Transcript The Great Depressionx

Chapter 25
Background

 Began 10/29/1929  stock market crash
 1932 – worst year of the Depression
 Unemployment rate = 25%
 Nation’s character changed
 Economic AND cultural crisis
 FDR and the New Deal change American political
history forever


 Mickey Mouse Great Depression
Causes of the Great
Depression

 Stock market speculation
 “buying on margin”
 Federal Reserve Board  errors
 Tariff of 1930
 Hawley-Smoot Tariff Act
 Maldistribution of Wealth
Federal Reserve Board

 Curtailed money in circulation
 Raised interest rates
 SHOULD HAVE:
 Expanded money supply
 Lowered interest rates
 Effects global!
Smoot-Hawley Tariff
Act

 Raised tariff from 32% to 40%
 Agricultural AND manufactured products
 Supported by Republicans
 Retribution
Distribution of Wealth

 Wealthiest 20%  10% boost
 Poorest 60%  13% drop
 Coolidge administration LOWERED taxes for the
WEALTHY
 consumption and industrial growth slowed
 Government SHOULD have increased income for
average American
Herbert Hoover

 Political background
 Elected to the presidency in 1928
 “We in America today are nearer to the final triumph
over poverty than ever before in the history of the
land.” (8/1928)
Hoover’s Plan to Save
the Economy

 Domestic policy plan:
 “Associationalism”
 Failed!
 Foreign policy plan:
 1 year moratorium on loan payments owed to US
 Glass-Steagall Act (1932)
More on Domestic
Policy

 Began to expand government’s role
 Reconstruction Finance Corporation (RFC) (1932)
 Home Loan Bank Board (1932)
 HOOVER ≠ COMFORTABLE WITH
GOVERNMENT INTERVENTION IN ECONOMIC
WELFARE!

 Could not balance the budget (1932)
 RFC expenditures
 Supported the Revenue Act of 1932
 Balance budget by raising taxes!
 HH hesitated to ask Congress for direct relief for the
poor
 Destroy will to work
 Undermine sense of self-worth

The Bonus Army

 Spring, 1932 – army vets from OR (Bonus
Expeditionary Force) march towards Washington
 Petitioned government for early redemption of
bonuses
 HoR = agrees
 Senate = refuses
 HH = refused to meet with vets
 7/1932 – Gen. Douglas MacArthur and Gen. George
Patton attack camp
 Result: more anti-Hoover sentiment
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Cinema and Literature

 Reflect the times
 Themes: economic misery, spiritual depression,
hopelessness, despair
 Gangster films popular, too.
Franklin Delano
Roosevelt

 Old Money
 Well Educated … yet average
 Player
 Liberal NY governor (1929 – 1933)
 Elected to the Presidency in 1932
 Mood shifts: despair  hope
“Liberalism”

 Interventionist on economic matters
 Need to regulate capitalism
 Libertarian on personal issues
 Laissez-faire
 promised a “new deal for the American people”
The First New Deal
(1933-1935)

 3/1933 – economy in shambles
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Industrial production  50%
New investments 
100,000 businesses went bankrupt
Banks on verge of collapse
Unemployment rates 
First Hundred Days
(3 – 6/1933)

 Persuaded Congress to pass 15 major pieces of
legislation to help: bankers, farmers, industrialists,
hungry
 Repealed prohibition
 “The only thing we have to fear is fear itself.”
 “Fireside chats”

 FDR NEW DEAL HOPE
Basis for the New Deal

 The three “R’s”
 Relief
 Recovery
 Reform
 Started with the banks …
Banking Reform

 Declared a “bank holiday”
 Congress passed the Emergency Banking Act (EBA)
 Federal loans available to private banks
 Economy Act (EA)
 Balancing the budget

 Second Glass-Steagall Act (1933)
 Separated commercial and investment banking
 Federal Deposit Insurance Corporation (FDIC)
 $5000.00
 Securities Act (1933) and Securities Exchange Act
(1934)
 Regulated stock market
 Created the Securities Exchange Commission (SEC) to
enforce laws
Economic Relief

 FERA
 CCC
 CWA
 HOLC
* Direct subsidies lent credibility to FDR’s claim that he
was “different”
Agricultural Reform

 1933 – FDR expected relief would come from agricultural
and industrial cooperation
 Backbone of plan: AAA and NIRA
 *AAA
 Controversial
 Did not help sharecroppers
 Great Plains suffered, too (environmental and economic
issues)
 DUST BOWL!
 SCS
 * replaced by Soil Conservation and Domestic Allotment
Act
Industrial Reform

 Used HH techniques (persuasion and association)
 NIRA (and *NRA)
 “blue eagle” logo
 Unenforceable!
 Failed!

Rebuilding
Infrastructure

 NIRA  PWA
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Economic investment, NOT short term relief
Dams
Schools
Bridges
Roads

The TVA

 Hydroelectricity would bring new life to Tennessee
Valley (KY, TN, MS, AL, GA, NC)
 Resembled the PWA
 Socialist in nature
 **one of New Deal’s biggest successes
 Government was NOT a substitute for private
enterprise
New Deal and Western
Development

 West – benefited more than any other region
 Public works projects
 Welfare
 Federal loans
 Dam Building HUGE!
 Hydro-electric power
Public Backlash?

 NRA dismantled in 1935
 Still, critics emerged
 Senator Huey Long
 Father Charles Coughlin
 Francis E. Townsend
 Labor organized, too
 1934 – 2,000 strikes!
The People Speak

 Democrats gain more influence in both the House
and the Senate
 Radical third parties emerge
 Communism in the USA?!
The Second New Deal

Reforming the Reform Movement
Background

 New Deal needed to move toward (and embrace)
Populism
 “Underconsumptionism” needed to be corrected
 Support of unions
 More social welfare
 Ambitious public works program
 DEFICIT SPENDING CONTINUES
Second New Deal

 January to June, 1935
 Two most historic acts
 Social Security Act (5/1935)
 Employer AND employee taxation to fund pensions
 National Labor Relations Act (6/1935)
 aka: The Wagner Act
 Solidified existence of unions and their right to collective
bargaining
 Established the National Labor Relations Board (NLRB)
More Alphabet Soup

 Holding Company Act
 Wealth Tax Act
 Banking Act
 Rural Electrification Administration (REA)
 Emergency Relief Appropriation Act
 Gave money to PWA, CCC
 Created the National Youth Administration (NYA)
 WPA
 WPA Ad
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The Election of 1936

 FDR vs. Alf Landon
 FDR = 61% of popular vote
523 electoral votes
 Landon = 37% of popular vote
8 electoral votes
 **Democratic Party  party of reform and that of
the “forgotten American”
 First election that blacks voted against the Republican
Party!
The Realities of the
New Deal

 Not as severe as it looked
 DID include capitalists in plan!
 Excluded many groups
 Minorities
 New Dealers = technocrats
 Snobs?
Women & the New Deal

 Progressive!
 Visible
 Eleanor Roosevelt
 Frances Perkins
 Women’s Movement lost momentum …
 Protective legislation

The Labor Movement

 AFL divided!
 Congress for Industrial Organization (CIO) formed
 Included John L. Lewis
 Goal: to influence politics more
 Labor’s Non-Partisan League (LNPL)
 Enhanced by Wagner Act and NLRB

 1936 – United Auto Workers challenged General
Motors
 Sit in
 MI governor refused to use National Guard!
 FDR refused to use federal troops!
 WPA writers and artists depicted unions as the
“voice of the people”
Minorities & the New
Deal

 New Dealers belief: social and economic issues
outweighed racial and ethnic issues
 Eastern and Southern Europeans
 Important because they are a powerful voting block
 African Americans
 Major discrimination
 Majorly segregated
 Anti-lynching laws
 1929-1938: Approx. 128 lynching's (11 white)
 Black people DID make some advancements
 Marian Anderson Song
 “Black Cabinet”
 *Black vote was not strong enough to have a serious
impact on the elections
 Mexican-Americans
 Repatriated! (started in 1931)
 “invisible minority” (LA)
 Excluded from many New Deal Acts
 American Indians
Indian New Deal

 1800s – 1930s
 US government pushed for Native American
assimilation
 Dawes Severalty Act
 BIA est. Carslile Schools and outlawed many other
Indian traditional practices
 Practices questioned by Hoover!
 FDR appointed John Collier as head of BIA
 MAJOR Indian advocate!
 Incorporation of Indians in New Deal
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Indian Boarding Schools

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 Indian Reorganization Act (1935)
 *centerpiece of the Indian New Deal
 Aka Wheeler-Howard Act
 “cultural pluralism” celebrated diversity
 Indian New Deal opposed by almost everyone!
1937 - 1940

FDR’s Foreign Policy

 Believed foreign policy should further domestic
growth
 1933 – pulled out of the World Economic Conference
(London)
 Goal: to strengthen gold standard
 Gold content for dollar = high; commodity prices = low
 Counter-productive for the US
 Would inflate prices of agricultural and industrial goods

 1934 – Reciprocal Trade Agreement
 Lowed tariff rates as much as 50%
 Benefited larger corporations
 Consistent with 2nd New Deal (increase circulation of
goods and money in the economy)
 **implementing foreign policy was MUCH harder
than passing New Deal legislation!
 Need to consider conditions in other nations
 **international economic policies NOT successful
 1933 – first president to recognize the Soviet Union
 Established diplomacy
 12/1933 – “Good Neighbor Policy”
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Renounced US rights to intervene in Latin American affairs
Pulled out of Haiti and Nicaragua
“ignored” Platt Amendment
Panama given more autonomy and more control of canal
 US did NOT give up control over Latin America!
 1934 – revolution in Cuba
 1936 – Mexican government nationalized American owned
oil companies
 Good Neighbor Policies strengthened Latin-US ties
1937-1940

 New Deal lost steam
 Class divisions becoming worse
 Strikes overused
 FDR needs to problem solve
 “Restructuring” of the Supreme Court
Presidential Powers

 Article II, Section 2, Para. 2:
 He shall have Power, by and with the Advice and Consent
of the Senate, to make Treaties, provided two thirds of the
Senators present concur; and he shall nominate, and by and
with the Advice and Consent of the Senate, shall appoint
Ambassadors, other public Ministers and Consuls, Judges of
the supreme Court, and all other Officers of the United
States, whose Appointments are not herein otherwise
provided for, and which shall be established by Law: but the
Congress may by Law vest the Appointment of such inferior
Officers, as they think proper, in the President alone, in the
Courts of Law, or in the Heads of Departments.
Supreme Court

 Article III, Section 1, Para. 1:
 The judicial Power of the United States shall be vested in
one supreme Court, and in such inferior Courts as the
Congress may from time to time ordain and establish. The
Judges, both of the supreme and inferior Courts, shall hold
their Offices during good Behaviour, and shall, at stated
Times, receive for their Services a Compensation, which
shall not be diminished during their Continuance in Office.
The “Court Packing”
Scheme

 2/5/1937 – FDR asks Congress
 1 new justice for each justice over the age of 70.5
 “Benefits”
 alleviate work load of elderly judges
 Reality
 6 appointees
 Backlash = fierce!
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Patience Is a Virtue

 3/1937 – Justice Owen Roberts ended up supporting
New Deal legislation
 Upheld constitutionality of Wagner Act and Social
Security Act
 By 1940 – 5 older judges retired
 ** FDR’s reputation suffered**
Recession of 1937 - 1938

 Economy stimulated by 1935 New Deal programs
 Social Security taxes hurt the commoners
 $2 billion
 Benefits not paid until 1941
 Unemployment rose from 14% to 20%!
 Economy and stock market crashed again
 Midterm elections of 1938
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