THE GREAT DEPRESSION AND THE NEW DEAL

1. THE GREAT DEPRESSION AND THE NEW DEAL 1929-1936

2. Background of the Great Depression • For yrs, stock market had been rising • = “BULL MARKET”(opposite = “BEAR MARKET”) • By early Oct 1929, value = $87 b. • Many people liked to speculate(gamble) in stkmkt • Result: higher stock prices • But higher values an illusion b/c companies’ actual productivity much lower

3. Also many ppl bought stks“on margin” • Sometimes only had 10% in cash & borrowed rest from stockbroker • Used stks as collateral • Extremely risky -- WHY?

4. STOCK MARKET CRASH • Oct 24, 1929= “BLACK THURSDAY” • Large investors started selling off stk • Stkprices fell & became virtually worthless

5. “BLACK TUESDAY”= Great Crash (Oct 29, 1929) • More than 16 m. shares sold off as PANIC swept stkexchgs • Brokers demanded customers pay up for margin purchs • By mid-Nov, $30 b. loss in mkt value of stks

6. U.S. banks had loaned heavily to stkbrokers for stk purchases • As stk prices fell, local banks failed • Bank customers lost their savings (even those who had been careful not to “speculate” in stkmkt!)

7. CAUSES OF GREAT DEPRESSION • Weaknesses in some sectors of economy • 1920s "boom" enriched only someAmericans • Weaknesses were masked by bull stock market • Sectors that were hurting: • Farmers struggling after boom time dur Great War • By end of 1920s, other “sick” industries • Ex: mining, textiles, construction, steel & even auto production down by 1929

8. (2) Unequal distribution of income b/t rich & poor • Farmers & laborers’ earnings stayed low or dropped • = less consumer demand • Led to “underconsumption” (pplcouldn’t afford to buy manufactured goods) • Thus, couldn’t pump $$ back into economy • Also, many biz & consumers bought a lot on credit

9. 3) After crash, tighter credit (fewer loans available) by Federal Reserve System • Thus, not enough money supply to allow economy to come back

10. (4) Worldwide crisis, not just US: • (a) Due to instability left from Great War • (b) US biz not lending to Europe in 1920s • (c) US raised tariffs (Smoot-Hawley tariff in 1930) • How did this hurt world economy & US?

11. Impact of Great Depression • Worst depression ever in US • Lasted longer & caused more losses to more ppl • From 1933-34, overall jobless rate 25%; another 25% of workers had wages & hrs cut • Affected 1 in 2 US households • B/t 1930-32, more than 5,000 banks failed • No fed deposit insurance existed to guarantee savings • Ppl had no $$ to spend…Led to cycle of more factories closing…fewer jobs

12. Bread lines, • Soup kitchens, • Shanty towns, • Hobos & tramps

13. The Government's Response: Hoover • Hoover believed that if left alone, the economy would right itself • Thought gov’t should cut spending even further • WHY? • Concerned about unbalancing fed budget & violating laissez-faire ideals

14. Hoover refused to allow fed govt to provide direct aid (food, $, shelter) b/c would weaken moral fiber of Amerppl; hurt their self-respect • Thought charities, churches & local govtsshould help • Also afraid would make US communist/socialist +result in large fed bureaucracy

15. Meanwhile, hunger & homelessnessbig problems • City govts & religious groups & Red Cross tried to help, but not enough

16. DUST BOWL • Terrible dust storms & drought from 1932 – 1939 in Great Plains (Oklahoma, Neb, Tx, Colo, NM, Dakotas) • Many “Okies”fled to Calif & W. Coast for better life • Looked down on as hicks; in competition w/ Mex & Filipino migrants already in Calif • Some employers took advantage & paid poverty level wages

17. Also more discrimination against Mexican migrant farm workers living in Southwest (Calif, Tx etc.) • Pressured to leave US (even US citizens) • Result: many sought repatriation(return to former homeland)

18. PSYCHOLOGICAL EFFECTS • Huge stress on families; high divorce rate • Shame of unemployment & loss of biz or homes; desertion by fathers • Wives took on extra work (ex: sewing, laundry) or jobs outside home (offices & retail) • Fewer people getting married & having kids, less hope for future

19. Dorothea Lange, Migrant Mother One of most famous photos from Depression era

20. ESCAPISM through entertainment Ziegfield Follies show Fred Astaire & Ginger Rogers Pulitzer Prize for fiction, 1939

21. What Hoover did: • (1) Tried to encourage voluntary action by biz leaders • (2) Tried to stabilize biz community • Created Reconstruction Finance Corp (RFC) in Feb 1932 to loan $ 2 b. to strengthen big biz (ex: RR, insur, banks) • But not enough benefit to small biz, or to needy indivuals • (3) Tried to help farmers thru Agricultural Marketing Act, setting up Farm Board to make loans to help set up cooperative marketing associations • But again, didn’t go far enough to prevent farm foreclosures

22. Hoover not flexible enough • Hated & blamed by all: “Hooverville” = shantytown “Hoover blanket” = newspaper used for warmth

23. “Hoover Valley” Central Park, NYC

24. “Bonus Army”, 1932 • App 20,000 WWI vets & families came to DC to ask Congress for “bonus” promised (13 yrs earlier than scheduled)

25. July 1932: US Army charged their camps w/ tear gas, tanks & bayonets to destroy shacks & forcibly evict vets • Hurt 100s, 1 baby died • Outrage at HH!

26. Democrat FDR easily defeated him in Nov 1932 • Anyone but Hoover!

27. Franklin Delano Roosevelt (FDR) • As NY Guv, FDR had provided aid to ppl& biz in need • From wealthy NY family; crippled by polio • Distant cousin to Teddy R. (but a Democrat unlike Teddy) • FDR upbeat, believed in social reform Hoover & FDR ride together on Inauguration Day

28. After inauguration, Bonus Army returned to DC • FDR’s wife Eleanor gave them coffee & led in song “Hoover sent the army. Roosevelt sent his wife.”

29. Eleanor Roosevelt • Eleanor compassionate about suffering in Depression • Also sympathetic towards blacks • Arranged for opera singer Marian Anderson concert at • Lincoln Memorial to fight racism

30. FIRST NEW DEAL • From Mar thru June 1933, FDR proposed & Congress passed 15 different programs • Referred to as “HUNDRED DAYS”

31. Bank holiday • Before FDR sworn in, many states had declared banking moratorium (temporarily closing banks) to calm down panicky depositors…but led to more closings • Day after FDR sworn in, he declared 4-day “bank holiday” to enable fed govt to examine banks to determine their health • Later FDR reassured people w/ “fireside chat” • Next morning, > $1 b. deposits made

32. Created “alphabet soup”of new fed agencies • All tried to solve probs of 3 R’s: • RELIEF for unemployed • RECOVERYto stimulate biz • REFORMto reduce possibility of future disaster

33. RELIEF PROGRAMS • --Fed Emergency Relief Admin (FERA)= gave $ to state & local welfare agencies • --Civil Works Admin (CWA)= created jobs to get ppl off the ”dole”(welfare) • Govtpd $750 m. to app 4 m. people

34. --Civilian Conservation Corps • (CCC) • Job training to young men; mostly tree planting • --Public Works Admin (PWA) • Govtcontracts for private cos to build rds, govtbldgs • Hoped to stimulate economy \

35. RECOVERY • --NatlIndustrial Recovery Act (NIRA) • Allowed competing cos to work together; suspended antitrust laws • Govttrying to keep prices stable, raise wages, provide jobs • Also allowed workers to join unions, collectively bargain & strike • Increased unionization resulted in more strikes • BUT…FDR didn’t really help workers b/c worried most about corporations’ recovery • Also ended up hurting small biz

36. FARMERS • --Agricultural Adjustment Act (AAA) • Govt paid farmers “subsidies” to produce less & thus raise crop prices • Problems: • Higher costs to consumers • Also crops & animals were discarded when ppl were starving • Sharecroppers forced off land • Southern Tenant Farmers’ Union (STFU) went on strike but no real results & little help from FDR

37. --Tennessee Valley Authority (TVA) • Fed govt’s hydroelectric power program (7 states) • Dam-building, electric power-generation, flood and erosion control, built recreation areas • Created relatively high-wage construction jobs • **Most controversial program b/c greatest fed govtinvolvement in communities

38. REFORM • --Securities Act of 1933 • Made companies liable for fraud in deliberately misleading investors • --Federal Deposit Insurance Corp (FDIC) • Insurance up to $2500 on bank accts

39. CRITICISM OF NEW DEAL • From conservatives: • --AMER LIBERTY LEAGUE • Conservative group backed by biz interests • Opposed New Deal as being socialism • --Father Coughlin, Catholic priest w/popular radio show • Claimed New Deal led US toward Communist dictatorship • Blamed Depression on a Jewish conspiracy • Considered a demagogue = someone who appeals to peoples’ prejudices to get power

40. Critics on Left: • -- • --Dr. Francis Townsend • Tried to get radical pension plan for seniors passed but failed • --Huey Long, Guv & Sen from Louisiana • “Share our Wealth” program • All income above $5 m confiscated & given to families to • guarantee all Amer families $5,000 annual income + home

41. 1935 Second New Deal • Supreme Court began to strike down ND laws • FDR response: tried to get new ones passed • Ex: AAA farmer subsidies overturned by Sup Ct • --FDR then tried to help farmers w/ Soil Conservation Act • --Also Rural Electrification Act (REA) 1935

42. Another ex: Sup Ct found NIRA unconstitutional, so pushed for Works Progress Admin (WPA) • --Created construction jobs • --Also employed artists, writers, actors, directors, photographers • --Over 8 m. employed on WPA projects 1935-1943

43. Also passed National Labor Relations (Wagner) Act • --Strengthened labor union rts to organize & bargain • --Led to formation of Congress of Industrial Organizations (CIO) whose auto worker and coal miner units got big wage increases • --Ex of 2nd New Deal restoring economy “from the ground up”

44. Social Security Act • --Unemployment insurance • --Pensions for ppl> 65 yrs old • --Payments to disabled, elderly, widows or children of male workers who died • --Safety net for older workers

45. 1936 Election • IMPORTANT: Many blacks switched to Democratic Party (had been Republicans due to Reconstruction)

46. “Court Packing” • After re-election, FDR tried to add up to 6 new justices to 9 member Sup Ct • People thought violation of Constitution, FDR acting like a dictator • Plan failed but…Sup Ct started to uphold more FDR programs after

47. Economy sort of improving in 1936 & early 1937 • But slumped again in Aug 1937 (“Roosevelt recession”) • So FDR again increased govt lending & spending, but didn’t end Depression

48. IMPACT ON WOMEN • Positive: • --1stfemale cabinet member, Frances Perkins, Secty of Labor • --FDR appointed female judges & ambassadors; more than 100 in high positions in govt • Negative: • --Still very few females & most not very influential in govt • --Much discrimination in hiring & salaries

49. Eleanor’s women-only press conferences

50. IMPACT ON BLACKS • Positive: • --Some ND programs gave blacks jobs & $$ (PWA, WPA & FERA) • --FDR had group of AA advisers w/in fed govt (the “Black Cabinet”), ex: Mary McLeod Bethune • Negative: • --Still much discrimination in hiring, wages, segregation • --FDR didn’t support fed anti-lynching law or repeal of poll tax