Chapter 24

1. Chapter 24 The Great Depression and the New Deal 1929-1939

2. Introduction • Franklin D. Roosevelt • Elected president in 1932 • During the Great Depression • Dominated national politics until his death in 1945 • The New Deal • FDR’s programs • Aimed at relief, recovery, and reform

3. Introduction (cont.) • The New Deal went through 2 phases • 1933-1935 • 1st New Deal • Attempted to unite all Americans • Relief and recovery measures • 1935 • 2nd New Deal • More radical • Impose greater govt. regulation • Introduced legislation to benefit workers, farmers, sharecroppers, and others at the bottom of the economic ladder

4. Introduction (cont.) • A superb politicians, Roosevelt won the love of the have-nots and the hatred of many of the financially privileged

5. Introduction (cont.) • 1.) What were the causes of the 1929 stock market crash and of the depression that followed? • 2.) What was the social and political impact of the crash and depression? • 3.) What strategy did the first New Deal employ, and what specific measures were passed to implement it? • 4.) Why did Roosevelt turn to a second New Deal in 1935, and what major legislation expressed the shift?

6. Introduction (cont.) • 5.) How did the depression and New Deal affect farmers, workers, women, and minorities? • 6.) Which New Deal programs failed and why? Which programs still have an impact on the nation and why? • 7.) How did the economic hard times affect American arts and popular culture?

7. Crash and Depression, 1929-19323 • Black Thursday and the Onset of the Depression • In 1928, a wave a wild speculation started • 9 million Americans played the market in hope of quick profits • This drive stock prices to dangerously inflated levels • Worse yet, they often speculated on borrowed $$$ • They bought on margin

8. Black Thursday and the Onset of the Depression (cont.) • Factors contributed to the speculation: • Low taxes for the rich • Created by Sec. of Treasury Andrew Mellon • The easy-credit policy of the banks • The optimistic buyers ignored warning signs • Falloff of new construction

9. Black Thursday and the Onset of the Depression (cont.) • Oct. 24, 1929 • Black Thursday • Speculative bubble bust • Stock prices plummeted • Panicked shareholders rushed to sell • On the following Tuesday, the plunge continued • History Channel video--Black Tuesday • This stock market crash trigged the worst depression in U.S. history • History Channel video--1920's economic troubles

10. Black Thursday and the Onset of the Depression (cont.) • Between 1929 and 1933, the nation sank deeper and deeper into depression • Farm prices declined by 60% • 5,500 banks failed • Unemployment rose to 25%

11. Black Thursday and the Onset of the Depression (cont.) • What were the causes of the Great Depression? • Structural vs. monetary policies • Many economists point to the structural weaknesses in the economy: • 1.) Workers’ wages did not rise sufficiently during the 1920’s to allow them to buy all of the consumer goods coming off the factory assembly lines • By 1929, there was an overproduction crisis • More houses, automobiles, electric appliances, etc. for sale than there were Americans who could afford to buy them

12. Black Thursday and the Onset of the Depression (cont.) • 2.) The 1920’s depressed agricultural sector further weakened the economy. • 3.) The collapse of European economies under the weight of WWI debt repayments and the unfavorable balance of trade with the U.S.A. • This caused our foreign sales to fall sharply

13. Black Thursday and the Onset of the Depression (cont.) • The monetarist school of economist claim it was the tight-money policy of the Federal Reserve Board in the early 1930’s that caused the Depression • Contracted credit denied businessmen the capital they needed to start new ventures and get the economy rolling again

14. Hoover’s Response • President Hoover’s ideological commitment to private-sector initiative, limited govt. intervention, and balanced federal budges severely handicapped him in dealing with the Depression • Hoover asked business leaders not to: • lay off any more workers • impose further wage cuts • Business leaders initially agreed • They later broke their pledge because they could not sell their products

15. Hoover’s Response (cont.) • Hoover preached that private charity and local govt. must handle relief for the jobless • Private philanthropy and city and county govts. were soon overwhelmed by the numbers needing help • Reconstruction Finance Corporation • Empowered to lend money failing business corporations • He held out until July 1932 in using any federal funds to assist states in helping the unemployed

16. Hoover’s Response (cont.) • His pronouncements in favor of self-help and local initiative made him seem indifferent to the suffering of depression victims

17. Mounting Discontent and Protest • Millions of people lost their jobs • They and their families often were unable to feed themselves or pay rent • They wandered the country looking for work • They often lived in shantytowns called “Hoovervilles” • “Hoover Valley” in Central Park was the most famous

18. “Hoovervilles”

19. “Hoovervilles” (cont.)

20. “Hoovervilles” (cont.)

21. “Hoovervilles” (cont.)

22. Mounting Discontent and Protest (cont.) • Everywhere banks foreclosed on farmers and homeowners who could not meet mortgage payments • The spreading mood of despair and confusion resulted in an expanded suicide rate

23. Mounting Discontent and Protest (cont.) • As conditions worsened, protests escalated • Midwestern farmers tried to raise agricultural prices by halting the shipment of food to cities • Destitute veterans marched on Washington demanding immediate cash payment of their bonuses for WWI service • Hoover ordered the army to remove the “bonus marchers” from the capital • The sight of armed troops expelling peaceful veterans convinced the public of Hoover’s callousness

24. Mounting Discontent and Protest (cont.) • Writers in the early thirties reflected the despair and disillusionment with life in capitalist America • John Dos Passos • The 42nd Parallel • James T. Farrell • Young Lonigan • Jack Conroy • The Disinherited

25. The Election of 1932 • Republicans nominated Hoover • Stuck by his failed antidepression measures • Democrats nominated Franklin D. Roosevelt • Not clear on how he would fight the Depression • The anti-Hoover sentiments of the people carried FDR and the Democrats to lopsided victories in the presidential and congressional elections • History Channel speech--FDR inaugural address

26. The New Deal Takes Shape, 1933-1935 • Roosevelt and His Circle • The promise of govt. action and the mood of optimism in FDR’s inaugural address lifted peoples’ spirits • New Deal • Relief, recovery, and reform measures • “brain trust” • A circle of Roosevelt’s advisers • Devised broad programs of “federal economic planning”

27. Roosevelt and His Circle (cont.) • Eleanor Roosevelt • Along with her social worker and women reformer friends • Pushed for legislation to assist the economically disadvantage and minority groups

28. Roosevelt and His Circle (cont.) • Old-time Progressives, university professors, and able young lawyers joined the Roosevelt administration to contribute ideas and administer new programs

29. The Hundred Days • March 9 and June 16, 1933 • The administration introduced and Congress passed an unprecedented volume of legislation • These laws had the overall effect of greatly increasing federal involvement in the economy

30. The Hundred Days (cont.) • Federal Deposit Insurance Corporation • FDIC • Insured bank accounts up to $5,000 • Civilian Conservation Corps • CCC • Employed jobless young men on conservation projects • Home Owners Loan Corporation and the Farm Credit Administration • Refinanced mortgages • Saved homes and farms of millions

31. The Hundred Days (cont.) • Other important laws imposed regulation on the stock market • Tennessee Valley Authority • TVA • Electricity to rural America • Public Works Administration • PWA • Construction of public projects/improvements

32. The Hundred Days (cont.) • Federal Emergency Relief Administration • FERA • Federal $$$$ for relief efforts • Agricultural Adjustment Act • AAA • Aimed at reviving agriculture • Guaranteed prices for agricultural produce • Paid farmers for not growing crops that were in surplus

33. The Hundred Days (cont.) • National Recovery Administration • NRA • Aimed at reviving businesses • Helped business draft and enforce codes to eliminate cutthroat competition, price-cutting, and the use of child labor • Management promised to bargain with the unions chosen by their employees

34. Problems and Controversies the Early New Deal • Complaints concerning the NRA multiplied • Management resented govt. regulation • Small businesses claimed that the codes helped only the big farms • The NRA was bogged down in supervising code making in every possible industry • In 1935, the Supreme Court ruled that the NRA was unconstitutional

35. Problems and Controversies the Early New Deal (cont.) • Overall farm income rose by 50% between 1933 and 1937 • Drought • the AAA payment not to grow surplus crops • The AAA did nothing for landless farm laborers • It hurt tenants and sharecroppers • Landlords kicked many tenants and sharecroppers off their property • Landlords pocketed the govt. subsidy checks

36. Problems and Controversies the Early New Deal (cont.) • Poor farmers also fell victim to the vast dust storms that rolled over the Upper South and the Great Plains • Destroyed the crops in their paths • History Channel video--Dust Storm • History Channel speech--Dust storms • Many poor farmers, tenants and sharecroppers headed for CA • They struggled to survive as migratory farm laborers

37. Problems and Controversies the Early New Deal (cont.) • Between 1933 and 1935, New Dealers were split between whether the govt. should concentrate on pulling up the agricultural sector as a whole or on helping the rural poor • It was not until 1935 that legislation aiding farm laborers, tenants, and sharecroppers was passed

38. Problems and Controversies the Early New Deal (cont.) • The PWA projects were enduring projects • Led by Harold Ickes • The PWA was slow though to get work under way • It was also slow in putting $$$ into the hands of the unemployed

39. Problems and Controversies the Early New Deal (cont.) • Harry Hopkins led the FERA (Federal Emergency Recovery Administration) • FERA quickly dispensed millions of dollars to the poor • Roosevelt relied more and more heavily on Hopkins • Transferred funds from PWA to FERA

40. Problems and Controversies the Early New Deal (cont.) • Hopkins created the Civil Works Administration (CWA) • CWA created more jobs for the poor • Hopkins continued to dominate federal relief policy making during and after the Great Depression

41. Challenges from Right and Left, 1934-1935 • When the first phase of FDR’s New Deal did not end the Depression, frustration with and criticism of Roosevelt began • In 1934, there were thousands of strikes • Some led by communists • American Liberty League • Created by business leaders and conservatives • Charged that the New Deal was radical and socialistic • Wanted to defeat New Dealers at the polls

42. Challenges from Right and Left, 1934-1935 (cont.) • FDR and policies retained the support of most Americans • In the 1934 midterm congressional elections the Democrats greatly increased their majorities in the House and Senate

43. Challenges from Right and Left, 1934-1935 (cont.) • Demagogic extremists were gaining some support • Proposed radical plans for ending the Depression • Charles Coughlin • National Union of Social Justice • Francis Townsend • Elderly supporters • Huey Long • “Share Our Wealth” movement

44. Challenges from Right and Left, 1934-1935 (cont.) • In 1935, Roosevelt proposed a second burst of reform, relief, and recovery legislation • Hoped to lessen the discontent and steal the thunder of the extremists

45. The New Deal Changes Course, 1935-1936 • Introduction • Roosevelt took a swing to the left • He proposed to Congress a new package of reform measures • “Second New Deal” • Emphasis on aiding the disadvantaged rather than trying to appeal to all classes

46. Expanding Federal Relief • Emergency Relief Appropriation Act • Congress passed in 1935 • Granted nearly $5 billion • Expanded work-relief programs • Works Progress Administration • WPA • Headed by Harry Hopkins • Received the largest amount of $$$ from the Emergency Relief Appropriation Act

47. Expanding Federal Relief (cont.) • WPA (cont.) • 1935-1943 • Employed over 8 million people • Construction • Clerical • Professional • Arts endeavors • Thousands of roads, bridges, schools, hospitals, post offices, and other public facilities were constructed or repaired • Millions of Americans enjoyed free or low-cost plays and concerts, saw murals and paintings, and received instruction in the arts

48. Expanding Federal Relief (cont.) • National Youth Administration • Another new agency • Provided part-time jobs for students • Allowed thousands of young people who otherwise could not have afforded to go to or remain in college • The PWA also shared in the $$$$ • Used for major construction projects

49. Expanding Federal Relief (cont.) • The large amounts of money spent on these work-relief programs caused mounting federal budget deficits • British economist John Maynard Keynes • Said such deficit spending was a positive way to pump funds into the economy and combat the Depression • Called Keynesian economics

50. Expanding Federal Relief (cont.) • Roosevelt never endorsed Keynesian economics • He did tolerate deficit spending as a short-term necessity to relieve the suffering