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Explore the worsening economic situation during the Great Depression, including the crash of 1929, bread lines, and the impact on various sectors. Learn about the government's response through policies and programs.
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U.S. History IIHIS-112 Unit 9 The 1930s
Worsening Economic Situation • Overall, the Crash of ‘29 represented loss of over $26 billion on paper • This is equivalent of $332 billion in 2008 currency • The Crash was made even worse because of economic policies put in place by the government • Many members of Congress wanted Hoover to veto the Smoot-Hawley Tariff • They believed it would hurt foreign trade and the economy in the long run • However, with the Crash, many wanted to protect Americans interests and Hoover approved it
Worsening Economic Situation • The Federal Reserve made matters worse • In 1931, it raised interest rates which led to a tightening of credit • As consumer spending went down and loans were more difficult to get, businesses began cutting production and jobs • The U.S. was also hit negatively by the collapse of the European credit system • Many countries tried to get off the gold standard • This led many investors to trade in equity in U.S. companies for gold • In turn, this hurt our financial system
Worsening Economic Situation • In 1930, the market collapsed further • Over 1,300 banks failed • Many factories cut back on production and others closed • U.S .Steel announced a 10% wage cut in 1931 • The auto industry laid off workers leading to over 40% unemployment in Detroit • Hoover worked hard to keep the U.S. from falling into a worsening depression • He promoted keeping the U.S. on the gold standard • He also worked with Congress to balance the budget • He even sponsored a tax cut hoping to stimulate the economy
Worsening Economic Situation • Hoover also called for conferences with businessmen and labor leaders • In 1931, he tried to organize a pool of private money to rescue banks and businesses • He also met with mayors and governors and encouraged them to speed up public works projects • In Europe, the situation grew worse • By June 1931 the German financial system was in chaos • In September, Britain abandoned the gold standard, which led to a decline in lending and trade • Soon most of the industrialized world was caught in the Depression
The Great Depression • By 1932, the economic recession became known as the Great Depression • Investments had dropped by 32% • Exports dropped by 1/3 • Farm incomes dropped by 60% • Gross national product dropped by almost 50% • Average wages dropped by more than 40% • Some cities had unemployment rates as high as 80% • 12 million Americans were unemployed • 1/3 of America fell below the poverty level • Over 1 million Americans were homeless
Government Response • The election of 1930 brought Democrats into the majority in both Houses • Hoover was willing to work with them to find new ways to end the Depression • More public works projects were built during his administration than in the past 30 years • Congress had approved a $2.25 billion for public works • This included a dam on the Colorado River that later gets named after him • The Federal Home Loan Bank Act of 1932 • It was designed to help mortgage lenders who were struggling and to make mortgages more affordable
Government Response • The Reconstruction Finance Corporation was set up in 1932 • It was given $500 million to make loans to banks, insurance companies, farm mortgage companies, and railroads • The Norris-La Guardia Act of 1932 outlawed court injunctions against strikes, boycotts, and picketing • This was done to please the Democrats, industrial workers, and unions • Glass-Steagall Banking Act of 1932 – • It expanded credit to make more loans available to businesses and individuals
Government Response • However, Hoover was not willing to go along with all of the Democrats’ plans • He vetoed a bill to build government power facilities along the Tennessee River • He also rejected a proposal by GE President Gerard Swope (the Swope Plan) that called for industrial cooperation and regulation of businesses by the federal government • Hoover’s biggest failure was that he did not truly understand how bad the Depression was • He was willing to use the federal government to support business, but he would not accept a plan to use federal aid to help the unemployed
Economic Hardship • Many Americans were affected by the Depression • Unemployment in 1932 reached 23.6% • For those who lost their jobs and homes, many moved into “Hoovervilles” • These were shantytowns on the outskirts of the cities sardonically named after President Hoover • Bread and soup kitchen lines became commonplace in the cities • Those groups already struggling before the Depression was hit the hardest • This included immigrants, Native Americans, and blacks
Economic Hardship • One of the hardest hit groups was the Mexican American population • Most Americans assumed that many Mexican-Americans were here illegally • Many left the U.S. voluntarily as the job opportunities dwindled • Starting in 1929, the Department of Labor began deporting Mexican-Americans out of the U.S. • Between 1929 and 1940, approximately 500,000 were deported as “illegals” • Half of them where American citizens
Economic Hardship • Native Americans were already suffering from poverty, high illiteracy rates, and high infant mortality rates prior to the Great Depression • In 1928, 84% of Native Americans earned less than $200 a year • This conditions were only exacerbated by the Depression • During the Depression, the Bureau of Indian Affairs and other federal agencies continued to exploit the tribes • In 1930, the Federal Power Commission allowed the building of the Flathead Irrigation Project on tribal lands without giving any compensation to the tribes involved
Economic Hardship • African-Americans were also hit hard • The unemployment rates for African-Americans were double, and even sometimes triple, to those of whites • In 1933, unemployment ran approximately 25% for whites while it was as high as 50% for blacks • In areas where they did work, they received 30% less income than whites • Many lived in the south where conditions were worse • Many tenant and sharecroppers lived “below any level of decency”
Scottsboro Boys • Socially, conditions were still deplorable in the south for African Americans • In March 1931, nine black youths were accused of gang-raping two white girls in Scottsboro, Alabama • When brought in front of an all-white jury in April, they were all found guilty and eight of them sentenced to death • The ninth boy was 12 years old and given life imprisonment • He later had his conviction overturned as he should have been tried as a juvenile • The case got the attention of the NAACP and the Communist Party’s International Labor Defense (ILD)
Scottsboro Boys • In November 1932, the boys’ convictions were overturned by the Supreme Court on the basis the boys had not received adequate council • Starting in 1933, the Scottsboro Boys were retried • The ILD hired Samuel Leibowitz, a New York defense attorney, to defend the boys • At the retrial of one of the boys, one of the women admitted that one of them lied for fear of being charged with a Mann Act violation of crossing state lines for immoral purposes • The boys were once again convicted of rape and charged with the death penalty
Scottsboro Boys • The Supreme Court overturned the convictions in Norris v. Alabama (1935) • It stated that the boys had not received due process and equal protection because blacks were excluded from the jury rolls • Four of the boys were found guilty in their third trials • Each of them received jail sentences from 75-109 years • The others had the charges dropped • Two because they were young and the judges found time served was enough of a punishment • Two were disabled at the time of the crime, one blind and the other suffering from debilitating syphilis, and were considered not guilty
World War I veteran Frank Tracy and his children in front of their tent shelter outside Washington D.C. (June 19, 1932)
Bonus Expeditionary Force • In 1930, World War I veterans began demanding immediate payment of their Adjusted Service Certificate • This was a bonus guaranteed by the Adjusted Service Certificate Act of 1924 which gave them a bonus of $1 for each day served in the U.S. (max $500) and $1.25 served abroad (max $625) • It was not scheduled to be paid until 1945 • Hoover and the Republicans did not support an immediate payout • They were fearful that such a large payout would hurt the federal government and relief programs
Bonus Expeditionary Force • In 1932, Representative Wright Patman introduced a bill to the House to give the veterans their bonuses • In support of the bill, former Army Sergeant Walter W. Waters and a number of veterans marched to Washington • The marchers grew in number and were known as the Bonus Expeditionary Force (BEF) • It contained around 43,000 protesters including the veterans, their families, and affiliated groups • Many of them created a “Hooverville” just outside of D.C. in Anacostia Flats
Bonus Expeditionary Force • The bill failed to pass the Senate in June • Most veterans accepted free railroad tickets and left • However, several thousand remained behind in protest • When the protesters clashed with police forces on July 28, 1932, Hoover called this a "Communist conspiracy“ • He sent in the U.S. Army under General Douglas MacArthur to clear the area • MacArthur used tear gas, tanks, and machine guns to clear the protesters and their camps • With him were Major Dwight D. Eisenhower and Major George Patton
Election of 1932 • In the Democratic National Convention, Franklin D. Roosevelt was nominated as the party’s candidate • His running mate was Speaker of the House John Nance Garner of Texas • The Democrats ran on a platform of: • Federal relief for the unemployed • Repeal of prohibition, with the liquor income paying for a reduction in federal spending by 25% • Lower tariffs • FDR gave his promise of a New Deal • “I pledge you, I pledge myself, to a new deal for the American people”
Election of 1932 • FDR traveled throughout the country promoting his idea of change • His campaign song was “Happy Days are Here Again” • Hoover was the Republican candidate • He portrayed FDR as a radical who would make conditions only worse • However, with the Great Depression to his name, he had no chance of winning • FDR won the election with 57.4% of the votes and 472 electoral votes • Hoover only received 39.7% of the votes and 59 electoral
Franklin D. Roosevelt • Franklin D. Roosevelt was born on January 30, 1882 in Hyde Park, NY • As a young child, he was taught by private tutors and then attended Groton School, a private academy, when he turned 14 • He went on to attend Harvard where he was editor of the Harvard Crimson • He then went to Columbia Law School but never graduated because he dropped out after passing the New York Bar Exam • In 1905, he married Eleanor Roosevelt • She was Theodore Roosevelt’s niece • She was also his fifth cousin once removed
Franklin D. Roosevelt • In 1910, FDR started his political career as a New York State Senator • He was a progressive who was best known for fighting the Tammany machine in New York • Because he supported Wilson in the 1912 election, FDR was appointed Assistant Secretary of the Navy in 1913 • While there, he created the Navy Reserve and expanded the navy • After the war, he was responsible for demobilizing the navy
Franklin D. Roosevelt • In 1920, James Cox was nominated by the Democratic Party for president with FDR as his running mate • After losing the election, FDR returned to private life and became vice president of Fidelity and Deposit Company of Maryland • In August 1921, FDR was afflicted with an illness believed to be polio • He was paralyzed from the waist down • Some researchers believe that he had Guillain-Barré which is an autoimmune disease
Franklin D. Roosevelt • For the next few years, FDR worked to improve his health • He did not believe his paralysis was permanent and spent his time seeking treatments and therapies • The most successful was the hydrotherapy treatments he received in Warm Springs, Georgia • He set up the Warm Springs Foundation to help other polio victims, especially those who could not afford treatment • He returned to public life when he was elected as governor of New York in 1928 • There he worked against a Republican state legislature to push through progressive reform including unemployment insurance, conservation and child labor laws
FDR’s Inaugural Speech 1933 • “This great Nation will endure as it has endured, will revive and will prosper. 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. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days.”
FDR as President • When FDR took office on March 4, 1933, the country was in shambles • Over 15 million Americans were unemployed with unemployment at 25% • Over 2 million where homeless • Thousands of financials institutions were on the verge of bankruptcy • Bank runs caused banks to collapse to such a point that 29 states passed legislation placing a moratorium on removal of assets • 32 of 48 states had closed their banks • Industrial production dropped by 50% since 1929 • Price of agricultural products dropped by 60%
FDR as President • Roosevelt surrounded himself with intelligent and innovative advisers • Harold Ickes, a progressive Republican and once supporter of Theodore Roosevelt, was appointed as secretary of the interior • Henry Wallace, another progressive Republican, was appointed as secretary of agriculture • Frances Perkins, secretary of labor, was the first woman ever appointed to a cabinet post • FDR also had an informal “brain trust” of Columbia professors who helped him shape the first New Deal • FDR hoped that his New Deal would bring three things: relief, recovery, and regulation
First Hundred Days • FDR hit his first stumbling block the day after his inauguration • The New York Federal Reserve Bank was unable to open because there had been a bank run on it the previous day • FDR responded by calling a four-day national bank “holiday” to put a stop to the bank runs • During his “First Hundred Days” of office, FDR pushed through legislation to help the failing economy of the country • He started with calling a special session to deal with the financial crisis on March 9, 1933
First Hundred Days • On March 9, 1933, Congress passes the Emergency Banking Act of 1933 • This gave the president the ability to regulate currency • It gave the Treasury the right to inspect banks and issue federal loans • It also legalized FDR’s national bank “holiday” • On March 12, 1933, FDR gives the first of his many “fireside chats” • The purpose was not only to calm the populace about the bank runs but also to convince them that depositing money in the banks was safe
First Hundred Days • On March 30, Congress passes the Reforestation Relief Act • This created the Civilian Conservation Corps (CCC) • It created 250,000 jobs for young men between the ages of 17 and 25 in reforestation, road construction and developing national parks • The men lived in work camps and earned $30 a month, $25 of which had to be sent home • On April 19, FDR took the U.S. off the gold standard • The was done by executive order prohibiting the export of gold • The purpose was to stabilize the country’s gold supply
First Hundred Days • On May 12, Congress passed the Federal Emergency Relief Act • It created the Federal Emergency Relief Administration (FERA) which was authorized to distribute $500 million to state and local governments • Half of the money was to be granted directly on the basis of need with the other half given on a matching basis of one federal dollar for every three state dollars • This money was a grant, not a loan, that was given to states in need • Harry Hopkins was appointed to head FERA and supposedly gave out $5 million in grants in his first two hours on the job
First Hundred Days • Also on May 12, FDR signs the Agricultural Adjustment Act • This called for farmers to reduce crop sizes of major agricultural staples—wheat, cotton, corn, hogs, rice, tobacco and milk—to stabilize prices • The Agricultural Adjustment Administration (AAA) was charged with giving farmers a subsidy for compliance • In 1933 alone, the AAA ordered thousands of acres of cotton plowed up and 6 million young pigs slaughtered • AAA helped large farmers more than small ones • It was often disastrous for tenant farmers and sharecroppers who were simply kicked off the land
First Hundred Days • On May 18, Congress created the Tennessee Valley Authority (TVA) • The Tennessee Valley was one of the more impoverished regions of the country • The TVA was established to construct dams and provide electricity for the region as well as provide fertilizers and education for farmers to improve crop yields • The TVA built nine major dams and many minor ones between 1933 and 1944 • For residents it meant cheaper electricity and an improvement in lifestyle • The TVA was successful as a relief and recovery method since it created jobs for thousands
First Hundred Days • On May 27, the Federal Securities Act was passed • It required stock brokers to file information regarding investments • It also made company directors responsible for improper practices • On June 6, the National Employment System Act was passed • It set up the United States Employment Service (USES), a system of public employment offices
First Hundred Days • On June 13, Congress passed the Home Owners Refinancing Act • This created the Home Owners Loan Corporation (HOLC) which designated to issue government bones to refinance mortgages • This rescued 10% of homes from default or foreclosure • On the last of the “first hundred days,” June 16, Congress passed three more acts to help with the economic crisis • The Farm Credit Act created the Farm Credit Administration • This allowed farmers to refinance their loans and mortgages
First Hundred Days • The Banking Act of 1933 (aka Glass-Steagall Banking Act of 1933) • It separated banks into commercial v. investment banks • It also created the Federal Deposit Insurance Company (FDIC) to insure bank deposits • National Industrial Recovery Act • It also created the Public Works Administration (PWA) to supervise public works projects and create new jobs • It created the National Recovery Administration (NRA) which had the power to set fair competition codes in all industries • The law also gave labor the right to organize and be involved in collective bargaining
First Hundred Days • The NIRA was considered very radical for the time but ultimately failed • The biggest problem behind the NIRA was the NRA • One major problem with the NRA was that it assumed businesses would police themselves • All the codes that were created to protect workers and consumers were drawn up by the biggest companies • Therefore, all the policies were beneficial to large companies, not small businesses or consumers
First Hundred Days • Another key problem is that corporations rarely respected the rights of labor to organize • The federal government did not do its part to enforce labor's right to collective bargaining as per the NIRA • The NRA actually hurt recovery rather than help it • It had tried to stabilize prices by lowering production • The money would have been better off going to consumers to encourage them to buy goods • In 1935 in Schecter Poultry Corp. v. U.S., the NIRA was declared unconstitutional • The Supreme Court stated that the industrial “codes of fair competition” in the NIRA were unconstitutional
