Great Depression and the New Deal (1929-1939)



Great Depression and the New Deal (1929-1939)Causes/Effects of Great DepressionHoover FDR – Great Depression PresidentsPeople believed that is was just part of economics – standard depressionTook two presidents and 12 years – ended with WWIIWall Street CrashStockmarket was symbol of wealth in the 20s‘the decade of the boom and the bust’ = 1920s US Stock Exchange and NY Stock Exchange rose continually for 18 monthsSept. 3 – DOW reached all-time highMillions of people invested – get rich quickWeren’t informed, educated2 weeks up to crash, stock prices had fluctuated greatlyPanic to sell began on Oct 24th, Black ThursdayPrices plunged when too many people tried to sellGroup of bankers tried to trick market and purchased millions of dollars, only worked one day – Friday, Oct. 25thSelling resumed on Monday and the bottom fell out on TuesdayBlack Tuesday = Oct. 29DOW was at 41, roughly 1/9 of what it had beenCauses of CrashUneven distribution of income – disproportionment of wealthWages weren’t rising as much as pricesTop 5% had 1/3 of all the moneySpeculation in the Stock MarketPeople expected quick profits and didn’t care for health of the companyUsed buying on marginBorrowing money to purchase stock – debts repaid by profits made by stockExcessive use of CreditPeople were buying large things on installments Believed that prosperity was permanentSaturation of Key industriesBusiness grew and productivity increased - people bought moreConsumers didn’t demand something because they already had productsCompanies had to cut back production and lay off workersGovernment PolicyLeaders did not pay attention to economists Government had faith in business, didn’t regulate it, passed tariffs that hurt USHawley-Smoot TariffHurt farmers and international tradeWeak Farm EconomyProsperity never reached farmersSuffered from overproduction, excessive debt, low prices, surplus. Weather didn’t cooperate Global Economy was in bad shapeNations had grown very interdependent Great Depression was a world issue US made programs, rest of world built ‘war machine’EffectsMaslow’s Hierarchy of NeedsSelf-ActualizationSelf-esteemSafety and SecurityEssentials (shelter)Depression Mentality can be seen in the elderly todayDepression ended when American was employed to provide supplies for WWIIGross national product was cut in halfNational incomes declined by 50%1/5 banks clothes down10 million dollars in savings accounts was completely goneUnemployment25% of workforce, not including farmersPoliticsThe Republicans were doomedThe federal government got huge – New Deal agencies and programsPeople accepted this – government was seen as a way to help peopleLifestylePeople had to move to find workHoovervillesPeople were evicted and had to live in shanty townsHoover’s PoliciesTariffs /Debt Moratorium Hoover didn’t believe in direct reliefHe was in denial; tried to prevent the panicThought government would make it out alrightResponseHoover raised tariffs to help economy and foreign tradeHawley-Smoot just made it worseMoratorium‘payment holiday’ – extension of debt time limitHurt the banksFederal Farm Board and RFCCreated in 1929 – expanded during CompressionHelped to stabilize pricesReconstruction Finance CorporationGovernment loans money to big businessSaid profits would trickle down to the average people – but it was slowBoulder DamBuilt it Hoover DamGovernment paid people to build dams and work on them to give people jobs and create electricity in the areaFarm Holiday Association and Bonus ArmyFHAFarmers wanted to retaliate Were trying to prevent the 1932 crop from reaching the marketBut not everyone agreed, so organization collapsedBonus Expeditionary ForceNot an army – large group of people who were WWI vetsWere told that they would receive a pension from the governmentPetitioned for Hoover to give them their bonus early, he said noThey went to DC – million man marchCamped out, were turned away with tanks Several people were killed; an infant was killedTurned many people against Hoover – cold and callous1932 Election and Lame DuckRepublicans renominated HooverVaccum sucks, and Hoover sucked tooDemocrats nominated Franklin Delano RooseveltWhen he was nominated, pledged a ‘New Deal’ for the peopleWanted to repeal prohibitionAid unemployedCut government spendingVotersWho could end the Depression?3/5 voters chose FDRSocialists – nominated President Norman ThomasAbandoned Thomas to vote for FDRDemocrats also won both Houses by a large majorityLame Duck Amendment – 20th Amendment January 20th was the new date for the president to take office FDR’s New DealFDR and Eleanor New Deal didn’t solve all of the problems of the DepressionThough it helped, it was mainly the war economy of WWII that saved the country’s economy EleanorMarried Teddy’s niece – Eleanor, his 5th or 6th cousinMost active first lady in historywrote a news columntraveled the country and reported to FDR about what the country neededspoke to many audiences FDRExpanded executive branch; dominated presidency 12 years and 2 monthsWas elected 4 timesMost influential world leader of the 20th centuryBorn in a wealthy NY familyAdmired older cousin TeddyHad many similarities – but Teddy was R and Franklin was DGot polio Worked hard to hide itFounded the ‘March of Dimes’Great orator, charismatic, had a warm personalityWanted to remember the forgotten manMade vague promisesThree R’s and Brain TrustThree R’sRelief for unemploymentRecovery for businesses and the economy in generalReform – long-termBrain TrustRelied on this group of smart academia types for adviceHad most diverse cabinet at the timeAppointed blacks; first female Cabinet member – Frances PerkinsFirst 100 DaysCongress turned to President for helpCalled emergency meeting – 1st 100 daysCongress passed nearly all of his programsEnacted more programs in 100 days than a 2 year CongressThere were so many agencies Alphabet soup of agenciesRun on the BankPeople ran to get their money, but it wasn’t thereOver 5,000 banks failedBank HolidayClosed banks down for long weekend Wanted to stop ‘Run on the Bank’Investigators went in:Determined health of the bankReorganized system and reopened stable banksFireside ChatsUsed radio to convey messages to the public Used to invoke coziness; reassurance to American peoplePeople tuned in to hear the President speak Told the public what was going on, how things workedPublic responded by depositing more money in the banks than they took outProhibitionUsed 21st amendment to repeal the 18thAny liquor could be sold and consumed RecoveryEmergency Banking Relief ActLaw that created the Bank HolidayFollowed it up with the FDIC Guaranteed everyone’s accounts up to 5,000 dollarsCreated HOLKHome Owner’s Loan CooperationProvided for refinancing of homes on existing mortgages, lowered rates – backed by governmentFarm Credit AssociationProvided low interest loans and mortgages for farmers to refinanceReliefFERA – Federal Emergency Relief ActFed gov gave block grants to state and local governmentsGovernments spent the money however they thought it was necessaryProject Works Administration (PWA)Directed by Harold Ickes, secretary of the interiorGave money to state and local governments to build roads, bridges, and dams – other public worksMany needs, employed many peopleCCC – Civilian Conservation CoreCleared land, fixed up areas, conserved landMen 18-25 were able to work for CCCTVAHuge regional development experiment – TN Valley AuthorityTook TN Valley and the Southeast and made it worth somethingBuilt a series of 45 dams – NC, TN, AL, KY, GAWater was used for hydroelectric powerMade huge dams and lakes – entertainment, tourismWas used for erosion control, cheap electric power, transportationBank HolidayClosed banks down for long weekend Wanted to stop ‘Run on the Bank’Investigators went in:Determined health of the bankReorganized system and reopened stable banksFireside ChatsUsed radio to convey messages to the public Used to invoke coziness; reassurance to American peoplePeople tuned in to hear the President speak Told the public what was going on, how things workedPublic responded by depositing more money in the banks than they took outProhibitionUsed 21st amendment to repeal the 18thAny liquor could be sold and consumed NIRANational Industrial Recovery AdministrationCommunism/Socialism – supposed to guarantee profits for businesses and fair conditions for laborSuspended anti-trust laws to do thisNIRA evaluated separate industries, studied them, and said how much a company could produce, how many workers should be hired and what the wages wereSet fair codes of competition – wages, employment, levels of production, final product’s priceFirst time that the government recognized unions legallyGave workers right to bargain collectively, rights to organizeLater declared unconstitutional; did help economyBecause government cannot regulate businessAAAAgricultural Adjustment Administration Encouraged farmers to decrease productsPaid farmers by the acre to farm their crops under and kill livestockDeclared unconstitutional 2 years laterControversial because farmers had to kill things, but weren’t able to sell themHelped farm prices increase Other Programs of first New DealCongress adjourned briefly and then returnedLate 1933 CWACivil Works Administration Hired workers to do temporary construction projects paid by governmentSECDesigned to regulate the stockmarket; supposed to end speculative practicesSecurities and exchange commissionFHAFederal Housing AdministrationHomeowners would get people loans to build new homes and replace old homesGave construction industries a boost Country was taken off the gold standardFed. Reserve Board placed country back on the gold standardFirst two years were just getting the country back on its feetThe Democrats won by even more in the next electionSecond New DealRelief Programs (WPA, Resettlement Adm.)WPACreated in 1935, Works Progress Administration Spent billions of dollars btw ’35 and ’40 to provide 3.4 million men and women with jobsPaid double the relief rate, but didn’t pay as much as if you were working at a private companyMuch bigger version of PWA, CWA – more direct from federal governmentBuilt new bridges, roads, airports, zoos, public buildings, stadiums, schools, gutter and culvert systemsFederal Project # 1Music project, artists project, theater project, writer proectEmployed people of such professions to contribute to communityNational Youth Administration (NYA)Students would have part-time jobs after school to clean up and do chores around the schoolResettlement AdministrationProvided loans to sharecroppers, tenants, and small farmersCreated migrant camps on the way to CA where migrants could stop on the wayReforms (Wagner Act, REA, Taxes)NLRA – National Labor Relations Administration (Wagner Act)Major labor law placed that was supposed to replace the labor parts of the NIRA, which was declared unconstitutional Outlawed business practices that were unfair to laborCreated a National Labor relations board to investigate working conditions at businessesEnforced lawREA – Rural Electrification ActProvided electrical cooperatives to deliver power to rural areasRevenue Act of 1935Raised taxes on the wealthyAdded a tax on luxury items and an inheritance taxStarted taxing stocksSocial Security ActAutomatically collect money out of your paycheck which is supposed to go to your retirementElection of 1936 and Solid South/Coalition Economy was improved, though econ was still weak and unstableDemocratsFDRStill popular, showing leadership, working hardThe public adored him, though businesses and the rich disliked himRepublicansLandonWanted to cut back on spendingRoosevelt won all but two states Democratic party could now count of votes from New Democratic CoalitionSolid south, African Americans, laborers New Deal CriticsLiberals/ConservativesOpinion polls and elections results showed that majority liked FDRLiberalsSocialists, extreme liberals in D partySaid FDR didn’t do enough for the people – working poor, unemployed, elderly, women, foreignersConservativesMore numerous than liberalsSaid federal government had way too much power and that the Wagner Act was too much like socialism and communismDidn’t like regulations, union help, the fact that the government borrowed money to pay for programsDemagoguesIndividuals came from both partiesStrong-willed individual that manipulates the publicOffers simple solutions and messages and sayingsUsed radioTried to use evil conspiracies, economic security for the elderlyCharles Coughlin – said gov. should inflate currency and nationalize all banksSaid FDR was scheming with rich Jews; Catholic superiors told him to shut up and get off the airFrancis TownshendRetired physicianProposed single plan to guarantee secure income for the elderlySaid everyone over 60 were supposed to get 200 a month from governmentThey were supposed to spend itFDR created Social Security as a result Huey LongVery popular in LouisianaProposed a ‘share our wealth’ programTaxed the bejeesus out of the wealthy and give everyone 5,000 a month, a car, and a home. 1935 – announced his plans to challenge Roosevelt for president; but was mysteriously assassinated while walking through the Louisiana State Capitol Supreme CourtRoosevelt’s ChallengeHe was determined to fix the SC to where it wouldn’t be an obstacle in his eyesDidn’t have the opportunity to choose justices; many were left over from conservative eraSubmitted Court Reorganization Plan, ‘Court Packing Bill’Tried to get president to appoint an additional justice for each justice over 70 and halfDeclared some of his agencies unconstitutional; said they were old and were still in the past he could have added 6 new justices Never passedmany Republicans and Democrats were outragedsaid he was trying to become a dictator; go against the ConstitutionReorganization Plan was defeatedRoosevelt’s first major defeat His popularity decreased somewhatMeanwhile, many of the justices backed off in their resistance, some did resign in his second termHe was able to appoint his own justicesRise of UnionsCIO FormsUnions had flourished in the progressive era, and then went down in the 20sTwo major things changed the situation btw the workers and management:NIRAWagner Act When depression began, union size tripledAFL was still biggest unionUnderwent strains and factions – rival unions within AFLSome groups wanted to extend membership to anyone regardless of sex, age, etc CIOCIOLed by John L. Lewis who initiated the effortAFL suspended CIOCIO Congress of Industrial OrganizationsMade their own unionStrikesGeneral Motors Plant – Flint Michigan1937 – strikeCompanies refused to recognize unions so the workers had a sit-inGovernment did not support company with troopsCompany had to yield and recognize the United Auto Workers UnionFord PlantStrikers were driven away and beaten Battle of the OverpassSteel IndustryRecognized the CIOBy 1941, nearly all companies dealt with the CIOFLSA1938 – Fair Labor Standards ActRegulated interstate businessesEst. first federal minimum wage40 hour work weekOvertime – time and a half pay for over 40 hoursRestricted child labor for those under the age of 16Last and only major reform in Roosevelt’s Second termEnd of New DealRecession, 1937-38Major recession’33-’37 – banks were stabilized, employment was betterIn winter of ’37, economy got worse because of:Social SecurityReduces spending because the people have less to take home and spendRoosevelt cut back on relief programs WPA, etc. Wanted to reduce national debtJohn Maynard KeynesBritish economist who was consulted by RooseveltSaid he made a mistake by trying to cut spendingSaid at this point it time, deficit spending was acceptable to be used in desperate times and in order to give people jobsKnown as ‘priming the pump’Keynesian theory was adopted in 1938Spending, employment, and industrial production went upWeakened New DealRepublicans and conservative democrats started to block ambitious reform legislationNew Deal was diverted by changing moods and WWIIDepression MentalityPeople were insecureLife During the DepressionWomenWomen kept families together Still had to feed and clothe their familiesMore had to work; percentage in workforce increasedStill earned less than menFarmersDrought made things worse Dust BowlDust BowlIncluded Texas, AK, MI, OK, KACollectively called OkiesTrying to go west and find work because they had borrowed money and lost their farmsAfrican-AmericansFaced discrimination; got worseAfrican Americans were the last-hired and the first-firedUnemployment exceeded national averageDespite poverty, many were left out of New Deal and relief programsTVA had early affirmative actionSuffered more lynchingsFDR never did anything for Civil RightsDidn’t want to lose southern votesGot moral support from individuals - Eleanor Roosevelt and Ickes Efforts to get blacks into elections were increasingBlacks supported FDR and the DemocratsFederal Council of Negro Affairs to advise the presidentNative-AmericansJohn Collier – NA AdvocateAppointed commissioner of bureau of Indian AffairsPassed IRA – Indian Reorganization ActGot rid of Dawes ActSupported preservation of culturesNew Deal was accused of withholding control from NAsMexican-AmericansMain source of labor farming US Road to War, 1939-41Poland InvadedBtw the wars, the US had taken a stance of neutralityMunich was where French, British, and Hitler signed a pactMunich Pact – where Hitler would take no more landHitler didn’t honor thisWar is unavoidable – Germany was very aggressive Poland was next in line to be attackedBritish pledged that they would help if Germany attacked Poland1939Hitler and Stalin signed non-aggression pactSaid the two countries would not fight each otherSecretly agreed to divide PolandSept. 1, 1930Poland was blitzkrieg-ed Lightning war; overwhelmed PolandBritain and France declared war against Germany the next day and WWII beganGermany attacked Scandinavians to the north and the French to the west. Denmark and Norway surrendered, French also didGB was only European power that wasn’t overrun by GermansFDR felt that British security was vitalBegan chipping away at neutralityBy 1940, most Americans were seeing the need to help BritainBritish navy still controlled the watersUS used an embargo with other countriesUS Policy Changes (cash and carry, Selective Service, destroyers-for-bases)Cash and CarryAnyone fighting in the war could travel to America and pay cash for armsTechnically neutral, but favored the BritishSelective Service ActAll men btw ages of 21 and 35 had to registerTrained 1.2 million men in one yearDraft was reinstatedBattle of BritainGerman subs threatened to take control of the Atlantic FDR arranged a trade Destroyers-for-basesBritish received 50 old naval ships in exchange for the rights to build bases in the Caribbean Election of 1940FDR broke two-term traditionStated that in critical times, he would accept the nomination if chosenSaid in his campaign, ‘your boys are not going to be sent into any foreign wars’Republicans chose Windle WillkeLawyer and utility executiveWealthy and a New Deal criticNever elected to public officeCriticized breaking the two term traditionEcon was improving, FDR had experiencePeople were happy and wanted experience FDR viewed Germany as trying to defeat all of EuropeThreat to democracy and USArsenal of Democracy (four freedoms, Lend-Lease, Shoot on sight)1940 – FDR said US had to be great Arsenal of DemocracyTold Congress that they had to assist GB:Said they needed to protect nations who followed the 4 freedoms:SpeechReligionFrom want From fearWanted to loan cash to Britain Lend-Lease Act was passedPearl HarborHome Front Industrial ProductionImpact on Society/Prop. Election of 1944Battle FrontNorth Africa/Western Europe/GermanyFighting Japan/Pacific ................
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