The Great Depression and the New Deal AP Chapter 24

Florence Leona Christi "I did not ask her name or her history. She told me her age, that she was 32. She said that they had been living on frozen vegetables from the surrounding fields and birds that the children killed. Dorthea Lange--Photographer

I. The Great Crash October 29,1929 “Black Tuesday” Within 3 weeks… Over time…

A. Causes of the Crash 1. Stock Market Speculation 2. Mistakes by the Federal Reserve Board 3. An Ill-Advised Tariff 4. A Maldistribution of Wealth

1. Stock Market Speculation Money poured into the stock market Many investors bought on 10% “margin” Investor put in only 10% and borrowed from banks, brokers Rampant speculation and risky ventures Confidence in future earnings fell and banks, brokers demanded loan repayment

2. Mistakes by the Federal Reserve Board 1930-1931, Federal Reserve curtailed the amount of money in circulation and raised interest rates Credit became more difficult for the public to obtain Policy was disastrous when the crash occurred U.S. needed easier credit once Depression began

3. An Ill-Advised Tariff Hawley-Smoot Tariff (1930) Raised tariffs on agricultural and manufactured goods Other countries retaliate by raising tariffs on American goods

4. A Maldistribution of Wealth Huge gap between wealthy and poor Wealthiest families’ incomes rose the most Coolidge Administration mistakes: Lowered taxes on the wealthy Slowed consumer consumption

Income Distribution Before the Great Depression

B. Effects of the Crash 1. Gross National Product… 2. 25%..

Unemployment, 1929-1942

The Jobless

C. Hoover’s Response Unable to effectively communicate with the common man… Tries the “trickle down” method… Debt moratorium…

1. Hoover’s Program Associationalism Glass-Steagall Act (1932) Reconstruction Finance Corporation (RFC) Hoover uncomfortable with deficit spending, Especially spending that directly gave money to the poor Livestock feed over food for farm families Bank bail out over salaries for teachers and city workers

D. Mounting Discontent and Protest 1. Bonus Expeditionary Force (Bonus Army) 20,000 staged a march on Washington, D.C. About 2000 make “camp” House agrees, Senate refuses Douglas MacArthur and George Patton called in Make shift city burned and veterans dispersed

“Bonus Army”

D. Mounting Discontent and Protest 2. “Hooverville’s” *Make shift cities, like in Central Park, where jobless people lived. *Suicide rates skyrocket

“Hoovervilles”

The Homeless

E. The Dust Bowl Tons of topsoil blown off barren fields --storm clouds for hundreds of miles. CO, KS, TX, OK; eventually entire country was affected. 1932, 14 dust storms By 1934, 100 million acres of farmland had lost all or most of the topsoil to the winds.

Black Sunday April 14, 1935 April 1935 -- weeks of dust storms, Cloud appeared on the horizon Winds were clocked at 60 mph. Then it hit.

The Hobos Migratory Homeless Poor/penniless Indigent workers Sometimes supporting others Unlike tramps, vagabonds who did not want to work

The Rail Yard Hobos

The Migrants The “Arkies” and the “Okies”

II. The New Deal Takes Shape

The Emergence of Roosevelt 1933 - 1945 Franklin Roosevelt born to wealth and privilege 1921--crippled by polio 1928--elected governor of New York talented politician 1932--defeats Hoover with farmer- worker-immigrant-Catholic coalition

Election of 1932

“We have nothing to fear but fear itself“ Roosevelt Bulldog determination to succeed Talent for surrounding himself with capable people and getting most out of them (the Brain Trust) Instill hope and courage in the people “We have nothing to fear but fear itself“ http://www.youtube.com/watch?v=3tyvvjWtc-

F.D.R. & Eleanor

The “New Deal” Three “R”s… Brain Trust… “Hundred Days”… Bank Holiday… Repeal of Prohibition… Alphabet Soup Agencies…

A. The Hundred Days Several significant reforms in the first three months of his initial term. Banking system saved from collapse Fifteen major laws provide relief New Deal aims to reform and restore, not nationalize, the economy

Emergency Banking Relief Act, which permitted sound banks to reopen under direction of the Treasury Dept. First 'fireside chat,' Roosevelt told Americans it was safer to keep money in a reopened bank than “under the mattress

PWA Public Works Administration

TVA Tennessee Valley Authority

CCC Civilian Conservation Corps

AAA Agricultural Adjustment Act

WPA

SEC Securities and Exchange Commission

NRA National Recovery Administration

Indian Reorganization Act

National Labor Relations (Wagner) Act

Social Security Administration

Rise of Organized Labor 1932--National Recovery Act spurs union organizers Congress of Industrial Organization (CIO) formed by John L. Lewis CIO unionizes steel, auto industries 1940--CIO membership hits 5 million, 28% of labor force unionized

Challenges to FDR Francis Townsend Elderly - over 60 $200/month but had to be spent in 30 days – as a way to stimulate the economy More than ½ the national income to less than 10% of the population – scares, frustrates economists Signs of discontent everywhere in 1935 Upton Sinclair almost won the governor of California Violent strikes in textile industry in 20 states

Opponents of the New Deal Father Charles Coughlin Dr. Francis Townsend

Huey Long Share the Wealth Seize fortunes of more than 5 million dollars and a 100% tax in individuals earning more than 1million dollars Take from the rich and redistribute the wealth to make every man a “king”: Every American guaranteed a home worth $5000 thousand and yearly income of $2500 Threatened to run for presidential candidate – Assassinated in Louisiana late 1935 http://www.youtube.com/watch?v=hphgHi6FD8k

Father Coughlin Stood strong against capitalism and its foundations, Warning against the dangers of communism regularly. “For the good of the people,” against all things government."  sympathetic to fascist Nazi, Italian regimes National Union of Social Justice FDR administration eventually shut down his broad casts

End of the New Deal 1936--New Deal peaks with Roosevelt’s reelection Congress resists programs after 1936 Least assistance for women, ethnics groups and laborers

Pros and Cons Did not end Depression Failed as formula for economic recovery Businessmen and financiers did not support New Deal– caused federal government increase Rural Electrification Social Security Insurance of bank accounts, protection for labor unions Federal controls over the economy gave others sense of security

The Election of 1936 FDR’s campaign attacks the rich promises further reforms defeats Republican Alf Landon Democrats win both houses of Congress FDR coalition: South, cities, labor, ethnic groups, African Americans, poor

Keynesian Economics John Maynard Keynes Deficit spending… “priming the pump”

Court Packing Plan

The Supreme Court Fight Supreme Court blocks several of FDR’s first-term programs 1937--FDR seeks right to "pack" Court Congressional protest forces retreat FDR’s opponents emboldened

The New Deal in Decline 1936--cutbacks for relief agencies 1937--severe slump hits economy Roosevelt blamed, resorts to huge government spending 1938--Republican party revives

Fair Labor Standards Act

The New Deal and American Life New Deal’s limitations depression not ended economic system not fundamentally altered little done for those without political clout Achievements Social Security, the Wagner Act political realignment of the 1930s

Consider Women… African Americans… Native Americans… Mexican Americans…