The Great Depression and The New Deal UNIT 3 The Great Depression and The New Deal
Causes of the Great Depression Uneven distribution of income Low level of buying power Supply exceeds demand Easy credit Stock market (speculation) Not required to pay off prior loans Federal banks could not loan on stock exchange, but private banks could
Causes, cont. Unbalanced foreign trade Mechanization Dust Bowl Keep out foreign trade goods Hawley Smoot Tariff Act Mechanization Modern plants require fewer workers More products, but no money to buy them Dust Bowl Drought in the Great Plains caused by overproduction
The Dust Bowl
Black Tuesday October 29,1929 16 million shares dumped By November, $30 billion was lost (amount US spent during WWI) Americans panicked and withdrew $$ from banks causing banks to collapse.
Aftershocks National Income Payments to producers cut in half - $81 billion to $41 billion 85,000 businesses shut doors 400,000 farms lost 6,000 banks failed - $9 million in savings accounts Every week, 100,000 workers lost jobs
Aftershocks, cont. Women & children Malnutrition 1928 – 18% 1931 – 60% Sweatshops = no school = no teachers 60 days of school/year
No Direct Relief The Bonus Army Camp
Unit 3 part 2 “The New Deal”
So, how do we fix it? Philosophies: Treasury Secretary Andrew Mellon – Depressions were normal part of Laissez Faire (Hands Off). President Hoover – economy is too complicated.
Solutions Do not cut payrolls Labor leaders – no raises No shortened hours Tax cut Easier to borrow $$ from fed banks $800 million set aside for public works – Hoover Dam Farmers limit production Still failed – too little, too late
Problems Hoover’s ideals Humanitarianism vs. rugged individualism He wanted to help people, but felt that it should be the local government’s responsibility
How did homeless and unemployed feel? *Hoovervilles *Hoover blankets *Hoover flags
No Better off in Europe US investors pull out of European stock market Hoover tells Allies to hold payments of war debts Europe discards gold standard – pays US w/ cheap money
FDR’s Programs FDR wins election of 1932 – The New Deal “The only thing we have to fear is fear itself.” “I will apply action.” “War against poverty and pessimism.” Pragmatist – the value of an idea is whether or not it works Fireside chats – radio First Lady – Eleanor Roosevelt made sure policies included women and minorities.
Bipartisan Cabinet – “Brain Trusts” Harry Hopkins – work relief rather than monetary relief Francis Perkins, Secretary of Labor – creation of Social Security system (first woman on a presidential cabinet)
FDR’s Programs, cont. Relief Programs – His first 100 days Bank Holiday Banking Relief Bill CCC – Civilian Conservation Corps SEC – Securities and Exchange Commission FDIC – Federal Deposit Insurance Corporation TVA – Tennessee Valley Authority SSA – Social Security Act
Stories from Great Depression
Ringer #7