The Great Depression and The New Deal

Herbert Hoover: President 1928

BLACK Tuesday October 29, 1929 STOCK PRICES PLUNGED STOCK MARKET CRASHED- start of the great depression Buying on Margin- borrowing money from a broker to buy a stock Bull Market 1920s vs Bear Market 1930s

BANKING CRISIS Banks loaned money to stock brokers Stock Market Crashed- People could not pay brokers from buying on Margin, Brokers could not pay banks, Banks collapsed, peoples savings were wiped out. Bank Runs- People lined up to withdraw their money, 3,800 banks failed 1931-32, 1/5 of the nations banks failed

Overproduction and Underconsumption Overproduction- making too many goods Assembly line Underconsumption- people not buying as much Farming industry hit hard Wealth Gap Wealthiest 5% received 1/3 of the money

Government worsens Great Depression Federal Reserve System- Central Bank of the US, controls the money supply Discount Rate: Rate of interest banks can borrow money from the federal reserve Fed increases Discount Rate (Interest Rates)----- decreases the Money Supply---- business fail---- unemployment increases Hawley Smoot Tariff Act- law raising taxes on imported goods Tariff war--- halted trade--- worsening the great depression

CAUSES OF THE GREAT DEPRESSION Bank failures Overproduction Underconsumption Stock Market Collapse Tariffs B—O—U—S—T

Bonus Army WWI Veterans requested early retirement payment and marched on Washington President Hoover ordered the National guard to regain control, loosing support from the veterans VIDEO

Ideology- beliefs and values RADICAL CONSERATIVE LIBERAL Extreme Change Leave it Alone Minor Changes - Encouraged by the working class to rebel against greed capitalists EX: Communism, Socialism Complete government intervention - Tradition Belief in the business cycle, a recovery will follow a recession and/or depression No Government Intervention -Expansion of Liberty -Public Works Projects – government funded projects to provide jobs -Social welfare programs to provide those in need - Limited government intervention

Hoover’s Response No Government intervention Relied on Optimism Hoovervilles- shantytowns that homeless people built out of cardboard and tarpaper Relied on Optimism RFC- Reconstruction Finance Corporation Trickle Down Theory

FRANKLIN DELANORE ROOSEVELT President elected in 1932 NEW DEAL- program of relief, recovery, and reform First Hundred Days- Congress passed a record number of bills implementing the New Deal

Human Impact 25% unemployed- few could earn a living wage (wage high enough to provide an acceptable standard of living) Farmers lost their land- property values depleting Foreclosure- legal process of a lender (bank) taking over a property

Human Impact Unemployment led to psychological problems Marriage rate down Birth rates down Divorce Rates down (too expensive) Suicide rate up Teenagers left home Eviction- legal process where landlords remove tenets, Eviction rates rose Malnutrition- psychological condition from lack of adequate diet

Human Impact Soup Kitchens Breadlines Sprang up around the country, 82 in NYC

DUST BOWL Dust Bowl- area of the Great Plains that suffered from a drought, wind erosion, and poor farming Black Blizzards- dust storms Desertification- land becoming desert like Depopulation- loss of residents from an area Grapes of Wrath- novel by John Steinbeck about a family leaving the great plains during the dustbowl Okies- people who followed Route 66 toward California, 300,000 left the Plains

Great Flood 1936: Great Flood- Devastating flood in New England that resulted form a series of record- breaking storms in March 1936

Americans survival Americans sold anything they cold for money, cut corners financially, and did whatever they could to avoid receiving public relief Public Assistance- aid in the form of money, goods, or services that government provides to those in need

NEW DEAL and it LEGACY The First New Deal Fireside Chat with 60 Million radio listeners Emergency Banking Act- Closed all banks FDIC (Federal Deposit Insurance Corporation) $5000 Securities and Exchange Commission- Stock Market Reform

NIRA National Industrial Recovery Act (NIRA)- Centerpice of New Deal, goal: increase production, boost wages and prices. Aimed at Businesses, labor unions, and the Unemployed Businesses Labor Unions Unemployed National Recovery Act (NRA) Required standardized products, minimum prices and announce price increases NIRA guaranteed unions collective bargaining and minimum wages and maximum hours NIRA allotted 3.3 billion dollars for public works projects Public Works Administration (PWA)- oversaw construction jobs

NEW DEAL ACTS AAA (Agricultural Adjustment Act) Aid farmers by reducing crop production and raising prices, also helped farmers pay their mortgage Parity: Price that gives farmer purchasing power TVA (Tennessee Valley Authority) Built series of dams in the Tennessee River Valley to create jobs, controlled floods, stopped erosion and provided hydroelectric power to 7 Southern States

NEW DEAL ACTS Home Owners Loan Corporation- provided loans for mortgages FHA(Federal Housing Administration) Boosted banking by insuring mortgage loans to 80% of the homes value CCC (Civilian Conservation Corps) Employed young men planting trees and working on conservation projects FERA (Federal Emergency Relief Administration) Sent money to the state governments to distribute money to the needy

Responses to the New Deal Right Winged Response- Conservative critics of the New Deal, thought it went TOO FAR Left Wing Responses- Liberal Critics who believed FDR needed to go further Demagogues- Huey Long “Every Man a King”

The Second New Deal Electricity and Jobs- 1935 20% of farmers had electricity, new deal created power plants, power lines, and 90% had electricity by the end of the decade WPA (Works Progress Administration)- Work relief program which put 3 million Americans to work. Bridges, parks, public buildings, artists for murals, guidebooks and folk music

Supreme Court Attacks New Deal Wagner Act (National Labor Relations Act)- protected workers right to organize into unions, It continued the NIRA policies after it was considered unconstitutional

Social Security Act Created a social insurance program that provides two main types of benefits: Retirement disability

FDR: Packing the Supreme Court FDR attempted to add more justices to the supreme court due to their inability to keep up with the work-load (age), when obviously he just wanted liberal justices to back the New Deal

New Deal: Good and bad for whom? Workers Women African American American Indians Mexican Deal Good Deal Mixed Deal Disappointing Deal Better Deal Tough Deal Unions stronger CIO- Congress of Industrial Organization- union established to organize workers by industry rather than occupation FDR, put many women in his administration thanks to Eleanor The Economy Act of 1932- no Husband and wife working in fed gov. Women exclusion from unions CCC and WPA helped African Americans survive, some New Deal agencies practiced racism and segregation. Eleanor took a stance on racism Indians were living in poverty. John Collier, Commissioner of foreign affairs stopped assimilation and Indian cultural awareness and healthcare improved. Indian Rec. Act. Mexicans faced poverty and unemployemnt. The AAA cut down on farming which forced them to move into cities. They could not enroll in gov. programs (illegal) deported? Best to Worst: Workers, American Indians, Women, African Americans, and Mexican Americans

New Deal Coalition A political partnership formed during the 1930s among various social and political groups in support of the New Deal, democratic party, and FDR

New Deal Legacy Economic Security: New Deal promised people the right to a job, adequate wages, a decent home, medical care, and a good education Welfare State- A social system in which government takes responsibility for the economic well-being of its citizens The Federal Government is now actively involved in the economy Deficit Spending: Spending more than the government receives in revenues. He Financed the deficit by borrowing money Lasting Programs: Social Security, TVA, SEC, FDIC, etc…