THE GREAT DEPRESSION AND THE NEW DEAL Chapter 26

Economy Appears Healthy  As Hoover takes office, the economy looks to be in fine shape  By 1929, stock values hit 87 billion  In realty the economy is headed toward disaster

Uneven Prosperity  Rich got richer, poor got poorer  Top 1% (24,000) of the population incomes rose by 75%  70% of the population made less then 2,500 a year (minimum amount for a decent standard of living)  Profits should have been used to increase wages

Buying on Credit  People bought radios, refrigerators, and other new products they could not afford  Installment plans made expensive items look irresistible  There was a huge increase in personal debt  80% of people had no savings

Playing the Stock Market  People began (speculating) playing the stock market  Many bought on margin- Purchase a stock for only a fraction of its price (10%) and borrow the rest  Brokers charged a HIGH interest rates and could demand repayment at any time

Too many Goods, too little Demand  Productivity increased 43%, wages only by 11%  Warehouses held piles of surpluses  Overproduction caused some industries to slow in the late 1920’s  Over production led to layoffs  Housing market slows to a stand still

Hardships of Farmers and Workers  Prices of wheat, cotton, and other farm goods plummeted making it hard for farmers to repay loans they took out during WWI  McNary-Haugen Bill (price-supports) is vetoed by Coolidge  Dustbowl hits Midwest farmers in the 30’s compound

Stock Market Crashes 1929 Dow Jones Industrial Average was the most widely used barometer of the health of economy Investors start to pull/sell stock sending out a panic among rest of the investors – Black Thursday (10/24) – Black Tuesday (10/29) Overall losses is 30 billion dollars – Example-GE was $400 a share and dropped to $283 1/2 of all banks close due to bankruptcy! Will be a severe economic decline that will last from 1929 until WWII throughout the world

Explain how these indicators from the great depression RELATE to each other and show the severity of the economic downturn during the 1930’s.

Social Effect on the Great Depression

Strain on Society Hoover claims, “no one has starved” Hardship affected all classes but middle class was hit the hardest Thousands of young homeless, jobless (25%) Children quit high school to support families Women and African Americans are discriminated against for taking jobs!!

Brother, Can You Spare a Dime," lyrics by Yip Harburg, music by Jay Gorney (1931) They used to tell me I was building a dream, and so I followed the mob, When there was earth to plow, or guns to bear, I was always there right on the job. They used to tell me I was building a dream, with peace and glory ahead, Why should I be standing in line, just waiting for bread? Once I built a railroad, I made it run, made it race against time. Once I built a railroad; now it's done. Brother, can you spare a dime? Once I built a tower, up to the sun, brick, and rivet, and lime; Once I built a tower, now it's done. Brother, can you spare a dime? Once in khaki suits, gee we looked swell, Full of that Yankee Doodly Dum, Half a million boots went slogging through Hell, And I was the kid with the drum! Say, don't you remember, they called me Al; it was Al all the time. Why don't you remember, I'm your pal? Buddy, can you spare a dime? Once in khaki suits, gee we looked swell, Full of that Yankee Doodly Dum, Half a million boots went slogging through Hell, And I was the kid with the drum! Say, don't you remember, they called me Al; it was Al all the time. Say, don't you remember, I'm your pal? Buddy, can you spare a dime ?

Are you sure Hoover?

End of Hoover Hoover initially sought solution through voluntary action, private charity Eventually aided farmers with Farm Board to buy surpluses and bankers with loans through Reconstruction Finance Corporation Bonus Army & General MacArthur Resisted Democratic efforts to give direct aid to the unemployed – Perceived as indifferent to human suffering

FDR captures urban/farmer vote

The Hundred Days FDR inaugural inspired with the term “nothing to fear, but fear itself” Banking system saved from collapse Fifteen major laws provided relief – Tennessee Valley Authority was the most ambitious one New Deal aimed to reform and restore, not nationalize, the economy

Roosevelt Recovery/Relief/Reform Roosevelt and Recovery – Formulate codes for industry, labor, and agriculture NRA, Wagner Act, AAA, etc… Roosevelt and Relief – Put people back to work TVA, CCC, WPA, etc… Roosevelt and Reform – Focus on immediate problems in banking and finance FDIC, SEC, FCC, etc… – By 1935 FDR started shift to a economic reform “broker state” to end historical inequities in American life SSA, Wagner Act, NLRB, etc…

Did the New Deal Work?

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, Security Exchange Act, etc… – Political realignment of the 1930s