Depression and Deal

1. Depression and Deal

2. Depression and Deal Voices from the past: “Here were all these people living in rusted-out car bodies. I mean that was their home. There were people living in shacks made of orange crates. One family with a whole lot of kids were living in a piano box. This wasn’t just a little section, this was maybe ten miles wide and ten miles long. People living in what ever they could junk together.” • Resident of an Oklahoma City “Hooverville,” 1930s

3. Depression and Deal • Objectives for today: • To identify the causes of the Great Depression. • To explain how the New Deal brought the U.S. out of the Depression. • Text: Chapters 27 and 28

4. Depression and Deal • Review • After WWI, the U.S. wanted to go back to a normal, prosperous life. • They wanted to stay out of wars, but the U.S. was too enmeshed in world affairs to return to isolationism. • Life was “normal” for about a decade, until the Great Depression hit.

5. Causes • What was the Great Depression? • An economic decline that lasted for more than a decade. • It is still the worst economic depression in our nation’s history. • Fear, starvation, joblessness, and homelessness characterized this time.

6. Causes • Paradox: • Starvation in the midst of plenty. • Farmers heated their homes by shoveling crops into furnaces, because it was cheaper than coal. • In Iowa, farmers dumped milk trucks in an attempt to raise prices. • In Oregon, ranchers slaughtered sheep because mutton prices were lower than the cost of shipping the animals to market. • At the same time, all across America, families were digging through garbage looking for scraps of meat to eat.

7. Causes • #1 - Slump in Agriculture • Crop surpluses caused prices to drop so low that farmers could not make a profit. • They could not pay back their loans to the bank. • In turn, these banks started to fail, taking peoples’ life savings with it.

8. Causes

9. Causes • #2 – Overproduction • Labor saving machines produced far more goods than the nation could consume. • More and more bought big ticket items (cars, refrigerators, washing machines) on installment plans, decreasing real consumer spending.

10. Causes • #3 – Stock Market Crash • In 1929, stock prices were flying high. • The price of a share of GM: • June 1929 - $268 • Sept 1929 - $452 (+69%) • Google: • Nov 2007 - $650 • Feb 2008 - $510 (-22%) • People would borrow to buy stocks, and when stock prices fell, there was no money left to pay the loans back. • Banks, and the savings of everyone who used them, failed.

11. Causes

12. Causes • #4 - High Tariffs and Taxes • Fordney-McCumber Tariff: insistence on collecting war debts, interfered with world trade. • Mellon Tax: favored the upper class, created uneven wealth distribution. • Failure to curb overspeculation in the stock market.

13. 1929 Avg. family income: $2300 Unemployed: 4 million people GNP: $204 billion NYSE stock values: $18 billion Unemployment: 3.2% 1933 Avg. family income: $1600 Unemployed: 12 million people GNP: $144 billion NYSE stock values: $3.8 billion Unemployment: 24% Causes

15. Causes • Herbert Hoover • His Presidency lasted from 1928-1932. • These were some of the worst years of the Great Depression. • Optimism • Hoover kept talking about a turnaround that did not occur during his Presidency. • Communism • Great fear among Americans of Communism • Hoover steadfastly refused to help the jobless, homeless, and starving through government relief programs.

16. Causes • Europe • Hawley-Smoot Tariff Bill • Worsened the crisis in the U.S. and Europe. • Austria, England, France, and Germany, already struggling with war debt, were sucked into a downward spiral of massive unemployment and staggering inflation. • Open door for military dictators to take charge.

17. Solutions • What was the New Deal? • A Plan • President Franklin Delano Roosevelt’s plan to get the country out of the Great Depression. • A Revolution • The New Deal changed the way the American government interacted with the American people. • Like never before, the actions of the government touched every single citizen.

18. Solutions • One Hundred Days • Congress • In a special emergency session, Congress passed an extraordinary series of measures. • Sometimes, these measures were passed without even being read. • “Take a method and try it. If it fails, try another.”

19. Solutions • Alphabet Soup • CCC: Civilian Conservation Corps • AAA: Agricultural Adjustment Act • TVA: Tennessee Valley Authority • FDIC: Federal Deposit Insurance Corp • SEC: Securities and Exchange Commission • FERA: Federal Emergency Relief Administration • CWA: Civil Works Administration • FSA: Farm Security Administration • PWA: Public Works Administration • NRA: National Recovery Administration

20. Solutions • FDR • FDR ended 12 years of Republican power. • Both houses of Congress were also swept. • He was President from 1932-1944 (4 terms). • He was crippled with polio, but was a source of strength for a country demoralized by economic hardship. • He is remembered for his warm and understanding approach to people (Fireside chats).

21. Solutions • FDR • “This is pre-eminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great nation will endure as it has endured, will revive and will prosper…”

22. Solutions • FDR (cont) • “So first of all let me assert my firm belief that the only thing we have to fear is fear itself – nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

23. Homework • Organize the New Deal programs (Alphabet Soup) into the following categories (3 columns): • 1. Agriculture relief • 2. Industrial relief • 3. Help for the unemployed • Indicate the purpose of each program.