GREAT DEPRESSION & NEW DEAL
(1929-1939) Chapter 33
I.Roaring 20s (laissez faire)
Harding:“Return to Normalcy’s
Coolidge:“The business of America is business. He who builds a factory, builds a temple. And he who works there worships there.”
Hoover:“Rugged Individualism”
II.1929 -- Black Tuesday: Great Stock Market Crash -- Stock market dramatically loses value and triggers a crash.
“Buying on margin” -- Buying Stock on Credit
III.Causes for the Great Depression:
A.Weaknesses in the Overall Economy
1.Farm prices too low
2.Unemployment high prior to the crash
3.Overspeculation in Real Estate
4.Underconsumption/Overproduction
B.Unequal Distribution of Wealth -- 1% of population owns 59% of wealth
C.Weak Corporate Structure -- “Holding Companies” -- Corporations owned stock in other corporations. When one collapse it, then all do.
D.Weak Banking Structure -- No government regulation
E.Weak International Economies --
1.Smoot-Hawley Tariff-- Raises tariffs. World trade decreases
2.Countries’ economies interdependent
3.World economic slowdown
4.Treaty of Versailles-- German economy destroyed.
F.Government Policies
1.No regulation of stock market
2.Regressive tax system
3.Anti-trust laws NOT enforced
4.Federal Reserve decreases money supply which slows down economy
IV.Hoover tries to halt Great Depression, but does too little too late.
Bonus Army: WWI Veterans march on White House & Hoover sends in real army to chase them out.
Hoover’s Actions:
1.Gives speeches: “Prosperity is just around the corner”
2.Tries to help businesses -- Too little too late
3.Lends some $ to businesses -- Too little too late
4.Started Federal Works Projects (Hoover Dam)
5.Asked businesses not to decrease wages. They ignore him.
6.Halted payments from Europefor WWI debt to help them out. (US public mad).
Unemployment figures: 12 million; 25% unemployment (Note: No Welfare, No unemployment insurance, No government assistance). Long soup lines. People have to rely on charity, churches, friends & family.
Hoovervilles -- Shacks the homeless lived in. Derogatory term against president.
Dust Bowl– Great Plains – especially OK. (multi-year drought). Migration of “Okies” from OK to CA.
1. Election 1932RepublicanHooverDemocrat FDR
Degree of FDR’s victory: Landslide
2. What are the 3 Rs of FDRs New Deal: Relief, Recovery, Reform
3. What was FDR’s “clarion note,” We have nothing to fear, but fear itself
4. What was the bank holiday?Emergency Banking Relief Act.Close banks to insure people of their sound worthiness – instill confidence
5. What is the “First Hundred Days”Passes a lot of legislation focused on relief. More than some presidents passed in 4 years.
6. FDRs New Deal found roots in what reform movement?Progressive
7. FDR was a “pragmatic” president. What does that mean? Does whatever necessary. Tries different solutions. Experiments.
8.What was the Emergency Banking Relief Act (1933) (Bank Holiday) – instilled banking confidence 1933 . See above.
9.What were “fireside chats”Radio addresses that reassure the public.
10. What did the Glass-Steagall Banking Act do? Creates FDIC & regulates banks (1933)
11. What did FDR do regarding gold? Ordered all private gold to be surrendered to the Treasury for paper $ - then took the nation off the gold standard.
12. What does it mean that FDR wanted a “managed currency”Wanted to create inflation by buying up gold at high prices.
What was FDR’s goal here: to relieve debtors and stimulate growth.
13. What did FDR mean when he wanted to “prime the pump”stimulate the economy by increasing the money supply through government spending – Keynsian Economics.
Compare this to President Obama: Also follows Keynsian Economics. Increased MS through government spending “stimulus package,” printing of money, cutting taxes and government borrowing. See Cartoon.
14. Ways in which FDR handled the millions of jobless:
A) CCC Civilian Conservation Corp– government jobs in parks, forests (Chestnut Ridge)- 1933
B) Federal Emergency Relief Act$ to states for hungry, homeless, unemployed - 1933
C) AAA1st & 2nd Agricultural Adjustment Act (AAA) - $ to decrease farm supply - 1933 & 1935 (1st AAA unconstitutional – See U.S. v. Butler)
D) HOLC Home Owner’s Refinancing Act - 1933
E) CWACivil Works Administration – Government Jobs - 1933
15. Demagogues critical to FDR:
A) Father Charles CoughlinCatholic priest w/ radio show. 40m listeners. Blamed Jews for the Great Depression. Helped defeat US entry into World Court.
B) Senator Huey Long:Also Gov. LA – “Kingfish” “Share our Wealth” program – think Robin Hood.
C) Dr. Francis E. TownsendGive all 60+ yr a $200/mnth check – Does not formulate a way to pay for it.
16. What was the WPAWorks Progress Administration - government jobs – 1935
17. What was the NRA & its significance: National Industrial Recovery Act (NIRA) – Creates PWA & NRA (National Recovery Administration) & Codes of fair competition. Min Wage/Max Hours (Unconstitutional – Schecter Poultry Case) 1933
PWA Public Works Administration (PWA) – government jobs -
18. What was the economic theory of the AAA paying farmers not to farm? By decreasing supply you raise prices and enable farmers to survive.
19. Who wrote the Grapes of WrathJohn SteinbeckAbout The Dustbowl and the migration of Great Plains (OK farmers) to CA. See Handouts
20. What was the SECSecurities Exchange Act – regulates the Stock Market 1934 – instills confidence in the market.
21. What was the TVATennesseeValley Authority– major dam project for electricity- 1933
22. What is FHAFederal Housing Administration – government guarantee of mortgages- 1934
23. What is the significance of the Social Security Act of 1935 Creates a system to take care of elderly and disabled.
What are some of the problems w/ Social Security today: Going broke. When created 16 to 1; now under 3 to 1. (worker to retiree ratio)
24. National Labor Relations Act (NLRA) a/k/a The Wagner Act*** Guaranteed collective bargaining
What as the result of the Wagner Act? Dramatically increases the # of unions.
Who was John L. LewisLeader of the United Mine Workers. Creates to CIO (Committee for Industrial Organization) & develops the “sit-in”
25. Election of 1936
Republican Candidate Al Landon
Result: Landslide win. FDR takes all but 2 states.
What did Al Smith’s remark “No one shoots at Santa Clause” mean? FDR only won b/c of all the government $ given to the people.
What was FDR’s enduring coalition South, AA, urbanites & the poor.
26. FDRs Court Packing Plan
A) Describe the general attitude of philosophy of the Supreme Court: Laissez Faire Did not believe the Government should get involved w/ the economy.
B) The Supreme Court rules against FDRs New Deal in 2 key Court Cases:
1. Schecter Poultry v. US (1935) - See Court Case Documents -"The chicken case"
The Supreme Court ruled that the key component of the New Deal NIRA was unconstitutional b/c the Federal government was attempting to regulate "intrastate commerce" a power reserved to the states.
2. US v. Butler - The Supreme Court ruled the AAA was unconstitutional b/c it violated the 10th Amendment.
C) What was FDRs Court Packing Plan? Add 6 new judges + a retirement age.
D) What was the public/congressional reaction? Fearful, opposed
E) What is the Court's Response? Explain "A switch in time saves nine" 1 judge retires & the court begins approving the NEW Deal by 5-4 margins. 2nd AAA passed.
27. What does “Keynesian Economics” propose a country should do during times of recession?
Increase the MS through government spending & fiscal policy of Federal Reserve.
28. What was the Hatch Act of 1939 suppose to do? 1st Campaign finance reform law. Limit Government funds & officials in federal campaigns.
5 Stages of the New Deal (1933-1939)
1st 100 Days 2nd 100 Days 1936 High Point Setback WWII Begins
Note: The New Deal does not get our country out of the Great Depression. WWII does that. The New Deal gets our country through the Great Depression w/o resorting to extremism such as dictatorship, communism, or scapegoating.
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