1. The Great Depression and New Deal

2. Economic Collapse Industries in trouble
Many key industries made little profit in the 1920s.
Key economic indicator – number of new houses built declined.

3. Farmers need help Crop prices dropped by around 40%
Farmers went into debt trying to payoff loans.
Banks took farms for repayment of debts.
Congress tried to help with federal price supports. The government would buy surplus crops at guaranteed prices and sell them.
Coolidge vetoed.

4. Consumers Have Less Money to Spend
Americans bought less – rising prices, stagnant wages
In 20s people often bought goods on credit. Credit – buy now and pay later.
Credit = growing debt. People started buying less.

5. Hoover Takes the Nation
Election of 1928
Republican candidate: Herbert Hoover (winner)
Democratic Candidate: Alfred E. Smith
“We are nearer to the final triumph over poverty than ever before.”

6. Stock Market
Dow Jones was high = many people bought stocks. Engaged in speculation and buying on a margin.
Speculation – buying stocks hoping they will make money at risk
Buying on a margin – pay 10% of stock price and promise to pay the rest later.

7. Other causes First World War 1920s policies: pro-business
Federal Reserve increased interest rates

8. Stock Market Crashes
Fall 1929, stock prices fall causing people to sell their stocks.
October 29, 1929, Black Tuesday
16.4 million shares were sold, few were bought.
People who bought stocks on credit (buying on a margin) were left with huge debts.
Many people lost all their savings.

9. Financial Collapse The stock market crash began the Great Depression.
Great Depression – , the economy plummeted and unemployment skyrocketed.

10. Economic production was nearly cut in half.
Bank and Business Failures
People panicked and took their money out of banks. Many banks failed. Some people were unable to get their money. By 1933, 11,000 out of 25,000 banks failed.
Economic production was nearly cut in half.
By 1933, the unemployment rate was 25%

11. 1930, Hawley-Smoot Tariff – largest protective tariff in US history.
Worldwide Effects
1930, Hawley-Smoot Tariff – largest protective tariff in US history.
Purpose – to protect US farmers and manufacturers from foreign competition
Effects –Unemployment increased. Worldwide trade decreased by 40%

12. Causes of the Great Depression
Tariffs and war debt limited foreign demand for American goods.
Farm crisis
Easy credit
Unequal distribution of income
These factors caused consumer demand to decrease. The government kept interest rates low, encourage businesses and individuals to keep borrowing and building debt. Some of this borrowed money was used to buy stocks which led to the stock market crash.

13. Hardship and Suffering during the depression
The Depression in the Cities
Homelessness
Shantytowns
Soup Kitchens and Bread lines
African Americans and Latinos had higher unemployment rates and lower wages.

15. farmers became tenant farmers and migrant workers.
Depression in Rural Areas
Loss of farms.
farmers became tenant farmers and migrant workers.

16. The Dust Bowl Where: What happened: Great Plains
Strong winds blew away top soil
Dust and Sand exposed

18. Causes
Drought
Over farming
Loss of prairie grass

19. Effects:
60% of people moved west.
Migrants became known as Okies.

21. President Hoover Hoover did not believe in federal direct relief.
Economists believed the economy would naturally improve on its own.
Hoover did not believe in federal direct relief.
Welfare could damage the “moral fiber” of the country.
He believed industries and laborers should work together to solve the economic problems.
Charities should help the poor.

22. Things hoover could have done
Increase the money supply to fight deflation
Not vetoing the Hawley-Smoot Tariff
Stayed on gold standard when Europe went off of it
Not raised taxes

23. Hoover’s Actions
Agricultural Marketing Act – stabilize demand for farm goods
Federal Home Loan Bank Act – lowered mortgage rates and allowed farmers to refinance their loans.
Reconstruction Finance Corporation (RFC) – provided emergency financing businesses
Relief would trickle down to the poor.
Too little, too late.

24. Bonus Army WWI veterans went to Washington to support the Patman Bill.
Patman Bill – would provide cash payment and life insurance to WWI veterans. Bill failed.
Some of the Bonus Army refused to leave. Hoover sent the army, lead by Douglas MacArthur, to run them off. Troops gassed the Bonus Army and burned the shanties.

25. The New Deal The Election of Franklin Roosevelt
Inaugural address “the only thing we have to fear is fear itself.”
fireside chats – radio addresses to the country
New Deal = relief, recovery, & reform
Appointed Francis Perkins the Secretary of Labor.
First female cabinet member

26. First 100 days Bank Holiday- all banks closed for 4 days
Emergency Banking Act
inspection of banks before reopening
Effect: Success - deposits surpassed withdraws

27. Glass-Steagall Banking Act
Federal Deposit Insurance Corp.(FDIC)
Insured people’s $ in banks up to $5k
Securities Exchange Commission (SEC)
- regulate stock market
- regulate on margin loans

28. Relief & Creating Jobs
Federal Emergency Relief Admin. (FERA)
funds for relief agencies & public works programs

29. Civil Works Admin.(CWA) – builds roads, bridges, hospitals, etc.
Public Works Admin. (PWA) – builds roads, parks, railroads, bridges

30. Civilian Conservation Corps (CCC)
maintained forests, beaches, & parks
2.5 million unmarried men
$30/m = $5 + $25 to family

31. Relief to Home Owners and Farmers
Homeowners Loan Corporation – low interest rates and emergency loans to stop foreclosures
Federal Housing Administration (FHA) – loans for low income families
Agricultural Adjustment Act – loans to farmers to save farms

32. Regulating the Economy Tennessee Valley Authority (TVA)
built dams - provided power

33. The Second New Deal Focus on Reform
a. National Labor Relations Act (Wagner Act)
legalized collective bargaining

34. b. National Industrial Recovery Act – regulates industry to ensure fair wages.

35. c. Works Progress Admin. - WPA
8 mil working on construction projects, and artistic works

36. d. Social Security - 3 types
1 Old age pensions-65yrs
2 unemployment insurance
3 aid for dependent children, blind & disabled

37. FDR Strategies
South: Don’t offend conservative Democrats by challenging white supremacy
Northern cities: balance helping workers and getting support from political machines
Educated and liberal Northern elite: most of FDR’s advisors

38. Election of 1936 FDR and Democrats easily won. Why?
New Deal was popular
Politics of FDR
Criticism of Supreme Court was popular
Labor unions and African-American support
People employed by New Deal programs voted
Homeowners who kept their homes
Bank deposits saved

39. Does Too Much New Deal Criticism
Republicans opposed
New Deal goes too far.
Many wealthy people regard FDR as their enemy.
American Liberty League
limits individual freedom
unconstitutional & socialistic

40. Doesn’t Do Enough
Progressives & Socialists
Upton Sinclair - economic system must be reformed.

41. Demagogues
Father Coughlin - attacked FDR & Jews
Dr. Frances Townshend - called for monthly pensions for the elderly
Huey Long - LA gov. Called for a redistribution of wealth

42. Supreme Court and the New Deal
ALA Schecter Poultry Corp v. US – ruled NIRA unconstitutional
N.L.R.B. v. Jones & Laughlin Steel Corporation – ruled the National Labor Relations Act unconstitutional.
United States v. Butler et al., - AAA unconstitutional

43. lost popularity. Court Packing
FDR tried to add 6 extra judges to Supreme Ct.
Reason: to get Justices that would support New Deal programs.
unpopular w/Dems & Repub.
lost popularity.