Great Depression 1929-1941

1. Great Depression 1929-1941

2. The economic realities… Prosperity was superficial (apparent rather than actual) • Some basic industries made money • Railroads, textile mills and lumber did not (make money) • Farming (agriculture) was in the most trouble • BIG orders came in just after World War I • Farmers tried to expand their operations to keep up • Demand fell (after the war); a lot of goods were imported • Farmers were in deep debt from trying to expand their farms -US government tried to help farmers with complex laws & new rules, but it failed

3. Some economists warned that a disaster was coming… …..but times were so good that no one believed it would end 1929 September, 1929– after reaching unreal peaks, stock prices began to decline Thursday, October 24, 1929– stocks took a BIG plunge in value Friday, October 25, 1929– leading wealthy investors bought up huge sums of stock to increase the value & restore confidence • The hope was that tempers would cool over the weekend  Monday, October 28, 1929 – prices fell rapidly….again

4. Tuesday October 29th 1929 aka Black Tuesday

5. Wall Street “crashed” (stock prices fell to being worth pennies on the dollar; there was no ACTUAL crash of anything) -stock holders had racked up huge debts (paid for stock ON MARGIN buying stock with only a percentage of the price) CAUSES OF THE GREAT DEPRESSION A depression is an economy in severe decline -America’s industries were old (in their methods and technology) -Agriculture (farming) was in a state of crisis -Credit had been TOO easy to get (people had amassed huge debts) -America had a very unequal distribution of wealth ( a very few people had control of most of the money, land and wealth )

6. What happened in America? -Companies had HUGE inventories of goods AND demand for products fell -Companies laid off OR fired many employees because they had no need to produce goods

7. What happened in America? -People were so afraid of the financial system that they took their money from banks….many banks closed because they had no money in them -Markets around the globe crashed (or struggled) too

8. Hoover tried to promote optimism and get people to go about “business as usual” The strategy of the Hoover team  do nothing and let the economy fix itself Hoover was a Quaker and an engineer – believed in the power of reason to solve problems Hoover was orphaned at age 8….not a career politician…inflexible….believed that local govt. should solve things

9. People called shantytowns “Hoovervilles”; pockets were “Hoover Flags” Americans blamed Hoover….Democrats won a majority of seats in 1930 (mid-term) elections Hoover responded by changed his mind…started the Reconstruction Finance Corporation (RFC) had Federal government spend $800 million to build Boulder Dam (later known as the Hoover Dam between AZ and NV)

10. President Herbert Hoover The Great Boulder Dam (later known as the Hoover Dam)

11. Banking crisis

12. The Dustbowl Breadlines

13. Franklin Delano Roosevelt 1933 ~ FDR

14. the New Deal had 3 aims: relief, recovery & reform • Relief= help for those in distress • Recovery= jump start -OR- spark, the US economy • Reform = prevent the problems that caused a Depression • FDR took office on March 5, 1933- US citizens had suffered for 2 full years (some longer, since 1929) • not enough $$$ in circulation (people took money out of banks and hid it…US business couldn’t operate

15. FDR’s first act ===> close all banks (banking holiday) • banks couldn’t reopen until they could follow new laws and prove they could carry on responsibly • June, 1933 = Congress created the FDIC F D I C EDERAL EPOSIT NSURANCE CORPORATION

16. New Deal tried to fix our economy by a method called “pump priming” • Government spent money (and went into debt) in order to get businesses & the total economy working again • direct relief- local authorities could spend money as they wished to help people in their towns & areas • work relief- FAR MORE DESIRABLE to Americans - “make work” projects (stuff to keep you busy) • US government had to find a way to create jobs that were useful to Americans everywhere…not just to occupy the unemployed

17. by 1936, the US was making economic progress…. • national income increased ($47 billion to $70 billion) • industrial output DOUBLED problems still persisted…. • 3.5 million Americans on work relief • 9 million workers unemployed • few factories working at full capacity (many were shut down or closed)

19. Roosevelt had TREMENDOUS support in 1936 • all Democrats and most Republicans supported him • labor, farmers and black voters supported him, too Roosevelt did have enemies in 1936 as well….. • Big business, small business, bankers, newspapers • their claim ==> FDR was pushing Constitutional limits (the Supreme Court had struck down 7 of 9 New Deal measures) • critics also claimed FDR was taking away freedom AND really not accomplishing anything economically

20. Roosevelt pushed on with his program despite problems • Wagner Act = allowed workers to bargain collectively • (factories could not penalize them for doing this) • A.F. of L. (American Federation of Labor) = began to organize unskilled workers in factories • many labor leaders thought the AF of L was too SLOW • John L. Lewis took action (he led United Mine Workers) • Lewis (and others) created the CIO (Committee for Industrial Organization)

21. The strategy of the CIO was to organize all workers within one type of industry • workers and their unions began to use strikes as a way to gain power • sit-down strikes = workers showed up at their factories, but did nothing once inside the factory • (sit down strikes worked because factory owners couldn’t bring in replacement workers) • Fair Labor Standards Act - set a maximum amount of hours that could be worked in a week & a minimum wage

22. The New Deal also tried to help farmers…… • AAA (Agricultural Adjustment Act) - a New Deal measure that was meant to control how much was grown & how land was used (allow supply to drop & prices to rise) • 1936 ==> Supreme Court struck AAA down • 1938 ==> Second AAA created…it had 4 parts • 1=payments to farmers for setting land aside & not planting • 2=producers & govt. decide which crops would be marketed (and how much each farmer could grow) • 3=when surplus was grown, the govt. promised to buy it and store it (not allow the market to be flooded with food) • 4=government insured crops against weather damage

23. Congressional elections of 1938 revealed a key fact: • Americans & the Democratic party were tired of the New Deal and its agencies (too much power for FDR) • FDR was well aware of this and suspended early New Deal actions • world war was again a possibility…FDR shifted the output of New Deal factories to making weapons • many critics felt that, if allowed to continue, New Deal activities would wreck the progress the economy had made

25. Technicalities of the New Deal • the New Deal had been financed (paid for) in 3 ways: • 1) inflation (allow prices to rise) • 2) deficit spending (government spent more money than it took in through taxes (national debt rose from $16 billion to $40 billion) • 3) raising taxes • while this was happening, FDR’s 2nd term was coming to an end (he wanted a THIRD, despite tradition)

26. New Deal - conclusion Public Works Administration - private contracts for bridges & schools PWA = HOLC = Home Owners Loan Corporation - stimulate home building with cheap loans Federal Housing Administration - encourage homeowners to rebuild, repair or remodel existing homes FHA =

27. 2 NIRA = National Industrial Recovery Act - attack business problems; establish 40 hour work week Section 7A = Workers given the right to negotiate as a group (collective bargaining) Schecter-vs-US (1937) = Supreme court case that nullified the NIRA--government had NO right to rule over every aspect of business Wagner Act = Labor relations brought back by Congress

28. 3 Bank security was achieved by = 1) Federal Reserve protected commercial savings accounts 2) New rules protected the public from worthless stocks 3) Securities & Exchange Commission administers the laws and regulations of stock trading

29. 4 Individual security was achieved by….. the Social Security Act of 1935 1) Unemployment Insurance to the jobless 2) Old age pension to people over age 65 3) Help for the handicapped AND for dependent children Rural Electrification Administration - rural power REA = Tennessee Valley Authority - dams & power TVA =

30. New Deal success was evident in higher national income and higher industrial output • FDR attempted to attack the Supreme Court appointing young men to join older members (anyone over 70); this idea failed miserably • As world events turned more dangerous, PWA & WPA shifted efforts from socially useful projects to NATIONAL DEFENSE • FDR made history - first President to win 3rd & 4th terms

31. Roosevelt said nothing about running again (but he organized the Democratic party so no one else could) • Republicans chose Wendell Wilke of NY • FDR told Americans that the developing world crisis demanded he stay in office • more Americans than ever voted - FDR won again • FDR’s focus turned (almost entirely) to world affairs …..next up  World War II