The Great Depression & The New Deal

1. The Great Depression&The New Deal

2. What Goes Up: Bull Market • Trading in the late 1920s was exciting, like a sporting event • People were told by business leaders and economists that it was “their duty as Americans” to buy stocks • Get Rich schemes were common, John J. Raskob, chairman of GM claimed that if you invested $15.00 every month, you would have $80,000.00 in the space of 20 years. “Everybody Ought to be Rich” • Stock Prices increased by about double the rate of industrial expansion • Surprisingly, only about 4 million Americans owned stocks of any significance • Margin Buying allowed investors to provide a small down payment, take out a loan for stocks, and then pay the loan back over time. “Buying On Margin” attracted a new sort of customer to the stock market, not just the rich and elite.

3. Must Come Down: The Crash • Contrary to popular belief, Wall Street did not crash in one day, but it fell steeply over a longer period of about a month and a half. • “Black Tuesday”, October 29, 1929, stocks dropped to less then half their value • About two weeks later, in mid-November, more than 30 billion dollars had been lost in the market price of stocks. • Depression did not immediately follow the crash • President Herbert Hoover insisted that the country’s economic state was “on a sound and prosperous basis” • Secretary of Treasury Andrew Mellon viewed the crash as beneficial, “It will purge the rottenness from the system” • The next several years of depression were unforeseeable by New Years of 1929.

4. Causes of the Depression • During the previous decade, there had been many underlying imperfections that led to the aftermath of Black Tuesday • Compared to the enormous output of industrial productivity, consumers and laborers received a very small amount. • As productivity had continued to rise dramatically, salaries had not risen by much • This rise in productivity only fueled more overproduction • Farmers had not seen the success of the WWI years, and were continuing to produce the same amount. • The differences between rich and poor were depressingly obvious, in 1929 the top .1% of the population was worth approximately the same amount as the bottom 42% • After the crash, manufacturers decreased their production and fired workers, causing more decline in consumer spending that could have checked the downward spiral of American economy. • Business expansion came to a halt • Banks failed as nervous customers withdrew their money

5. Effects of Depression • Mass unemployment left one out of every three workers out of a job by the end of 1933 • Men began to feel inadequate, many blaming themselves for the job shortage • Alcoholism and suicide was not uncommon • For those who were still employed, treatment from their employers became worse • Many women were sexually harassed, generally treatment of workers was worse then it had been in 15 years. • In urban areas such as Detroit, unemployment was up to 50% • Communist sympathies ran high • Homeless families began living in communities known as “Hoovervilles”, cardboard boxes in great numbers in areas such as city parks, named after President Hoover, who received much of the blame for the Depression • “Bonus Army” descends on Washington, a huge group (up to 20,000 by summer 1832) of WWI veterans demanding their $1000.00 bonus, forcibly driven away with guns and bayonets

6. F.D.R.“The only thing we have to fear is fear itself.” • Democratic Candidate in the election of 1932 • Landslide defeat of Herbert Hoover, Roosevelt carried 42 states and won 472 electoral votes, compared to Hoover’s 59. • He called his plan for rebuilding the nation the “New Deal” • Yes. He married his distant cousin. • In the summer of 1921 he was stricken with polio, never again to walk without help • Before even assuming the presidency, he assembled a group of advisors, intellectuals nicknamed the “Brain Trust” • Believed in setting the economy right through a cooperative Business/Government relationship. • Rejected old progressive ideals of a perfect society based on small-scale production. • Pushed for structural economic reform, and the acceptance of large corporate-enterprisingbased on mass production and distribution.

7. Recovery and the “New Deal” • The first economic issue addressed by the Roosevelt administration was the Banks. A “bank holiday” was called, to give the a little time to recuperate. • The Emergency Banking Act gave the President broad discretionary power over all banking transactions and foreign exchange. • Healthy banks began to reopen under direction of the Treasury Department, by March of 1933, about half of the country’s banks, holding 90% of the nations deposits had reopened • “The Hundred Days”, FDR passed an astonishing number of acts to combat the Depression • Programs to focus on reviving both industry and agriculture were established • Civilian Conservation Corps (CCC), provided work for jobless young men in conserving the nations natural resources • Federal Emergency Relief Administration, $500 million was authorized to distribute into state relief funds. • Agricultural Adjustment Administration (AAA), set to provide immediate relief to farmers, federalized agricultural planning and price setting. • Southern Tenant Farmers Union (STFU) kept the AAA in check, protested evictions, called strikes for higher wages, and challenged landlords • Tennessee Valley Authority (TVA) built dams and power plants, produced cheap fertilizer, and brought cheap electricity for the first time to thousands of people in six Southern states.

8. Second: New Deal and Hundred Days • FDR was staunchly criticized, either for overstepping his boundaries, or for not doing enough • Due to the popularity of Presidential-Hopefuls Upton Sinclair, Huey Long, and Francis E. Townsend, FDR began a new social reforms campaign. • “The Second Hundred Days” led to reforms such as the Emergency Relief Appropriation Act, which allowed money to large-scale public work for the jobless • Harry Hopkins emerged as a key figure in the New Deal, leading the Works Progress Administration (WPA), which was a community service organization making jobs for artists, musicians, actors, and writers. • Social Security Act created pensions for the elderly, and insurance for the unemployed. • The “Magna Carta of Labor”, National Labor Relations Act, or Wagner Act, guaranteed workers the rights to form unions, collective bargaining, improved wages, benefits, and working conditions. • Committee for Industrial Organization, pushed for the organization by industry and not craft, organize unions for more than just the skilled workers, and included Women and Black workers.

9. The West; Dust Bowl • At the worst time possible, the Plains area suffered from a massive drought, causing what we know as the Dust Bowl. Crops were destroyed, livestock and humans were killed by these monster dust storms. • In 1935-35 the Drought Relief Service bought 8 million cattle to support farmers devastated by Drought and Depression • The Soil Conservation Service set out to change the practices of farming, to control erosion, and better the environment. • Cotton farmers were evicted from their land to number approximately 300,000 people, called “Oakies” who migrated westward. • The Indian Reorganization Act reversed the Dawes Severalty Act of 1887, provided terms for the Indian tribes to set up tribal governments and gave back acres of tribal land.

10. Cultural Effects • Artistry was deeply effected by the Depression Era, for a brief time, the federal government substantially supported those in the creative community • Federal Project No. 1 offered support and relief to many artists and intellectuals, culturally enriching the lives of millions • The “Life in America” series entailed 150 volumes of American culture, including the narratives of former slaves, pioneers, and the ethnic history of Indians. • Organizations such as the FWP (Federal Writer’s Project), FTP (Federal Theater Project), FAP (Federal Art Project) and FMP (Federal Music Project) created opportunities for desperate artists of the time. • Big-Band Jazz became very popular • Individualism, Nostalgia, and searches for core American Virtues prompted a new, almost idealistic approach to culture • There was also an intense sense of radicalism and discontent beneath the art