1. Chapter 33

2. Financial Problems leading to Depression
Lack of Profit in key industries (railroads, textile, steel)
Fall in Housing market (usually indicates down turn in economy, effects many other industries)
Farmers (most hard hit) planted a lot during WWI b/c it was needed but after war have lots of surplus less demand.
Many farmers can’t pay bills and lose farms
Consumers have less to spend (lose job can’t buy other things, domino effect)
Living on Credit (only paying off interest, don’t have free money to buy other things)
Uneven Distribution of Income (rich get richer, poor get poorer, large income gap)

3. Election of 1928 Herbert Hoover (Republican) VS
Alfred Smith (Democrat)
Hoover Wins!

4. Stock Market: Wins and Woes
By 1929, economists say watch out for stock market but many don’t listen (did so well in the early ’20s)
Dow Jones Industrial Average (measure of stock market’s health) rising higher and higher in the 1920’s
Bull Market (period of rising stock prices)
Many buying and buying stock but doing so on margin and speculation (buying on chance of making it rich but no assessment of risks)
Leads to………

5. BLACK TUESDAY, OCT 29, 1929 Stock Market crashes
People lose confidence and begin to sell stocks rapidly, prices fall
Short term cause of the Great Depression
Million and within a few months billions lost
Domino effect again (economy is all interconnected)
GREAT DEPRESSION

6. CAUSES of Great Depression
Tariffs and war debt policies that cut down the foreign market for American goods
Hawley Smoot Tariff (1930) highest ever
Crisis in farm sector
Availability of easy credit
Unequal distribution of Income

7. Hoover’s thoughts on the Depression
Herbert Hoover thought it was job of the gov’t help different groups work together not get directly involved
Promoted “rugged individualism” people succeed through their own efforts
Against any form of direct federally funded relief, though private charities and local governments should handle it
Believe handouts weaken people, make them dependent and lazy

8. Hoover’s 1st Actions
Met with heads of business, banking, and labor ask them to find solutions and act in ways that would not make situation worse
Doesn’t help
1930 election Democrats win big, shows public dislikes Hoovers response (or lack there of)

9. Hoover’s 2nd Steps
Federal Home Loan Bank Act: (1932) lowered mortgage rates for homeowners and allowed farmers to refinance their loans and avoid foreclosure
Reconstruction Finance Corporation (RFC): (1932) authorizes up to $2billion for emergency financing for banks and other companies.
Believed money would cause a trickle down effect

10. Bonus Army Made up of 10,000-20,000 WWI veterans
Marched to Washington, DC in support of Patman’s Bill (allowed gov’t to give WWI veterans a bonus for their service in the war)
Senate votes down bill, about 2000 men refuse to leave Bonus Camp
Hoover authorizes 1000 soldiers to clear army out, does so very violently
Ruins Hoover politically

11. Election of 1932 and FDR Election of 1932:
Hoover (Rep) vs Franklin Delano Roosevelt (Dem)
FDR Wins!
Elected in Nov, does not take office until March 1933
In down time forms “Brain Trust”, group of advisors made up of professors, lawyers, etc to help him develop policies

12. Depression Changes lives
Shantytowns
Hoovervilles
Soup kitchens
Bread lines

13. Dust Bowl Large Drought in Mid-West during early 1930’s
Land exhausted due to over production
Drought and wind, little hold soil in place
Causes many to leave and look for work, farms lost
“Okies”

14. Effect on Families Men, leave to look for work Hoboes
Women, less work available, make do for family with less
Children
Lack of health care, due to lack of money
Schools close
Orphans

15. The New Deal Calls his program the “New Deal” Fireside Chats
Focuses on the 3R’s
Relief, Recovery, and Reform
Hundred Days:
March 6-June 16, 1933
Passes more than 15 pieces of major legislation

16. Helping the Banks Glass-Steagall Act Federal Securities Act
Bank Holiday (shuts them down)
Emergency Banking Act (federal gov’t can inspect banks for success)
Glass-Steagall Act
Establishes FDIC
Federal Securities Act
Corporations must provide complete reports and stock information

17. Alphabet Soup: New Deal Plans
Agricultural Adjustment Act (AAA)
Tennessee Valley Authority (TVA)
Civilian Conservation Corps (CCC)
National Industrial Recovery Act (NIRA)
Civil Works Administration (CWA)
National Recovery Administration (NRA)
Home Owners Loan Corporation (HOLC)
Federal Housing Authority (FHA)
Federal Emergency Relief Administration (FERA)

18. Other Plans and Disagreement
Unhappiness with deficit spending, FDR sees as necessary evil, others see as bad policy
Supreme Court rules NIRA and AAA unconstitutional, gives executive branch too much power
Court Packing
FDR wants to increase number of Supreme Court justices by 6
Does not pass

19. Second Hundred Days
Started in 1935, builds off programs set up in 1st Hundred Days
Economy doing better but still not back to normal
Roosevelt re-elected in 1936
**Of note, election of 1936 was first time majority of African Americans voted Democrat and not Republican and first time labor unions gave united support to a presidential candidate.**

20. Help for Farmers Thousands of farmers lost their homes and land
AAA unconstitutional so gov’t creates: Soil Conservation and Domestic Allotment Act: pays farmers for cutting production and rewards farmers for practicing good soil conservation techniques
1938 Congress approves the 2nd AAA, same as first but with minor changes

21. More ABC Soup….. Works Progress Administration (WPA)
Goal is to create as many jobs as fast as possible
spends $11billion to give jobs to more than 8 million people
Built roads, airports, public buildings, sewing groups, etc
National Youth Administration (NYA), created specifically to provide education, jobs, and recreation for young people
Provides financial aid but student must work part time at the school

22. More programs……
Wagner Act: allows collective bargaining for labor unions
Fair Labor Standards Act: set max work hours per week (44) and sets a minimum wage (.25), sets work rules for those under 16
Social Security Act: 1935
Old Age Insurance for retirees 65 and older, supplemental retirement plan
Unemployment Compensation
Aid to families with dependent children and the disabled

23. Roosevelt Recession
Despite FDR’s best efforts (and spending) Depression does not go away after 1st term
Unemployment 25% 1932 to 15% 1937
“Roosevelt Recession”- 1937
Social Security cuts pay
Risk of Spending and cut backs
Economics according to John Maynard Keynes

24. The Truth:
NEW DEAL HELPS EASE BURDEN OF GREAT DEPRESSION BUT DOES NOT SOLVE PROBLEM. WWII GETS US OUT OF GREAT DEPRESSION. WAR SOLVES UNEMPLOYMENT PROBLEM..DOMINO EFFECT
National Debt soars!

25. Critics of the New Deal
Too Much Spending and Waste with little accomplishments
Socialism
Increased Debt
“Case of the Gimmies”