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But when is it ever?
The Not-So-Great Depression
“I have no fears for the future of our country… It is bright with hope.” –H. Hoover, inaugural address
Lowered taxes for low income familiesDid not interfere with protestsDefended his family’s interracial friendshipsCreated Federal Farm Board to help Ag
industry
Early 1929
Increased tariffs on AG products to help domestic farmers
Eventually increased all tariffsNegative impacts:
Raise prices for consumersHurt farmers and export tradeEncourage inefficiencyProvoke foreign tariffs
Hawley – Smoot Tariffs
Housing market collapses in Florida in 1926Stock Market continues to soar despite
plateau/declineSpeculationBuying on margin
Other warning signs discussed in classBlack Thursday
It’s OK. It’s a perfectly normal, natural thing…
Can handle a $4 billion loss
Florida:
To stop panic, bankers bought stock (bail out)Worked temporarily
October 29, 1929 – BLACK TUESDAYStocks plummet – costs $30 billion
BLACK TUESDAY
Introduction in pictures
IMPACT OF THE DEPRESSION
Despite poor advice, Hoover was determined to respond and not let the “market sort itself out”.1. Confidence2. Convinced some companies to maintain
wages3. Public works projects (eventually offset)4. Tax reduction = more $$ to spend
Despite his attempts, Hoover was blamed for the woes of society and the economy.
POOR HERBIE…
Slight uptick in 1931, but global banks started collapsingHoover issues moratorium on debt
paymentsSame reactions to America’s crash happens
overseas, further hurting American investments.
Things are getting… worse.
Democrats seize control of CongressNew Congress pushes Hoover to ideological
limitsReconstruction Finance Corporation (RFC)Glass-Steagall Act
“Trickle-down” theory
BONUS ARMY
Times they are a’changin’
THE NEW DEAL
RELIEF – RECOVERY - REFORM
Crash Course #34
FarmsSome dumped milk and burned crops
Dust Bowl (1931-1940)Due to drought and farming practices
HealthIncreased number of depression and
suicideMalnourishmentLack of medical attention ($$ to pay for it)Relief gardens were used to barter for
other items
Effects of the Depression
Men felt worthless & embarrassedMarried women fired – “taking jobs of men”Minorities fired – “taking jobs of white men”Crime/theft increasedDivorce rate droppedBirthrate plummets
In the election of 1932, Hoover and FDR represented two extremes, but as the Depression worsened, Americans saw the federal government “as their only hope”.
Effects of the Depression
ConfidenceThree challenges: economy, mood, agricultureBelief in trial and error
1. Short term relief for jobless2. Increased federal spending 3. Increase food prices – pay farmers not to
farm
John Maynard Keynes
The First Hundred Days
Emergency Banking Relief Act21st Amendment repeals prohibitionFCA – Farm Credit AdministrationHOLA and HOLC – Hoover’s ideaFDIC** - insured personal deposits up to
$5,000SEC – Securities & Exchange Commission
The First New Deal
CCC – Civilian Conservation CorpsFERA – Federal Emergency Relief
AdministrationCWA – Civil Works AdministrationWPA – Works Progress Administration
FDR wanted jobs, not handouts for people
Relief
AAA – Agricultural Adjustment ActSuccessful in raising prices but also due to
Dust BowlNIRA – National Industrial Recovery Act
1. PWA – Public Works Administration2. NRA – National Recovery Administration
TVA – Tennessee Valley AuthorityREA – Rural Electrification Administration
Recovery
The New Deal was indeed an experiment of trial and errorAAA & NRA ruled unconstitutional (in your
reading)Focused more on long-term reform
WPASocial Security Act
Payroll deduction funds retirement supplement
Unemployables would remain a state responsibility
The Second New Deal
Republicans Gov doing too muchSocialism
Wealth Tax ActSocial Security ActAmerican Liberty League – “FDR limits
freedom”Led by former Democratic Presidential
Candidate Alfred SmithSocialists argued the New Deal didn’t do
enough
Critics of the New Deal
People who manipulate people with half-truths, deceptive promises and scare tactics
Father CoughlinUsed radio and sometimes contradicted himselfAnti-Jewish, pro-Hitler
Huey LongRural, poor upbringing – lawyer, Senator,
GovernorShare-Our-Wealth program -PROBLEM WITH
THIS???
Demagogues
S.C. had ruled 7 of 9 programs unconstitutional
Constitution didn’t specify # of justices
FDR would name 50 new federal judges and 6 additional Justices, one for each member over age 70
Some eventually retired and were replaced by FDR
Some decisions reversed
Court Packing
Economic output at 1929 levelsConcerns about deficit spending and inflation
Cuts in federal spendingMore $$ taken from Americans
4M back out of work
Democratic party divided – majority in HOR fell from 229 to 93
FDR consolidates govt agencies in 1939 WWII
Recession
Bloated federal bureaucracyHigher taxes funding programs means less $
to spendAllow the market to decide price, supply,
demandDEFICIT SPENDING & NATIONAL DEBT
More Critics
Keynes v. Hayek ROUND TWO
Should the government “bail out the losers?”“TOO BIG TO FAIL”
The Great Recession of 2008
