
World-wide shock
• European countries were already on verge
– Stock crash destroyed many foreign investments in US
• German reparations relied on US assistance
• Hawley-Smoot Tariff
– US protective tariff
– European countries passed their own tariffs
• Cuts down on trade, no open markets to help avert the
depression
• Dow drops to it’s lowest b/c of this; 62 points
Depression living
• Urban Areas
– People lose jobs, can’t pay rent or mortgage,
evicted
– Shantytowns (Hoovervilles)
--To feed themselves:
• Dig through garbage
• Soup Kitchens
• Bread lines
Relief
• In South Texas, the Salvation Army provided a
penny per person each day.
• In Philadelphia, private and public charities
distributed $1 million a month in poor relief.
– Gave families $1.50 a week for groceries.
• In 1932, total expenditures were $317 million
– $26 for each of the nation's 12 1/2 million jobless.
Rural Areas
• Advantages:
– can feed themselves
– More family oriented, sharing
• Even so, 400,000 farms lost due to foreclosure
– Increase in productivity to pay off loans led to a
drop in prices which created more debt
Dust Bowl
• Midwestern farmers had depleted the land
– No crop rotation
– 1930-32 drought contributes tons of top soil being
blown away
Herbert Hoover
• Believed the market
would correct itself
within a few years
• The president’s primary
position was to
maintain a balanced
budget, not overtax or
overspend
Bonus Army
• By 1932, unemployment rate had reached 23.6
percent.
– Over 12 million were jobless (out of a labor force of 51
million).
• 20,000 World War I veterans and their families
marched on Washington.
– Purpose was to pressure Congress into voting for
immediate payment of a veteran’s bonus earmarked
for 1945.
– The proposal was to pay veterans $1 for each day
served in the United States and $1.25 for every day
overseas.
Bonus Army
• Democratic House
approved it, but the
Republican Senate
refused. Hoover also
opposed it.
• On June 7, as 100,000
watched, some 8,000
veterans marched down
Pennsylvania Avenue
Election of 1932
FDR
• Package of sweeping
reforms called New Deal
• Inaugural Address:
– “The only thing we have to
fear is fear itself.”
• Francis Perkins
– US Secretary of Labor,
charged with
implementing most of his
reforms
– First woman to be in the
cabinet
First 100 Days
• Passed 15 bills
• Declared National bank holiday
– Until banks could be reorganized, prevent “run on
banks”
• Emergency Banking relief Act
– National Banks provided additional funds to Banks
to keep them open
– FDIC Insured
First 100 Days
• Federal Emergency Relief Act
– pumped $500 million into state-run welfare programs.
• Homeowners Loan Act
– first federal mortgage financing and loan guarantees.
– By 1936, provided more than 1 million loans totaling
$3 billion.
• Glass-Steagall Act *
– federal guarantee of all bank savings under $5,000
– Separated commercial and investment banking
– strengthened the Federal Reserve's ability to stabilize
the economy.
Work Programs
First 100 Days
• National Industrial Recovery Act (NRA)
– established codes of fair practices that would set
prices, production levels, minimum wages, and
maximum hours within each industry.
– Sought to stabilize the economy by limiting
competition, overproduction, labor conflicts, and
deflating prices.
• Tennessee Valley Authority Act--the first direct
government involvement in energy production.
– Built dams to provide electricity to rural TN
Agricultural Adjustment Act (AAA)
• Farmers who cut production to comply with quota laws would be
paid for land left fallow.
Mixed results:
• It raised farm income, but hurt sharecroppers and tenant farmers
• Farm incomes doubled between 1933 and 1936, but mainly
because of large farmers
• Large landowners used government payments to purchase tractors
and combines
– One Mississippi planter bought 22 tractors with his payments and then
evicted 160 tenant families.
• AAA forced at least 3 million small farmers from the land.
• Established the precedence for farm price supports, subsidies, and
surplus purchases
Public Works Administration (PWA)
• Highlights FDR’s idea
1.
2.
3.
4.
Gov’t creates works projects
Individual projects create jobs
Workers spend money to feed, cloth themselves
Will stimulate the economy
• $6 billion in 6 yrs.
Civilian Conservation Corps (CCC)
• Young men 18-25
• $30 a month
• planted saplings, built
fire towers, restocked
depleted streams,
restored battlefields
Works Progress Administration (WPA)
• Started Jan. 1935
• Employed 3.5 million workers at a "security
wage"--twice the level of welfare payments
• Constructed or improved 2,500 hospitals, 5,900
schools, 1,000 airport fields (including New York's
LaGuardia Airport), and nearly 13,000
playgrounds.
• By 1941 it had spent $11 billion
• Also employed artists, musicians and actors in
Federal Writers Project
Construction of the Dam
by William Gropper
Women of Flint, MI
by Joseph Varak
Huey Long
• “Share Our Wealth” Plan
– Gov’t guarantee every family
in the nation an annual
income of $5,000, so they
could have the necessities of
life, including a home, a job, a
radio and an automobile.
– Proposed limiting private
fortunes to $50 million,
legacies to $5 million, and
annual incomes to $1 million.
– Everyone over age 60 would
receive an old-age pension.
• "Every Man A King."
1935 Wagner Act
• Aka National Labor Relations Act
– Created the National Labor Relations Board
– Guaranteed private workers the right to unionize
• Collective Bargaining
• Collective Action
– Ex. 1937 General Motors Strike
• GM forced to recognize United Auto Workers
FDR woes of 1936
• Supreme court declared several parts of the
New Deal Unconstitutional
• “The Sick Chicken Case” (Schechter v US)
• Election of 1936
– FDR vs Alfred Landon
• Expansion in WPA… FDR being tricky?
Roosevelt Recession
• FDR introduces “Court-Packing”
– Add one Justice for any Justice over age 70
– Offered a pension package for 70+ Justices
– Political disaster
• Deepening in the depression hits in 1937
– Taxes on wealthy--- 70% income tax
– Social Security tax
– Cut programs like WPA---spike in unemployment
Music of the 1930’s
• Early, Jazz and vocals
– Ella Fitzgerald
– Bing Crosby
• 1935 on was “Swing”
– Benny Goodman, Tommy Dorsey
• Emergence of the “Big Bands”
– Glen Miller Orchestra
Glen miller orchestra in 1939
Writer’s
• Writers of the ‘30’s had a tendency to focus on
the conditions of the time
– John Steinbeck wrote The Grapes of Wrath, Of
Mice and Men and East of Eden as reflections of
the time, esp the Dust Bowl
– Don Passos The Big Money where everyone strives
for wealth, but sacrifice everything decent in
society
Film
• Increase in technology and film techniques
– Hollywood worked independent from the Gov’t
• 1939 “The year of film”
– The Wizard of Oz
– Mr. Smith Goes to Washington
– Gone with the Wind*
– Stagecoach
– Fantasia