NEW DEAL 1932 – 1941

Election of 1928 Herbert Hoover (CA) defeats Al Smith (NY) Hoover

Causes of the Depression 1.Stock Buying Spree –Faith in the “ Bull ” market ( stock market is going up ) –People buying stock on margin

Causes of the Depression 2. Business –Overproduction of consumer goods –Profits went into market instead of wages 3. Gap between rich & poor –Shrinking middle class

Causes of the Depression 4. Weak Banking System –Banks invested depositor’s funds into risky stocks –Bank runs (panics where investors withdraw all their money) 5. Risky European Loans –Some $10 billion loaned to European nations during WWI and years after to help in the rebuilding

Causes of the Depression 6. Farmers – Overproduction due to drop in world demand –With WWI over, no need to feed the world population anymore

Hoover’s Response Hawley – Smoot Tariff – Very high tariff that seals off American markets from other nations Made 1.5 million in loans to businesses to keep them running Bonus Army –Group of unemployed, U.S. WWI war veterans who set up camp in D.C. –Hoover orders the army in to break them up

Election of 1932 By 1932, Hoover’s popularity is at an all- time low “ Hoovervilles ” “Hoover Blanket” – hobo blankets “Hoover Flag” – no money

FDR & The New Deal 1.In the election of 1932, Hoover gets killed 2.FDR believed government should help people overcome economic hardship, unlike Hoover who believed everyone who benefit if business did.

FDR & The New Deal 3. Roosevelt was inclined to help people directly by giving them government jobs –Federal money would give people hope –Would also put money into the economy

New Deal 4. All FDR’s programs together are called the NEW DEAL –Promises action with strong emergency powers of the President –Gives fireside chats with radio audience to calm people down

FDR’S NEW DEAL PROGRAMS

Federal Emergency Relief Administration 1933 Poor & unemployed $ for emergencies & disasters

Glass Steagall Banking Act 1933 Banks Closed banks for 4 days to reorganize

FDIC (Federal Deposit Insurance Corporation) 1933 Banks & investors Banks insured investors money up to $5,000; (today your deposits are insured up to $250,000)

Tennessee Valley Authoriy (TVA) 1933 Residents & businesses in the Tennessee Valley The GOV’T Provided cheap electricity, navigation, and flood control to people living & working in the Tennessee Valley

Public Works Administration (PWA) 1933 Construction workers $6 billion that went into the construction of such things as airports, dams, aircraft carriers, and hospitals

Agricultural Adjustment Act (AAA) 1933 &1938 Farmers Government regulated crop production & slaughtering (paid farmers NOT to grow crops) Prices would go up!!

Civilian Conservation Corps (CCC) 1933 Single men 18 – 25 years Planted trees, cleared trails, cleaned forests Known as the “Tree Army”

"The main slogan of the Civilian Conservation Corps is 'We can take it!' Building strong bodies is a major CCC objective. More than half the enrollees who entered CCC the last year were seventeen years of age. Work, calisthenics, marching drills, good food, and medical care were features of the CCC health program."

Works Projects Administration (WPA) 1933 Unemployed (with special skills) Created as many jobs as possible from musicians, to artists

Wagner Act 1935 Laborers Guaranteed workers the right to unionize and join labor unions

Social Security Act 1935 Retired, disabled, dependent mothers Gave a pension for retired workers and their spouses and aided people with disabilities

National Recovery Act (NRA) 1935 Consumers Established fair codes of business practices Gave workers minimum wages and maximum hours Part of this act was declared unconstitutional

Securities and Exchange Commission (SEC) 1935 Investors Supervised the stock market and eliminated dishonest practices

Home Owners Loan Corporation (HOLC) 1935 Home owners Loaned low interest rates to home owners who could not meet mortgage payments

Rural Electric Administration (REA) 1935 Farmers Free electricity for farmers

End of the New Deal FDR & the Supreme Court –By 1936 the court ruled many New Deal programs unconstitutional AAA – U.S. v. Butler –Government couldn’t tell you how much to grow or how many livestock to kill

NRA – U.S. v. Schecter (aka Sick Chicken Case) –A Brooklyn company was accused of selling sick chickens to a butcher which in turn sold them to people who got sick. Federal government stepped in under the National Recovery Act (NRA) even though Schecter did NO out of state business. The company sued & won. –Only states have the right to control businesses that conduct business within a state

FDR & Supreme Court Trying to avoid Supreme Court rulings against New Deal policies, FDR proposes a bill Whenever a Supreme Court Justice reached 70 without retiring, the President could add a new justice (only up to 15 ) Congress says NO! FDR’s attempt to “ Pack the Court” failed

Impact of the New Deal Increase of Presidential power Increase in the power of the federal government Federal social programs – welfare Deficit spending starts – spending $ you don’t have Greater concern for workers (social security, Wagner Act, minimum wage) Renewal in faith for democracy