The Great Depression and the New Deal, Chapter 23 & 24

Hard Times Many people blamed the stock market crash of 1929 as the cause for the depression— this is inaccurate! The stock market became fashionable in the 1920s John J. Raskob (GM chairman) wrote an article for Ladies Home Journal titled “Everyone Ought to Be Rich” The article said that by investing $15/mo, you would have $80K in 20 years People began buying stock on speculation- buying on Margin

Bull Market

Hard Times Buying on the margins (loans) allowed more people to “afford” stocks Corporations with spending money would lend money to stockbrokers rather than re-invest in their own companies for new technologies, etc. Why is this a problem?

Hard Times Many assume that the stock market crash occurred over a few days Not true—the “crash” had been at least a month in the making

Compare to 2008 Stocks height of 2008 was at 13, (Jan. 2, 2008) Beginning of the drastic decline—Oct. 1 Low point=7, (Nov. 20) Ending point for Dec. 5, 2008=8, Dow reached its peak on Sept. 3 (381.17) The market started sliding in September, slowly On Oct. 23, 1929 the Dow Jones fell 21 points (large sum for back then) On Oct. 28 th the Dow lost 28 points On Oct. 29 (Black Tuesday) the Dow fell another 30+ points

Hard Times As the stock market became shaky, so did the credit market Because the loans were backed by the stock itself, as the value decreased, the borrower had to pay the difference In late Oct. Hoover stated that the country was on a “sound and prosperous basis” "In the long run, we can be confident that our economy will continue to grow, but in the short run, it is clear that growth has slowed.“ —President Bush, March 17, 2008

Hard Times Real causes of Great Depression Overproduction An unequal distribution of wealth Credit Reaction to Stock Market crash (banks)

Hard Times The crash caused investors, businesses, and the wealthy to lose confidence Banks began to fail as people began withdrawing the money There is no such thing as “unemployment benefits” during this time By M people were without jobs (33% unemployment rate) The psychological toll of unemployment

Hard Times Men, especially 35-55, found it more difficult to cope with Women could get jobs easier because they were paid less Local efforts to help were not sustainable

Hard Times Hoover seemed to ignore the severity of the issue by claiming that the local communities could handle it POUR Hoover believed that business confidence was the key He created the Reconstruction Finance Corporation (RFC) In 1932 Congress passed the Emergency Relief Act allowing $300M to go to states who needed additional funds Only $30M had been given out by Dec Only a small portion went towards public works

Hard Times By 1932, protests were occurring across the country Farmers The “Bonus Army”

Hard Times It is easy to see why Hoover didn’t get reelected FDR’s acceptance speech for the Democratic candidacy was “I pledge you, I pledge myself to a new deal for the American people.”

FDR and the First New Deal FDR was born wealthy and joined politics early It wasn’t until he was stricken with polio that he became such a determined person As Gov. of NY in 1928 he instituted unemployment insurance, stricter child labor laws, tax relief for farmers and pension plans for elderly

FDR and the First New Deal In his inaugural address he said “the only thing we have to fear is fear itself” The next day he declared a “bank holiday” The purpose was to fix the banking industry after bad policies had caused so many closures On March 12 th he started his “fireside chats”

FDR and the First New Deal Congress immediately passed the Emergency Banking Act Gave the president broad powers The Federal Deposit Insurance Corporation was created to protect deposits that were put into Federally backed banks

FDR and the First New Deal FDR didn’t come into office with a unified plan The first “Hundred Days” of his administration he passed through extraordinary amounts of legislation to fix various issues 7 key pieces of legislation were pushed through during this time Some were allowed to remain, others were overturned by the Supreme Court

Hundred Days Legislation Enlarged federal authority over private banks Government loans to private banks Emergency Banking Relief Act Unemployment Relief Conservation of Natural Resources Civilian Conservation Corps Direct federal money for relief, funneled through state and local governments Federal Emergency Relief Administration Federal farm aid based on parity pricing and subsidy Agricultural Adjustment Administration Economic development and cheap electricity for TN Valley Tennessee Valley Authority Self-Regulating industrial codes to revive economic activity National Industrial Recovery Act Federal public works projects to increase employment and consumer spending Public Works Administration

Left Turn and the Second New Deal FDR had many critics from both the right and the left Republicans called him a socialist Democrats said his was not tough enough on various issues Huey Long (Gov., then Sen. From LA) championed against FDR Created the Share Our Wealth Society He was going to run against him in 1936, but was assassinated

Left Turn and the Second New Deal The main goals that FDR had in his “Second Hundred Days” included: Strengthening the national commitment to creating jobs Providing security against old age, unemployment, and illness Improving housing and cleaning slums The legislation that passed during this time frame became known and the Second New Deal

Second New Deal Legislation Large-scale public works program for the jobless Emergency Relief Appropriations Act (1935, includes WPA) Federal old-age pensions and unemployment insurance Social Security Act (1935) Federal guarantee of right to organize trade unions and collective bargaining National Labor Relations Act (1935) Relocation of poor rural families Reforestation and soil erosion projects Resettlement Administration (1935) Federal funding for public housing and slum clearance National Housing Act (1937) Federal minimum wage and maximum hours Fair Labor Standards Act (1938)

The New Deal and the West The Great Plains in the 1930s saw the worst ecological disaster ever in the region Effects of the Dust Bowl included: Difficulty breathing Limited visibility Death to plants and livestock

The New Deal and the West To relieve issues stemming from the Dust Bowl, the federal government put moratoriums on loan payments, offered crop and seed loans, offered temporary jobs under the WPA

The New Deal and the West Another effort was the creation of the Soil Conservation Service, designed to control wind and water erosion All of the federal government’s effort was for naught: Rains returned World War II broke out, creating an increase in demand Farmers returned to their old methods and expanded wheat production

The New Deal and the West Another major outcome of the New Deal was the development of water projects such as damming and irrigation The most famous of these projects is the Hoover Dam, designed to harness to Colorado River The dam supplies energy to California, Nevada, and Arizona