Chapter 25

1. Chapter 25 The Depression and FDR

2. Section 1: The Great Depression • People were recommending investing money in The Stock Market • Grocers, motormen, plumbers, seamstresses, waiters were all in the stock market • The market had become a national phenomenon.

3. The Boom • In the late 1920’s, the value of stocks increased • Investors bought stocks on margin. This means they paid only a fraction of the stock price, and brokers and banks paid the other half. • As long as stocks continued to rise, the buyer could pay back the debt after he made a profit. • If the value fell, brokers would not have enough to pay off the loans

4. Uh Oh • Fearing the boom would end, stock brokers starting selling their stocks • These sales make prices fall • Brokers demanded selling their stock, and everyone had to sell their stock to pay back the brokers • Stock experts told people not to panic and continue investing

5. That Didn’t Happen • For three straight days, stock prices plunged as investors sold millions of shares. • Traders sold almost 13 million shares on October 24th 1929, a day that became known as Black Thursday • On Tuesday the 29th, after a few days of calm, everybody continued selling

6. The Great Depression • The next two years, the U.S slid into a severe economic crisis, known as the great depression. • The total economic output went from $104 billion to $58 • The stock market crashing did not cause the depression, but was perhaps the most notable of a series of causes

7. Farm Income Problems (low food prices) Automobile and Industry, suffering from lack of orders, and employees were laid off Laid off workers can’t afford new products Gap between rich and poor: In 1929 less than 1% of the people had 1/3 of ALL THE MONEY 75% of American families lived on the edge of families. Warning Signals

8. Credit Crisis • Consumers used credit to buy land, equipment, and supplies • Banks suffered when farmers defaulted or failed to meet their loan payments • Large banks had bought stocks as an investment, and took huge losses in the market crash • Thousands of banks were forced to close

9. International Depression • Foreign Countries relied on American money to rebuild their nations • Europe was getting money from banks in America • Banks now were in no position to give loans to foreign businesses • Other nations had no money to spend on American goods, trade slowed down

10. Looking for Work • In 1932, 25% of American workers were out of work. • Cities were hardest hit • Workers who managed to keep their jobs now worked only part time for less money • Many unemployed tried to earn a few cents by shining shoes or selling apples.

11. More Suffering • Long lines of hungry people snaked through the streets of the nations cities, waiting for a slice of bread, a cup of coffee, or a bowl of soup • Many lost their homes and built houses out of boxes and other objects • These “towns” were called Hoovervilles, because of president Hoover’s failure to act

12. Hoover’s Response • Hoover thought the crisis was only temporary, and that prosperity was just around the corner • The state and local govt provided relief, aid for the needy, to people in need • However, the govt ran out of money, and spending of aid by all levels of government declined

13. The Bonus Army • Americans lost support for Hoover after the Bonus Army Incident • Veterans of WWI were promised a $1,000 bonus by 1945, however the jobless veterans needed the money now • 20,000 soldiers marched

14. Hoover’s Response • Hoover sent the army to confront the veterans • The army led by army chief of staff General Douglas MacArthur, and his aide Dwight D. Eisenhower, entered the camp and burned it down. • While Hoover claimed the bonus army “challenged the authority of the government”, the people saw it as an attack on their own people, especially war veterans.

15. Section 2 Roosevelt’s New Deal

16. FDR • Franklin Delano Roosevelt, (FDR) was nominated by Democrats in 1932 to run against Herbert Hoover • At the Democratic Convention, he promised Americans “A New Deal” • Roosevelt won the election in a landslide, winning all but six states.

17. Background on FDR • He was a distant cousin of Teddy Roosevelt • Won a seat in the NY State senate in 1910, and also was governor of NY in 1928 • Ran for Vice President in 1920

18. Background on FDR ctd… • Came down with Polio in 1921. It was a disease that paralyzed both of his legs • His will remained strong, stating, “I spent two years of my life trying to move his big toe, after that anything seems easy • Roosevelt never publicly mentioned his paralyzed legs, and asked reporters only to photograph him from the waist up.

19. A Tough Road Ahead • Banks continued to close, and people were losing their deposits • Roosevelt assured the public by stating, “The only thing we have to fear is fear itself” • His first actions would be to fix the banks

20. Banks are closed on…wait every day?! • His second day in office he closed all the banks and reorganized them • The Emergency Banking Relief Act by allowed Roosevelt to use Presidential powers over banking, and set up a system that re-organized the banks • Roosevelt claimed, “It was safer to keep your money in a reopened bank rather than under a mattress

21. Comforting America • The next day deposits far exceeded withdrawals, and the banking crises had ended. • Roosevelt tried to calm the nation by using radio to talk to the American People. • His “Fireside Chats” gained the trust of the American People.

22. Hundred Days • In the next three months, Roosevelt launched 15 different programs in the time period known as the hundred days • Optimism spread through the capital • The main effect might not have been the programs themselves, but the calm it created among the people, in contrast to the panic at the start of the depression

23. The New Deal affected: Banking Stock Market Industry Agriculture Public works Relief for the Poor Conservation of Resources “In March, 1933, the New Deal was not a plan, it was a happy phrase FDR had coined during the campaign…It made people feel better, and in that terrible period of depression, they needed to feel better.” -Secretary of Labor Frances Perkins Roosevelt's New Deal

24. Job Programs • The civilian conservation corps (CCC) created jobs that benefited the community. • The Agricultural Adjustment Act (AAA) tried to raise farm prices. They actually destroyed food to raise prices up. (supply and demand • The Tennessee Valley Authority (TVA) built dams to generate hydropower

25. The Lasting Effect of the New Deal • The New Deal did not end the depression. • Times would be tough throughout the depression • The darkest days had now past, and the nation was slowly crawling toward recovery

26. Section 3: Life in the Depression • People had less income, food, and security • Parents and children shared homes with grandparents to save money • Because there was less work, more young people stayed in school • The strain on men not working caused many men to abandon their homes and go on the road to warmer California and Florida

27. Eleanor Roosevelt • She acted as her husbands “eyes and ears,” since polio had limited his mobility • She campaigned for women, who were trying to work as much as possible in rough times, even if they made less money • Instead of buying clothing and getting groceries, they sewed their own clothes, canned their own vegetables, and baked their own bread

28. The Dust Bowl • New farm technology made clearing fields easier. They did not know that the machinery tore the roots of grass out of the ground, the effect was the soil became loose • When a severe drought hit in 1931, the winds blew the soil away • It created “black dirt storms”. Ships in the Atlantic Ocean had residue from Great Plain dirt storms

29. Impact of the Dust Bowl • Farmers could not grow crops, and farms went bankrupt. • 400,000 farmers migrated to California. Many of these one time farmers became migrant workers, or people that moved from place to place in search of food • The hardest areas hit were Oklahoma, North Texas, East Colorado, and New Mexico

30. Rise of Political Movements • Socialists and Communists tried to convince Americans that the system was failing, though many would not abandon democracy, despite hard times • However, many people in Europe became desperate and looked for ways to end the depression

31. Rise of Fascism • Fascism is a political philosophy that holds the individual second to the nation and is ruled by dictatorship • In Germany and Italy, the people voted in Adolf Hitler (Germany) and Benito Mussolini (Italy) • Fascism tried to rise in Spain, and a violent civil war ensued.

32. Entertainment • People went to the movies to get away from hard times • They could relate to movies such as The Grapes of Wrath and Gone with the Wind • Many writers and photographers captured the life of Americans during the depression

33. Section 4 Effects of the New Deal

34. Desperate for More Reform • Father Charles Coughlin demanded Roosevelt attack big business. • Senator Huey Long demanded that the rich be taxed so the money could go to the poor • Both men felt Roosevelt was not doing enough to help, despite the new deal

35. The Second New Deal • By 1935 the economy had improved, but more was needed to be done • His second new deal changed American life more than the first new deal

36. New Programs • The Revenue Act raised taxes on wealthy people to pay for new programs • The Works Progress Administration (WPA) gave people jobs to help the country. Over 2 million workers built 800 airports,125,000 public buildings, 75,000 bridges, 650,000 miles of roads

37. Social Security • The Social Security Act created a tax on workers and employers • The money was used as a pension, or monthly payment, for retired people • Social Security also helped people with disabilities, the elderly poor, and children of parents who could not support them

38. The Courts Strike FDR • Those that opposed the new deal challenged that Roosevelt’s programs were unconstitutional • In 1935, The courts ruled that the National Industrial Recovery Act was unconstitutional • Other programs were under review as well, and it looked like the supreme court would destroy the new deal

39. The People Support FDR • The election of 1936 would determine if the people approved of the New Deal • FDR won in a landslide against the “champion of the average American” republican Alfred Landon • FDR was re-elected, and planned revenge on the court

40. Court Packing Plan • Since his programs were being shot down in court, Roosevelt wanted to change the members of the court from 9 to 15 members. Roosevelt would pick the members of the court • This split the democratic party and cost FDR respect among the people • When the Wagner and Social Security Act were ruled constitutional, he abandoned his plan

41. Recession • In 1937, FDR cut programs when the depression looked like it was over • Directly after, the economy collapsed again and people across the country lost jobs • However, as the 1930’s came to an end, America lost focus on domestic issues as terrible forces were brewing in Europe and Asia