Transcript Chapter 25 The Great Depression & the New Deal

Chapter 24
The Great Depression & the New Deal
Mr. Logan Greene
West Blocton High School
AP United States History
Chapter Objectives
• What triggered the Great Depression?
• Why did Herbert Hoover’s actions to resolve the
Great Depression fail?
• What were the main achievements of the early New
Deal?
• Which economic and social reforms made up the
“Second New Deal?”
• What impact did New Deal programs have on
women and minorities?
• Why were late New Deal programs unsuccessful?
The Cause of the Crash
• There is NOT one single cause to the Great
Depression as the causes are complex and
NUMEROUS
• The deciding factor in the Great Depression was the
combination of a “balloon” economy, an unregulated
stock market, closed international trading, uneven
monetary distribution, and the over use of credit
The Cause of the Crash
• “Balloon” economy:
– The economy of the 1920’s was growing at an
unbelievable pace; however, it was growing to fast. The
government under Harding and Coolidge allowed this
growth to go on unsupervised and the economy outpaced
the nation’s ability to stabilize it
The Cause of the Crash
• Unregulated stock market
– The stock market of the 1920’s was still a very new
entity. People were pumping incredible amounts of
wealth into the stock market. Two main issues caused
problems for the stock market. Margin buying is where a
person buys stock by only paying a portion of the price.
Speculation buying also led to problems as people bought
stock at prices for assumed gains that had not happened
yet and stocks were highly overvalued. Many people
based their entire wealth on the stocks they owned that
may have only been partially paid for and drastically
overvalued.
The Cause of the Crash
• Closed International Trading
– Throughout the 1920’s the government had consistently
raised tariff rates to protect American businesses.
However, this hurt Europe’s already FRAGILE economy
by not allowing them to do business in the United States.
The danger this posed was the American economy was
completely based upon American industry. The safety
net of international trade was non-existent.
The Cause of the Crash
• Uneven Distribution of Wealth
– A major contributing factor to the crash was the uneven
distribution of wealth in the United States. By 1929 0.1
percent of American families controlled as much wealth
as the lower 42%. Their wealth was based entirely on
industry and was far to reliant on stocks. As well, this
meant there was not enough purchasing power to sustain
the ever expanding materialistic economy.
The Cause of the Crash
• Credit
– Credit was virtually non-existent before the 1920’s.
During the overly materialistic 1920’s people bought
massive amounts of items on credit and saved little
money. This led to little safety net in case of economic
trouble. Coupled with many people’s wealth being
entirely based on stocks many upper class and upper
middle class families were living in an illusion of
economic security.
THE CRASH
• The balloon market (this was also a Bull Market
where prices continually rise as opposed to a Bear
Market where prices stagnate or fall) could only
continue to work as long as new investors entered
and continued to pump money in the system
• By late 1929 there were no new investors
• By October brokers sensed danger and began calling
in credit and demanding payment for stocks
• On October 29, 1929 “Black Tuesday” the Stock
Market crashed losing 12% in one day.
THE CRASH
• Without international trade and with such a small
percentage of the country controlling so much
money there was no way to control the crash
• By mid 1930 the country’s economy was on the
verge of complete and total collapse
• As well, my mid 1930 bank runs were becoming all
to common as people rushed to withdraw their
money from banks
• Over 10,000 banks closed by December of 1930
with several states lacking a single open bank
Unemployment
• By 1932 almost 25% of the country was unemployed as
factories cut back production
• This led to a vicious cycle of the Depression increasing as
fired people could not buy which is extended the Depression
further
Farmers
• Farmers were particularly hurt by the Great
Depression
• The agricultural sector had already been hurting due
to the over production and collapsed prices of the
1920’s
• The lack of buying power in the country depleted
farmers customers and their economic power
collapsed as thousands of farmers watched their
homes foreclosed upon
Hoovervilles
• Evictions were not isolated to rural families as
numerous factories workers were evicted upon
losing their jobs
• These families moved into “Hoovervilles” or shanty
towns named after President Hoover where
thousands of people lived in dreary conditions until
they could find work
Families
• Families saw incredible amounts of stress during the
depression
• Desertion (leaving your spouse with divorce)
skyrocket, marriages declined, birthrates fell, and
unemployed men became increasingly depressed as
they could not be the “bread-winner”
• Many parents starved themselves to ensure their
children’s health
Hoover and the Depression
• In keeping with his Big Business roots Hoover
refused to allow major government intervention to
try to curb the growing crisis
• Hoover believed in “volunteerism” or the idea of
businesses voluntarily keeping workers at a loss or
even hiring more workers to try to help the economy
• Hoover complained “You know, the only problem
with capitalism is the capitalists; they’re to damn
greedy”; however, he still rejected governmental
intervention
Hoover and the Depression
• Hoover relied on private programs to combat the
growing issues; however, there was a simple
problem with this plan: very few private programs
existed
• Eventually Hoover tried to enact policies to help the
crisis but it was to late as the Depression had
spiraled into a cyclical monstrosity that would take
years to subside
The Bonus Army
• An incident in 1932 epitomized Hoover’s issues and
disconnect with the American people
• In the mid 1920’s Congress allocated pensions for
World War I veterans to be paid in 1945
• As the depression worsened in 1932 the veterans
marched on Washington demanding the pensions
and even camped outside the capital
• Nicknamed the Bonus Army they were dispersed
violently under Hoover’s orders leaving the country
even more disgusted with Hoover’s leadership
1932 Election
• Somewhat surprisingly the Republicans renominated Hoover in 1932
• Democrats nominated the popular New York
governor Franklin Delano Roosevelt (cousin of TR)
• Roosevelt won easily as the election showed the
country had a total distaste for Hoover’s leadership
• Roosevelt although confined to a wheel chair due to
polio as a child Roosevelt was the realistic but
optimistic and energized leader the country craved
The First New Deal
• The first three months of FDR’s term were known as
the Hundred Days as still stand as possibly the most
important period of any American presidency (easily
the most important non war time period)
• Roosevelt was determined to be active and attack
the Great Depression with his cabinet known as the
“Brain Trust”
• Roosevelt asked the American people to trust him
and his “New Deal”
The First New Deal
• The New Deal was FDR’s program (really a group
of programs) aimed at stabilizing the economy,
growing jobs, and renewing American’s faith
• FDR convinced the country of the worthiness of his
cause through his weekly radio broadcasts known as
“Fireside Chats”
• The first of these acts was the Emergency Banking
Relief Act which closed banks with a bank holiday
and required approval from the federal government
to reopen
Act or Program
Acronym
Year Enacted
Significance
Agricultural Adjustment Act
AAA
1933
Protected farmers from price drops by providing crop subsidies to reduce production, educational
programs to teach methods of preventing soil erosion.
Civil Works Administration
CWA
1933
Provided public works jobs at $15/week to four million workers in 1934.
Civilian Conservation Corps
CCC
1933
Sent 250,000 young men to work camps to perform reforestation and conservation tasks. Removed
surplus of workers from cities, provided healthy conditions for boys, provided money for families.
Federal Emergency Relief Act
FERA
1933
Distributed millions of dollars of direct aid to unemployed workers.
Glass-Steagall Act
FDIC
1933
Created federally insured bank deposits ($2500 per investor at first) to prevent bank failures.
National Industrial Recovery Act
NIRA
1933
Created NRA to enforce codes of fair competition, minimum wages, and to permit collective
bargaining of workers.
National Youth Administration
NYA
1935
Provided part-time employment to more than two million college and high school students.
Public Works Administration
PWA
1933
Received $3.3 billion appropriation from Congress for public works projects.
Rural Electrification Administration
REA
1935
Encouraged farmers to join cooperatives to bring electricity to farms. Despite its efforts, by 1940
only 40% of American farms were electrified.
Securities and Exchange Commission SEC
1934
Regulated stock market and restricted margin buying.
Social Security Act
1935
Response to critics (Dr. Townsend and Huey Long), it provided pensions, unemployment
insurance, and aid to blind, deaf, disabled, and dependent children.
Tennessee Valley Authority
TVA
1933
Federal government build series of dams to prevent flooding and sell electricity. First public
competition with private power industries
Wagner Act
NLRB
1935
Allowed workers to join unions and outlawed union-busting tactics by management.
Works Progress Administration
WPA
1935
Employed 8.5 million workers in construction and other jobs, but more importantly provided work
in arts, theater, and literary projects.
Most Important Agencies
• NRA (National Recovery Administration)
– Halt price slides, lowering wages, and uemployment
– Helped Businesses more than labor
• Social Security Act
– Gave everyone a social security number
– Gave pensions for citizens over the age of 65
• TVA (Tennessee Valley Authority)
– Electrified the Tennessee Valley and gave thousands of
jobs to unemployed workers to build dams
Critics of the New Deal
• Not everyone loved FDR’s programs
• Huey Long, a senator from Louisiana, campaigned for more
social welfare
• Francis Townshend called for pensions for anyone over 60
• Charles Coughlin, a catholic priest, called for even more
help than the New Deal was giving
• As a response to these attacks FDR authorized the Social
Security Act in 1935
• As well, some critics attacked the biggest issue with the
New Deal: it was terribly expensive
The Dust Bowl
• Since the large scale movement to the Midwest at
the turn of the century farmers had uprooted much
of the topsoil of the Midwest
• This led to major erosion
• As thousands of people left the Midwest during the
depression their crops were no longer there to hold
the soil in place creating dust storms and a huge area
of desolate dusty conditions known as the Dust
Bowl from northwestern Texas to Oklahoma and
Kansas
The Second New Deal
• Roosevelt attempted to expand relief with the
Second New Deal in 1935
• Agencies such as the WPA (Works Progress
Administration) gave jobs to 9 million people
• Agencies such as the Emergency Relief
Appropriation act gave millions of dollars to jump
start the economy
• Although unemployment was starting to drop
Roosevelt was beginning to have some issues
The Supreme Court
• In 1935 the Supreme Court began examining the
New Deal
• In mid 1935 they declared the NRA an
unconstitutional infringement of government upon
the free market economy
• One after another the Supreme Court began
declaring New Deal programs unconstitutional much
to the chagrin and anger of FDR
The 1936 Election
• FDR went into the 1936 election riding a wave of
lower unemployment and the 1935 programs of the
second New Deal had destroyed much of the
criticism he faced (as well his main competition
Huey Long had been shot)
• The Republicans backed Alfred Landon but knew
they had little chance of winning the election
• FDR won in one of the biggest election landslides in
American history losing only 2 states
Scaling Back of the New Deal
• As FDR rode a wave of success into his second term he
took on the Supreme Court that had declared several of his
New Deal programs unconstitutional
• FDR attempted the Court Packing plan. In this he proposed
increasing the Supreme Court to 13 justices
– Therefore he could appoint the 4 new justices giving him
control of the court
• The public immediately issued harsh criticism to FDR for
trying to disrupt checks and balances
• Although the court packing plan was stopped it had the
desired effect as the Court stopped declaring New Deal
programs unconstitutional
The Recession
• What hurt FDR more than anything was the
Recession of 1937
• Just as the country was about to his pre-depression
levels economically a recession hit due to Roosevelt
bowing to pressure in 1936 and trying to balance the
budget
• By removing government money being pumped into
the economy while private business was still
stagnant the economy collapsed
• Roosevelt had no choice but to increase spending
Political Stalemate
• As the recession hit in 1937 the Republicans
managed to win a large amount of seats in the
Congress in the mid term elections
• This created a log jam in congress and kept many
important New Deal legislation items from coming
to fruition
• As well, many of the New Deal programs were
simply hitting their limitations and the economy
needed the private sector to also begin to up
production
Foreign Policy
• As the Depression entangled domestic policy at
home FDR began to open the door to trade
internationally specifically with Latin America with
the Good Neighbor policy
• Outside of the Western Hemisphere FDR lowered
tariffs and took the drastic step of recognizing the
Soviet Union to encourage trade between the two
large powers
Foreign Policy
• The 1930’s were tumultuous for Europe
• Germany became entangled in a Depression that
dwarfed Americas (we hit a maximum of 25%
unemployment while Germany hit a high of 65%)
• In their desperation Germany turned to a radical
fascist (government behind one dictator where
government, economy, and military are all aimed at
one goal) named Adolf Hitler
• FDR aimed for neutrality at all cost and Hitler did
not see the USA as a threat
War
• Europe plunged into war in 1939 as Germany
invaded Poland
• FDR pledged neutrality while quietly preparing for
war not only against Germany but also an
increasingly hostile Japan in the Pacific
• The increase in industrial orders from Great Britain
and France helped finally pull the United States out
of the Great Depression
The Legacy of the New Deal
• The Great Depression and the New Deal left a
lasting impression on the United States
• The Federal Reserve gained new power and a
heightened sense of responsibility over the economy
• The power of the Federal Government grew
immensely
• For the first time the United States adopted a welfare
policy of protecting its citizens from economic
disaster
Chapter Objectives
• What triggered the Great Depression?
• Why did Herbert Hoover’s actions to resolve the
Great Depression fail?
• What were the main achievements of the early New
Deal?
• Which economic and social reforms made up the
“Second New Deal?”
• What impact did New Deal programs have on
women and minorities?
• Why were late New Deal programs unsuccessful?