The Great Depression and the New Deal

The Great Depression and the New Deal APUSH - Unit 7B R. M. Tolles

Warning Signs Causes of the Great Depression Industries in Trouble – Railroads, Textiles, Steel, Coal, and Building Houses. Farmers Struggling – Not Making the same amount they were during WWI. Price Supports. Living on Credit. – Borrow Money, Pay it off later. Uneven Distribution of Income – Poor people couldn’t buy things. Additional Causes – unequal distribution of income, imbalance in foreign trade, and easy credit*

ELECTION OF 1928 Alfred E. Smith – Democrat. Great People Person. Herbert Hoover – Republican. Sec. of Commerce under Harding and Coolidge during Roaring 20’s. “We in America are nearer to the final triumph over poverty than ever before.”

The Stock Market Dow Jones Industrial Average – Measured the market’s “health” – reached a high of 381… 300 points higher than 5 yrs. before Bull Market – A rising market 4 million Americans were involved in the stock market Speculation – High risk sharing. Going for the get-rich-quick, knockout punch, trade. Buying on Margin – Paying 10% of a share, borrowing 90%, and paying off the 90% when the share makes money.

The Stock Market Crashes October 24, 1929 – The Stock Market blips. Black Tuesday – October 29, 1929 16.4 Million Shares were dumped, millions left without buyers. By the end of the 1930s, farmers, workers, veterans of WWI, and African American workers would all share in hard times, with rising unemployment and poverty.*

Domino Effect Banks Closed – Banks lost everything they had invested due to buying on Margin. Closed. People lost life savings. 11,000 banks closed (almost half) by 1933 Businesses Closed – Businesses can’t function without banks, 90,000 closed. One out of Every four people were fired. Those who kept their jobs got pay cuts and reduced hours. The Great Depression had begun. Effects fo the Great Depression

The Depression's impact on people: Consumer spending (in billions) on selected items, 1929-33 1929 1933 Food $19.5 $11.5 Housing $11.5 $ 7.5 Clothing $11.2 $ 5.4 Automobiles $ 2.6 $ 0.8 Medical care $ 2.9 $ 1.9 Philanthropy $ 1.2 $ 0.8 Value of shares on the NYSE $89.0 $19.0 Historical Statistics of the United States, p. 319.

The Crash Heard ‘Round the World No more money sent to Germany, who then couldn’t pay England and France, putting them in a Depression as well. Hawley-Smoot Tariff Act – designed to protect American farmers from foreign competition. Other countries did the same. Now U.S. can’t export.

Depression Life – Experience Shantytowns – Towns of shacks that sprang up due to massive number of homeless. Soup Kitchens and Bread Lines – Food provided for free by charitable organizations. African-Americans were discriminated against. First to be fired, lower pay, and attacked by unemployed whites. Latinos – also attacked by unemployed whites. Over hundreds of thousands were back to Mexico. Willingly and Deported.

Farmers Rural life – Farmers could grow food for their families but 400,000 farms were lost through foreclosure. Dust Bowl – for 7 years, drought and wind in the center of the country. No way to grow food. everything covered in dirt. 100’s of 1000’s moved to Pacific Coast. Route 66. Okies. In the 30s some farmers destroyed their crops instead of taking them to market to protest low prices for agricultural products.*

Depression Life (cont.) Monopoly is created in 1933 Men felt they needed to support their family. When they couldn’t, they ran away. Suicide Rates tripled. 300,000 “hoboes” wandered the country. Women were too embarrassed to beg, and many died in their houses from starvation.

Herbert Hoover Herbert Hoover was the President He declined Direct Relief - which is the Government giving people money to get them back on their feet. He favored federal assistance to business.* Thought the economy would naturally recover. Asked employers not to cut wages, or lay off workers. Asked Labor leaders not to demand more pay. Created private charities to provided for the poor.

Hoover Starts to Get Serious Federal Home Loan Bank Act – Lowered Mortgage Rates for Homeowners. Reconstruction Finance Corporation – Gave $2 Billion to get the banks, railroad, and life insurance companies up and running again. Boulder Dam - Hoover ordered a Dam to be built on the Colorado River. $700 Million project. Put many people to work. Renamed the Hoover Dam. Hoovers reluctance to use the federal government to provide direct relief during the Depression would cause harsh critics and his down fall.*

The Class must get 3 out of 4 to get a point… 1. Which two of Harding’s cabinet members worked hard to achieve advancements specifically for businesses? A Andrew Mellon and Albert Fall B Andrew Mellon and Herbert Hoover C Charles Forbes and Harry Daugherty D Herbert Hoover and Charles Forbes 2. What event occurred on Black Tuesday? A Unemployment reached nearly 25 percent. B The Federal Reserve lowered interest rates. C Investors sold more than 16 million shares of stock. D Germany stopped reparation payments to the United States. 3. What economic condition did economist John Maynard Keynes believe caused the Great Depression? A lack of government intervention B strict controls on stock speculation C too much oversight of the banking system D limits on production and consumer spending 4. Farmers contributed to the problems that led to the Dust Bowl by A putting down new layers of topsoil. B moving off of the plains to find new farmland. C damming western rivers and using irrigation techniques. D using intensive farming practices that removed protective grasses.

People turn against Hoover 1930 elections for congress went mainly to Democrats. People start calling Shantytowns Hoovervilles, newspapers Hooverblankets, and empty pockets Hooverflags

The Grapes of Wrath In the novel, John Steinbeck writes, “in the eyes of the hungry these is a growing wrath. In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage,” which is directed toward society being endangered by the Great Depression and the Governments refusal or inability to help.*

IT GOES FROM BAD TO WORSE – The Bonus Army 1932 - WWI Veterans were promised a Bonus they could collect in 1945. But they wanted it now. Over 100,000 of them Marched to Washington D.C. They call themselves the Bonus Army Sen. Wright Patman was on the side of the veterans. He introduced the Patman Bill but it got voted down. Most of the Bonus Army left, but 2,000 stayed.

REACTION Hoover commanded Douglas MacArthur and Dwight D. Eisenhower to disband the group. MacArthur showed up with 1,000 soldiers and tear gassed over 1,000 people, including a 8 month old baby who died, shot two people, and bayoneted many others. The Bonus Army happened in an Election Year, and many people hated Hoover for it. With the Country in shambles, a new leader will have to take upon one of the worlds largest financial crises.

The Class must get 3 out of 4 to get a point… 1. Why did the Bonus Army march on Washington, D.C.? A The Federal Reserve refused to pay veterans their bonuses. B General MacArthur attacked protestors demanding their bonuses. C President Hoover vetoed a bill providing for early payment of bonuses. D Congress passed a bill promising to pay veterans their bonuses in 1945. 2. President Hoover urged Congress to institute the RFC because he believed that the economy suffered from A a lack of credit. B over-employment. C too much government regulation. D a concentration of wealth in large businesses. 3. President Hoover responded cautiously to the Great Depression because he A thought that the business cycle would correct itself. B was distracted by the giant dust storms in the Great Plains. C did not have any experience with business methods and economic theory. D believed that the federal government needed to take an active approach to recovery. 4. Which of these factors contributed to the plight of rural farmers? A a long rainy season B decreased debt burden C falling prices for crops and livestock D increased demand for agricultural products

FDR and "The New Deal"

Franklin Delano Roosevelt Elected President in 1932 Election Ran Against President Hoover Was A Reform-Minded Governor Favored direct federal relief programs instead of federal assistance to businesses. Eleanor Roosevelt would change the role of 1st Lady by championing the cause of ordinary people. FDR passed a group policies in the first one-hundred days of taking office. Launched in 1933 In his Fire Side Chats – FDR explained the new deal. He ended the Gold Standard, declared bank holidays to stop the panic, this halted bank failures and begun the restructuring process.

New Deal Immediately established his “brain Trust” of advisors Set out to end the great Depression with his “New Deal” plan. Focused on relief for the the needy, economic recovery, and financial reform. Fireside chats Tried Court Packing – but failed (illegal)‏ Appointed the 1st female Sec. Of Labor – Francis Perkins FDR’s plan was based on John Maynard Keynes – spend heavily to jump start the economy, Many opposed due to the debt it would create.

The First Hundred Days Glass-Stegall Act – This insured the money in Banks, so people wouldn’t lose it. Federal Securities Act – Made companies be liable for their stock information. Federal Deposit Insurance Corporation (FDIC) – regulation and insurance of banks. Securities and Exchange Commission (SEC) – regulate the stock market Home Owner’s Loan Corporation – finance new homes. Social Security Act would have the greatest impact on the average citizen for years to come.

Agriculture and Industry Agricultural Adjustment Act (AAA) – Raise crop prices by lowering production. Gov’t would pay farmers for unused land. Farm Credit Administration for refinancing farm mortgages Civilian Conservation Corps (CCC) – Put young men to work. Keep men off streets. National Labor Relations Act – (NLRA)gave workers the right to organize unions and bargain collectively Tennessee Valley Authority (TVA) – financed rural electrification and helped develop the economy of a seven state area.

The New Deal is Under Attack FDR in general was supported by a majority of Americans, but his most outspoken critics were the Social Darwinists. Many people thought FDR was putting the U.S. into bigger trouble because we were spending more money than we were making. This was called Deficit Spending, or spending more money than the country makes. Huey Long – Against the New Deal. Wanted a communist style gov’t. Was assassinated by a lone gunman. Many felt the government had too much control over business interests.

Second Hundred Days Eleanor Roosevelt – First Lady, did much charity work and helped keep FDR focused on the problem at hand. Works Progress Administration (WPA) – Gave billions to create jobs immediately building libraries, schools, federal art projects, fixing roads, and sewing groups for women. National Industrial Recovery Act (NIRA) Gave Money to states to build schools and other community buildings Civilian Conservation Corps (CCC) – created forestry jobs for young men Federal Emergency Relief Administration – funded city and state relief programs

The Class must get 3 out of 4 to get a point… 1. Some Americans blamed the Great Depression on A fascism. B capitalism. C socialism. D communism. 2. What were the goals of the New Deal? A reform the government and decrease spending B create schools and protect farmers C increase spending on defense and trade D provide relief, recovery, and reform 3. What did President Roosevelt introduce to help retirees? A Fair Labor Standards Act B Second New Deal C Works Progress Administration D Social Security Act 4. Roosevelt created the Securities Exchange Commission (SEC) to A regulate the stock market. B give banks a chance to organize. C ensure bank deposits. D pay farmers to destroy their livestock.

Second Hundred Days (cont.) ‏ National Youth Program (NYA) – gave kids jobs, education, and recreation. Keep the kids off the streets. Wagner Act – Reestablished NIRA stronger Social Security Act – Acted as welfare for needy families and for retired people.

Greater Equality During the Depression, African Americans had the most difficulty of any other group. Frances Perkins – First female cabinet member (secretary of labor)‏ Mary McLeod Bethune – Hired by FDR to head the Division of Negro Affairs of the National Youth Council. “Black Cabinet” John Collier – Head of Indian Affairs. Indian Reorganization act of 1934. New Deal Coalition – Minority support for Democrats

Unions Get Stronger Congress of Industrial Organizations (CIO) A few men in the AFL organized industry wide organizations. Were kicked out of the AFL but formed the CIO instead. Union protests went up over loss of wages that could not sustain workers families.

The Great Depression and the New Deal