The Great Depression & The New Deal

1. The Great Depression & The New Deal 1929-1939

2. Roots of the Great Depression • Uneven distribution of income • Gains in income were more for wealthy than working class • Top 2% of population controlled 40% of nation’s savings • Market Speculation • Very wealthy purchase stocks and speculate on future • Buying stock “on the margin” • Excessive use of credit • Installment buying for cars, refrigerators, vacuums • This prohibited families from buying other items such as food, clothing • Overproduction • Weak farm economy: farm prices were highest during WWI • Farmers unable to payback installment loans on equipment

3. The Stock Market Crash • The exuberant spending of the 1920’s caused people to buy beyond their means (“on the margin”: purchasing a stock for a percentage of its value) • This was true for consumer goods as well as fr stocks • This greatly inflated the price of stocks, far beyond actual value • When the market “crashed” it was actually stock prices returning to more reasonable levels • This left many in debt

4. How the Crash Caused the Great Depression • Bank Closings Increased -banks had to close when farmers couldn’t repay the loans, and it trickled into the cities -5,000 banks failed with over $5 million in American savings • Income decreased for industrialists --invested heavily in the stock market & lost money when it crashed • Effect on the world -many European countries had loans in American banks -banks failing causes insecurity in these countries

5. Consumer Debt, 1921-1929 GRAPH Graph: Consumer Debt 1921-1929

6. Worldwide Depression DIAGRAM Diagram: Worldwide Depression

7. Bank Failures GRAPH Graph: Bank Failures

9. # of Bank Failures by year

10. Great Depression video • http://www.history.com/topics/great-depression/videos#the-great-depression

11. Social Impact of the Great Depression • -not uncommon for 2 people to share a job, since many lost their jobs (25% unemployment rate) • Women & minorities often 1st to lose jobs • Hoovervilles: settlements of scrap metal/lumber usually located on the outskirts of cities • Hobos riding on railroads (unemployed young people) • Dust Bowl: by the 1930s, many farms in OK, KS, NE, CO, TX were either ruined or abandoned due to drought & farmer loans • People moved to CA for work • The Grapes of Wrath by John Steinbeck portrays this

12. An Okie Family Hits the Road in the 1930s to Escape the Dust Bowl

13. The Extent of Erosion in the 1930s • Note the extensive wind erosion in the western Oklahoma panhandle region, which was dubbed the “Dust Bowl” in the 1930s. Mechanized farmers had “busted” the sod of the southern plains so thoroughly that they literally broke the back of the land. Tons of dust blew out of the Dust Bowl in the 1930s and blotted the sun from the skies as far away as New York. A Kansas newspaperman reported in 1935 that in his dust-darkened town, “Lady Godiva could ride through streets without even the horse seeing her.”

14. Dust Bowl Videohttp://www.history.com/topics/great-depression/videos#america-black-blizzard

15. The Policies of Hoover • Hawley-Smoot Tariff (1930): imposed highest import tax in history; Europe responds with their own high tariffs; did little to help US economy • Voluntarism: Hoover encouraged Americans to donate as much as they could to charities during this time • Debt Moratorium: 1 year moratorium on WWI debts

16. The Policies of Hoover cont. • 1929 Agriculture & Marketing Act created the Federal Farm Board: created to stabilize prices & promote sale of agricultural products • Reconstruction Finance Corporation (1932): federal agency that gave money to banks to loan to railroads and businesses • This was intended to spur economic growth • Bonus Army, Summer of 1932: WWI vets march to Washington ask federal govt for bonuses they were supposed to get in 1945 • Hoover urged Senate to deny them the bonus now • Hoover ordered them removed and Gen. Douglas MacArthur used tear gas to rid them from the White House

17. The Election of 1932 • One of the worst years of the depression & also happened to be an election year • Roosevelt campaign pledged a “New Deal” for the American public • Roosevelt won nearly 60% of the popular vote • Both houses of Congress also went to the Democrats in the election • This would later be important as Roosevelt attempted to pass his recovery plan

18. FDR • Wealthy • Sec. of Navy under Wilson, NY Governor • Stricken with polio in 1921 • Several biographies say this made him more sensitive to the people struggling • Married Eleanor Roosevelt • Very active in NY state politics, especially reforms for women

19. FDR video • http://www.history.com/topics/great-depression/videos#fdr-a-voice-of-hope

20. The New Deal • Roosevelt used his first 100 days in office to implement a his new ideas • Did something similar in NY & it was successful • The New Deal centered around 3 key ideas: • Relief: the concept of helping people immediately to get out of the misery of the Depression • Recovery: aimed at helping the business community and restarting the economy • Reform: trying to change the country so that a depression could never again have significant effects on the country

21. New Deal video • http://www.history.com/topics/great-depression/videos#the-new-deal-how-does-it-affect-us-today

22. New Deal & Keynesian Economics • Until this time, Economists believed the markets would adjust themselves (but they didn’t—Great Depression) • John Maynard Keynes • Economist • Demand-side/Keynesian Economics

23. The First 100 Days • Passed several programs to stimulate the economy & provide relief/jobs (Obama Administration) • The Bank Holiday: FDR orders all banks closed, US Treasury must OK bank reopening (part of the Emergency Banking Act, March 1933) • ¾ of banks belonging to the Federal Reserve System opened 3 days later • Repeal of Prohibition • National Recovery Adm., declared unconstitutional • Farm Controls • Agric. Adj. Adm. (AAA) offered subsidies to encourage production, also declared unconstitutional • Paid farmers NOT to produce certain crops and livestock

24. FDR’s 1st 100 days cont. • Tennessee Valley Authority (TVA): Authorized construction of a series of damns to provide electricity/flood control to those living in Tennessee River Valley • Financial Recovery • FDIC insures bank deposits (today, up to $150,000), Home Owners Loan Corp., Farm Credit Adm. • Federal Emergency Relief Adminstration (unemployment relief) • Public Works Administration (PWA): Schools, highways, hospitals were built

25. TVA Area More than twenty dams were constructed on the river’s tributaries as part of a massive project to control flooding, generate hydroelectric power, and revitalize the Tennessee Valley region, while also creating jobs for the unemployed. The shaded area represents the area served by TVA electric power.

27. Occupied Households with Electric Service • The Tennessee Valley Authority contributed to making electricity available to almost all Americans by 1960. African American leader Andrew Young later claimed that the TVA created the economic underpinnings of the civil rights movement: “It was the presence of the cheap electricity, lower interest rates, water projects, that laid the foundation for the New South.”

28. Mary McLeod Bethune (1875–1955) • The daughter of ex-slaves and founder of a college in Florida, Bethune became the highest-ranking African American in the Roosevelt administration when she was appointed director of the Office of Minority Affairs in the National Youth Administration (NYA). From this base she organized the “Black Cabinet” to make sure blacks benefited from the New Deal programs along with whites. Here she is picketing against segregated hiring practices at the Peoples Drug Store chain, one of the earliest targets of the black civil rights movement.

29. 1st 100 days cont. • Civilian Conservation Corp (CCC): work in forest /conservation programs • Fireside chats • Radio addresses to explain the immediate problems facing the country • Felt as though he was in your living speaking to you • Roosevelt’s “brain trust” cabinet • National Industrial Recovery Act (NIRA): attempted to stop prices from falling • More involved unions & collective bargaining • National Recovery Administration (NRA): President sets minimum wage, working hours • Declared unconstitutional in Schechter vs. US (1935) • Congress can not give the power to legislate to the President

30. Grand Coulee Dam Under Construction on the Columbia River, 1939 • Located in central Washington State, the Grand Coulee Dam was one of the most ambitious projects of the New Deal’s Public Works Administration. It is the largest concrete structure in the United States and the central facility in the Columbia Basin Project, which generates electricity for the Pacific Northwest and provides irrigation for half a million acres of Columbia Valley farmland—services that have transformed the life of the region.

31. The Second New Deal (1935) • The first part of the New Deal was aimed largely at relief • Wealthy did not support New Deal programs • Resettlement Administration: many farms were still being foreclosed • This offered loans to small farmers who faced foreclosure • Helps migrant farmers find work • Workers Progress Administration (WPA): people benefitting from FERA & employed them 30-35 hours per week -approximately 2,000,000 per month employed by WPA -unemployed artists, musicians, actors benefitted • Wagner Act: gave workers the right to organize/form unions • National Labor Relations Board: reported unfair working conditions here

32. Labor Triumphant • After generations of struggle, organized labor made dramatic gains in membership and bargaining power during the New Deal years.

33. WPA Mural, by Victor Arnautoff 1934 • The Pedestrian Scene, painted on a wall of Coit Tower in San Francisco, was one of a series of murals commissioned by the federal government to employ artists during the Great Depression.

34. Frances Perkins at the Site of the Golden Gate Bridge Project, 1935 • The first woman cabinet member, Perkins served as secretary of labor under Roosevelt. She was subjected to much undeserved criticism from male businessmen, laborites, and politicians. They sneered that FDR “kept her in labor” for many years.

35. Social Security Act (1935) • Creation of a retirement plan for those over 65 • Workers & employers pay into • Included unemployment insurance funded by payroll tax (employers with more than 8 employees) • AFDC • Disabled • Officially called OASDI

36. Goal of New Deal Programs It is now the job of the federal government to take care of those who could not take care of themselves

37. Presidential Election of 1936 • Campaign speeches rallied against business • He said they opposed his policies so they could continue to get rich • Ran against Governor Alfred Landon of KS • Landslide victory of 523 to 8 (ME & VT) Electoral College votes

38. New Deal Coalition & Political Party Shift • : Dems major party in America throughout the rest of 1930s-1980s (Reagan) • White urban dwellers support Democrats • Whites in south had largely voted Dem. Since the 1800s • Now labor unions/blacks/farmers join coalition • DRAMATIC shift as most blacks had voted Republican since Emancipation)

39. FDR & New Deal Opponents • People called him a socialist/communist • Wealthy thought he was a traitor • People felt neither party was trying to help average Americans • American Liberty League: wealthy Americans including prominent members of the DuPont family • Disliked 1935 Revenue Act which raised the income tax rate for those making over $50,000 • Referred to it as Bolshevism

40. More Opponents • Old Age Revolving Pension Plan • National sales tax would pay for a pension of $200 per month for all retired Americans • Created by Francis Townsend of CA (who ran for governor of CA in 1934 against Upston Sinclair & won)

41. More opponents • Dr. Charles Coughlin • On Coughlin’s radio show, referred to Roosevelt as a liar and betrayer • Very anti-semitic feelings/statements, praised Mussolini/Hitler • Church pulled him off the air during WWII • LA Sen. Huey Long • “Share the Wealth” program allowed no Americans to make over $1,000,000/per year (anything over would be payment to the govt in taxes) • From this tax $$, give every American family $5,000 immediately • Wanted to run against FDR in 1936 but was assassinated in 1935

42. Last Years of New Deal • 1937 Justice Reorganization Bill • US Supreme Court had said several New Deal programs were unconstitutional • Would have allowed FDR to appoint a new justice for every justice over 70 years of age • Nothing in constitution saying only 9 justices • Could pack the court with 6 new justices • Said to help older justices with their workload • Democrats & Republicans said trying to push his agenda • Did not pass • Several justices retired in few years after bill and Roosevelt still packed the court

43. Last Years of New Deal cont. • Large recession hit mid-1937 • Factories had major layoffs • New Deal critics blamed Roosevelt program for recession

44. Effects of the New Deal • Wagner Act permanently legitimizes labor unions • Sit-down strikes: Dec. 1936, GM plant in Flint, MI most famous • By Feb. 1937 management had to give in to demands • Congress of Industrial Organizations (CIO): lead by John L. Lewis, represent unskilled factory/textile workers • By 1938 represented 4 million workers

45. General Motors Sit-down Strikers, Flint, Michigan, 1937 • Strikers like these sometimes kept their spirits up with the song “Sit Down”: • When the boss won’t talk • Don’t take a walk; • Sit down, sit down.

46. Cont. • Women forced to work meager jobs to make ends meet • Blacks often first fired from jobs • Relief programs in south often excluded blacks • Lynchings • Scottsboro Trial: 9 black men were accused of raping 2 young white women on a train • Got help from Communist Party, in end, some convictions were overturned • Blacks supported FDR as they felt he was responsive to their needs

47. New Deal Culture • Zora Neale Hurston wrote Their Eyes Were Watching God (about growing up black in a small southern town) • Studs Lonigen by James T. Farrell shows lives of Irish in Chicago • Erskine Caldwell’s Tobacco Road about suffering of sharecroppers in GA

48. New Deal Culture cont. • Gone with the Wind by Margaret Mitchell a romanticized tale from Civil War period • 1930s radio offers soap operas, comedies, dramas, symphonic music/operas • 70% of all adults went to the movies once a week • Mr. Smith Goes to Washington • Shirley Temple movies • Theaters designed to look like palaces, air conditioned