The Great Depression

What caused it? Great Stock Market crash of 1929 Great Stock Market crash of 1929 On Black Tuesday, October 29 th after panic selling market fell 89% On Black Tuesday, October 29 th after panic selling market fell 89% Our economy had some serious weaknesses such as… Our economy had some serious weaknesses such as…

Worldwide price of agricultural good dropped hurting farmers Worldwide price of agricultural good dropped hurting farmers High unemployment in RR, coal, and textile industries High unemployment in RR, coal, and textile industries Bank failures because people could not pay back loans Bank failures because people could not pay back loans

Also… Unequal distribution of wealth Unequal distribution of wealth Excessive buying on credit, then less buying as debt piles up Excessive buying on credit, then less buying as debt piles up Business consolidations resulting in just a few large companies in each industry are left vulnerable to failure Business consolidations resulting in just a few large companies in each industry are left vulnerable to failure Weak banking structure Weak banking structure Weak post war international economy Weak post war international economy Inadequate government policies to deal with all of the problems! Inadequate government policies to deal with all of the problems!

Herbert Hoover  Tried to restore confidence Helped businesses in hopes of a “trickle down” effect Helped businesses in hopes of a “trickle down” effect Created some public works programs to create jobs Created some public works programs to create jobs

The Great Depression Two Main Causes: Two Main Causes: 1. OVERPRODUCTION 1. OVERPRODUCTION 2. UNDER CONSUMPTION 2. UNDER CONSUMPTION

TRICKLE DOWN ECONOMICS GOVERNMENT LOANS TO BUSINESS SO THEY INVEST PLAN TO EXPAND TO CREATE NEW JOBS TO

INCREASE PRODUCTION MORE WAGES IN CIRCULATION DEMAND INCREASES

NO MORE DEPRESSION?! This failed because… This failed because… Businesses were afraid to spend money given to them by the gov’t – therefore no one is hired. Businesses were afraid to spend money given to them by the gov’t – therefore no one is hired.

Also… Relief was not immediate or direct Relief was not immediate or direct He kept insisting things were getting better, but they were getting worse! He kept insisting things were getting better, but they were getting worse! He sent the army to break up a camp of WWI veterans camped out in D.C. demanding early payments of their bonuses for their war service. Americans were outraged when they saw the troops using tear gas and tanks on this “Bonus Army.” He sent the army to break up a camp of WWI veterans camped out in D.C. demanding early payments of their bonuses for their war service. Americans were outraged when they saw the troops using tear gas and tanks on this “Bonus Army.” His program was a failure. His program was a failure.

BONUS ARMY

Franklin Delano Roosevelt “I pledge you, I pledge myself, to a new deal for the American people.” “I pledge you, I pledge myself, to a new deal for the American people.” 100 Days – first few months of presidency saw intense action, 15 pieces of New Deal Legislation 100 Days – first few months of presidency saw intense action, 15 pieces of New Deal Legislation Master communicator used “fireside chats” to get his message to the people over radio Master communicator used “fireside chats” to get his message to the people over radio

First lady Eleanor, continued to push humanitarian, women’s, and minority issues to her husband First lady Eleanor, continued to push humanitarian, women’s, and minority issues to her husband

The New Deal in Action Alphabet Soup Programs Relief Relief Recovery Recovery Reform Reform

THE NEW DEAL strategies Action was direct, federal gov’t more involved in economy than ever before Action was direct, federal gov’t more involved in economy than ever before This required lower taxes, but increased gov’t spending This required lower taxes, but increased gov’t spending Increased federal regulation over banks, businesses, stock exchange Increased federal regulation over banks, businesses, stock exchange Deficit spending – gov’t was spending more than taking in to stimulate economy so people would start spending again Deficit spending – gov’t was spending more than taking in to stimulate economy so people would start spending again

FDR AND THE SUPREME COURT, CONSTITUTION, AND CRITICS, Schechter Poultry Corp. v. U.S Schechter Poultry Corp. v. U.S Declared the NRA (National Recovery Act) unconstitutional Why? 1. Congress does not have the right to regulate intrastate commerce, (commerce within a state) or pass that to the executive branch 2. Violated separation of powers by giving this power to the executive branch (Congress is supposed to regulate commerce)

U.S. v. Butler 1936 U.S. v. Butler 1936 AAA (Agricultural Adjustment Act) declared unconstitutional AAA (Agricultural Adjustment Act) declared unconstitutional Why? Why? Agriculture is a local, not interstate matter according to 10 th Amendment Agriculture is a local, not interstate matter according to 10 th Amendment

The Judicial Reorganization Plan Also know as the “court packing” plan Also know as the “court packing” plan New Deal legislation continues to get vetoed by Court so… New Deal legislation continues to get vetoed by Court so… FDR wanted the number of Supreme Court justices to go from 9 – 15 if they refused to retire at age 70 FDR wanted the number of Supreme Court justices to go from 9 – 15 if they refused to retire at age 70 What does this threaten? What does this threaten? Separation of Powers and system of checks and balances Separation of Powers and system of checks and balances

TVA Tennessee Valley Authority Provided jobs, flood control, cheap electricity for rural areas of 7 states Provided jobs, flood control, cheap electricity for rural areas of 7 states But some criticized it as being socialist But some criticized it as being socialist

FDR Serves 4 terms Unwritten constitution says presidents should only serve 2 terms Unwritten constitution says presidents should only serve 2 terms Who started this precedent? Who started this precedent? FDR wins a 4 th term! FDR wins a 4 th term! 22 nd Amendment later passed to limit presidential terms to 2 22 nd Amendment later passed to limit presidential terms to 2

Critics Less opportunities for women and African Americans than white men Less opportunities for women and African Americans than white men Progressives and Socialist said FDR not going far enough Progressives and Socialist said FDR not going far enough Republicans and some business owners said programs too socialist, FDR like a dictator, wealthy don’t like higher taxes Republicans and some business owners said programs too socialist, FDR like a dictator, wealthy don’t like higher taxes Some critical of new role of gov’t and deficit spending that adds to national debt Some critical of new role of gov’t and deficit spending that adds to national debt

New Deal Helped with many of the problems of the Depression, but WWII probably helped more Helped with many of the problems of the Depression, but WWII probably helped more