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Unit 5
Unit 5– Depression and New Deal
The Great Depression Begins
I. The Nation’s Sick Economy
Economic Troubles on the Horizon
§ As the 1920’s advanced, serious problems threatened economic prosperity
1) Industries in Trouble
q Railroads (Why?), textiles, and steel had barely made a profit in the 20’s.
q Mining and lumbering were no longer in high demand
q What was a key economic indicator that declined? Why is this key?
2) Farmers Need a Lift
q Huge demand for their crops in WW I, so they planted more and took out loans for land and equipment
q After WW I, demand dropped, and this led to lower prices and farmers could not pay back their loans.
q What did the government attempt to do?
3) Consumers Have Less Money to Spend
q Americans were buying less, mainly because of rising prices, stagnant wages, unbalanced distribution of income and overbuying on credit
4) Living on Credit
q Many Americans were living beyond their means during the prosperous 20’s
q What was the eventual problem with buying on credit?
5) Uneven Distribution of Income
q During the 1920s the rich got richer, and the poor got poorer (income of the top 1% off wealthy rose 75% = 9% increase for Americans as a whole)
q More than 70% of Americans earned less that $2,500, then considered the minimum amount needed for a decent standard of living.
Hoover Takes the Nation
1) The Election of 1928 - (R) Herbert Hoover (easy victory) vs. (D) Alfred E. Smith
q What was the major advantage Hoover had over Smith?
2) Dreams of Riches in the Stock Market
q The stock market became the most visible symbol of prosperity – rising steadily – Americans rushed to buy stocks and bonds
q DEFINE Dow Jones Industrial Average
q Speculation – buying stocks and bonds on the chance of a quick profit
q Buying on Margin – paying a small percentage of a stock’s price as a down
payment and borrowing the rest. PROBLEM HERE?
The Stock Market Crashes – ‘Black Tuesday’
q October 29, 1929 the bottom fell out of the market and the nation’s confidence.
q Shareholders frantically tried to sell before prices plunged even lower.
q By mid-November, investors had lost about $30 billion
Financial Collapse
q The stock market signaled the beginning of the Great Depression (the period from 1929-1940 in which the economy dropped and unemployment skyrocketed)
1) Bank and Business Failures
q After the crash people panicked and withdrew their money from banks.
Ø Why couldn’t people get their money at some banks?
q 90,000 business also went bankrupt and closed and this led to unbelievable unemployment in the US (25% or 13 million by 1933)
2) Worldwide Shock Waves
q Europe had been suffering throughout the 20’s because of WW I
q International trade was hurt because European goods were not being sold in the US and vice-versa.
q IDENTIFY Hawley-Smoot Tariff
3) Causes of the Great Depression
q Tariffs and war debt policies that cut down the foreign market for American goods
q A crisis in the farm sector
q The availability of easy credit
q An unequal distribution of income
II. Hardship and Suffering During the Depression
The Depression Devastates People’s Lives
Ø Great Depression had an impact on people’s lives; it brought hardship, homelessness, and hunger to millions
1) The Depression in the Cities
q In cities across the country, people lost their jobs, were evicted from their homes and ended up on the streets
Ø DEFINE shantytowns, soups kitchens, bread lines
q Conditions for African-Americans and Latinos were worse; their unemployment rates were higher and they were paid lower
ü Both were also subjected to violence; Latinos were even exported
2) The Depression in Rural Areas
q What was the advantage the rural areas had over cities?
q Many farmers lost their properties through foreclosures (EXPLAIN)
3) The Dust Bowl
q A drought that began in the early 1930s wreaked havoc on the Great Plains.
q What was a major cause of this?
q The Dust Bowl was the name given to the region that was hit the hardest – parts of Kansas, Oklahoma, Texas, New Mexico, and Colorado.
ü What was an Okie?
Effects on the American Family
Ø The economic conditions of the Great Depression put severe pressure on family life, but for most Americans the family stood as a source of strength
1) Men in the Streets
q Many men had difficulty coping with unemployment because they were accustomed to working and supporting their families.
q Some men abandoned their families and became “hoboes”
q DEFINE direct relief
2) Women Struggle to Survive
q Women worked hard to help their families survive adversity during the Great Depression
q Many women began to work outside of their homes.
ü How was this often received?
3) Children Suffer Hardships
q Poor diets and lack of money led to serious health problems for children.
q Schools often were closed because tax revenues were falling in communities
q What were “Hoover tourists”?
4) Social and Psychological Effects
q The hardships of the Great Depression had a tremendous social and psychological impact
Ø Suicide rate rose more than 30% between 1928-1932
q Many Americans had to accept compromises and sacrifices that affected them for the rest of their lives
Ø Stopped going to doctor or dentist
Ø Put off having children or decided not to have kids at all
Ø Gave up dreams of going to college
q What habits were developed and stuck with people?
III. Hoover Struggles with the Great Depression
Hoover Tries to Reassure the Nation
Ø After the stock market crash of 1929, President Hoover tried to reassure Americans that the nation’s economy was on sound footing
1) Hoover’s Philosophy
q Rugged Individualism – the idea that people should succeed through their own efforts; they should take care of themselves and their families.
ü What was the government’s role?
2) Hoover Takes Cautious Steps
q He asked employers not to cut wages or lay off workers
q He asked labor leaders not to demand higher wages or go on strike
q He created a special organization to help private charities generate contributions to the poor.
Ø None of these steps worked and the Depression continued to deepen.
3) Boulder Dam
q A project that Hoover approved that did make a difference; the building of the Boulder Dam
Ø What was the importance of this massive project?
4) Democrats Win in 1930 Congressional Elections
q The Democrats took advantage of anti-Hoover sentiments and took control of the House of Representatives and almost won the Senate
q Americans expressed their anger in other ways:
Ø Farmers destroyed crops rather than selling them at a loss; refused to work their fields; blocked roads so crops could not get to market (raise prices); used force to prevent authorities from foreclosing on farms
Ø IDENTIFY Hoovervilles, Hoover blankets, Hoover flags
Hoover Takes Action
Ø Hoover began to soften his position on government intervention in the economy and took a more activist approach to the nation’s economic troubles
1) Hoover Backs Cooperatives
q What was the Federal Farm Board?
q National Credit Corporation loaned money to small banks to help them stave off bankruptcy
2) Direct Intervention
q With a presidential election looming, Hoover appealed to Congress to pass a series of measures to reform banking, provide mortgage relief, and funnel more money into private investment.
- Federal Home Loan Bank Act
- Reconstruction Finance Corporation
Gassing the Bonus Army
Ø In 1932 an incident further damaged Hoover’s image and public moral.
1) The Patman Bill Denied
q The Bonus Army (WW I vets and their families) marched to DC to demand a bonus that they were in due in 1945 be paid immediately.
q The Senate refused to approve of the Patman Bill and Hoover told the Bonus Army to go home; most did but 2,000 stayed around.
2) Hoover Disbands the Bonus Army
q Hoover decided that the Bonus Army should be disbanded and ordered Gen. Mac Arthur to roust the veterans
q What did Mac Arthur do and how did it effect Hoover?
The New Deal
I. A New Deal Fights the Depression
Americans Get a New Deal
Ø The 1932 presidential election showed that the Americans were clearly ready for a change
1) Electing Franklin Delano Roosevelt (FDR) – Democrat – governor of New York
q Wins an easy victory over Hoover and the Democrats; and the Democrats also win control of both houses of Congress
q Why was this an easy victory for FDR and the Democrats?
2) Waiting for FDR to take over
q FRD began to formulate a set of policies (the NEW DEAL) that would deal with problems caused by the Great Depression (Relief, Recovery, Reform)
3) The Hundred Days
q On taking office, FDR launched a period of intense activity known as the Hundred Days – 15 major pieces of legislation
q What was the Emergency Banking Relief Act?
4) An Important Fireside Chat
q DEFINE fireside chats =
q What was their significance?
5) Regulating Banking and Finance
q Glass-Steagall Act = established the Federal Deposit Insurance Corporation (FDIC) – it provided federal insurance for individual bank accounts
q Federal Securities Act = required corporations to provide complete information on all stock offerings
ü What is the SEC?
Helping the American People
Ø The Roosevelt administration also implemented programs to provide relief to farmers and other workers; also attempted to stimulate the economy
1) Rural Assistance
q Agricultural Adjustment Act (AAA) = sought to raise crop prices by lowering production by paying farmers not to grow as much of their crop.
q What did the government also do that upset many Americans?
q Tennessee Valley Authority (TVA) = created 1000s of jobs and provided electricity to the badly depressed Tennessee River Valley
2) Providing Work Projects
q Civilian Conservation Corps (CCC) =
q National Industrial Recovery Act (NIRA) =
3) Promoting Fair Practices
q NIRA also sought to promote industrial growth by establishing codes of fair practices for individual industries.
q Workers were allowed to organize unions and bargain collectively.
4) Food, Clothing, and Shelter – New Deal programs that dealt with homes
q Home Owners Loan Corporation (HOLC) = provided government loans to homeowners who could not make loan payments.
q Federal Emergency Relief Administration (FERA) = $500 million to provide relief for the needy
The New Deal Comes Under Attack
Ø DEFINE deficit spending =
1) The Supreme Court Reacts
q Supreme Court ruled some New Deal programs unconstitutional.
q What was FDR’s “court-packing” scheme?
2) Three Fiery Critics
- Charles Coughlin = The ‘Radio Priest” wanted a guaranteed national income and nationalization of banks. Anti-semitic views eventually cost him support.
- Dr. Francis Townshend = believed FDR was not doing enough for the poor and elderly. He devised a monthly pension plan for the aged.
- Huey Long = the “King Fish” proposed a nation wide social program called “Share-Our-Wealth”. Everyone would have a home and income.
II. The Second New Deal Takes Hold
The Second Hundred Days
Ø By 1935 the Roosevelt Administration was seeking ways to build on the programs established during the Hundred Days. (The Second New Deal)
ü Who pushed the President in this direction?
Ø The election of 1936
q Republicans ran Alfred Landon (governor of Kansas)
q Democrats ran FDR and he won easily.
ü What (2) groups voted Democrat for the 1st time?
Helping Farmers
Ø In the mid-1930’s, two of every five farms in the US were mortgaged and 1000s of small farmers had lost their farms.
1) Focusing of Farms
§ Soil Conservation and Domestic Allotment Act – this act paid farmers for cutting production of soil depleting crops and rewarded farmers for practicing good soil conservation methods
§ Resettlement Administration – provided loans to small farmers to but land
Roosevelt Extends Relief
Ø As part of the Second New Deal, the Roosevelt administration and Congress set up a series of programs to help youths, professionals, and other workers.
Works Progress Administration (WPA)
q Set out to create as many as jobs as possible as quickly as possible
q Headed by Harry Hopkins (former chief of FERA)
q Spent $11 billion and gave jobs to more than 8 million workers
Ø List jobs for unskilled workers:
Ø List jobs for skilled workers:
National Youth Administration (NYA)
q Created specifically to provide education, jobs, counseling and recreation for young people. Students worked part-time jobs while in school
Improving Labor and Other Reforms
Ø FDR brought about important reforms in the areas of labor relations and economic security for retired workers.
1) Improving Labor Conditions
q After the Supreme Court ruled the NIRA unconstitutional, FDR and Congress passed the Wagner Act or National Labor Relations (3 provisions)
1.
2.
3.
q Fair Labor Standards Act = maximum hours per week (44), minimum wage ($.25), set rules for those under 16 and banned hazardous work for 18 and under
2) The Social Security Act – 1935
q Explain the following three provisions of this Act
1. Old-Age Insurance
2. Unemployment Compensation
3. Aid to Families
III. The New Deal Affects Many Groups
Ø The New Deal represented an important opportunity for minorities and women, but what they gained was limited:
1. Women
q Frances Perkins – 1st female cabinet member (Sec of Labor)
ü Instrumental in Social Security and labor legislation
q Still faced much discrimination (IDENTIFY)
2. African-Americans
q FDR appointed more than 100 African-Americans to key positions in the government
ü IDENTIFY A. Philip Randolph, Mary M. Bethune and the Black Cabinet
3. Mexican-Americans
q Tended to support the New Deal even though they received fewer benefits than African-Americans.
q Mostly worked as migrant workers (unprotected by state and federal laws)
4. Native-Americans
q Received strong government support from the New Deal
ü John Collier became commissioner of Indian Affairs
ü Indian Reorganization Act of 1934: (explain the following changes)
1. Economic
2. Cultural
3. Political
FDR Creates the New Deal Coalition
Ø DEFINTION = an alignment of diverse groups dedicated to supporting the Democratic Party (Southerners, urban groups, blacks, union workers)
1) Labor Unions Flourish
q 1933-1941 membership grew from 3 million to 10 million
q IDENTIFY the CIO
q What was the Memorial Day Massacre?
The Election of 1936
§ Why was this an easy victory for Roosevelt?
IV. Culture in the 1930’s
The Lure of Motion Pictures and Radio
1) Movies
q 65% of the population was attending movies once a week in the 30’s and there were over 15,000 movie theaters in the nation
q What role did the movies play in the Depression?
2) Radio
q Radio embodied the democratic spirit of the times, it was the most direct means of access to the American people.