Great DepressionCh. 33-34

Fordney-McCumber Tariff Law (1922)• Americans feared the flood

of cheap European goods after WWI

• Hiked tariff from 27% to 38.5%▫Europe needed to sell its

goods in America to achieve economic recovery and repay war debts to the US

▫Spurred European nations to pass high tariffs of their own

Harding Scandals• 1921 – Teapot Dome

Scandal▫ Sec. of Interior

transferred naval oil reserves to wealthy oilmen after receiving bribe

• 1923 – head of Veterans Bureau embezzles $200 mil. in connection with construction of veterans’ hospitals

• 1924 – Attorney General gets caught selling pardons and liquor permits

Calvin Coolidge•Becomes president when Harding dies of

pneumonia•Conservative businessman•Wanted to reduce taxes and debt•Laissez-faire

Farmers Suffer•Hurt by their own efficiency•Went into debt purchasing machinery•Crop prices fall because of bigger

harvests

International Affairs•Allied war debts $10 bil.•Allies protest repayment

▫claimed tariffs made it impossible to pay debts

•Germany must pay reparations to Brit. and France so they can repay the US▫Germany starts printing

money, causing hyperinflation

Dawes Plan 1924•Rescheduled German payments•Private American loans would be made to

fix German hyperinflation

Herbert Hoover•Elected in 1928•Self-made business man•Believed in isolationism, industrialism,

free enterprise and small government

Hoover Administration•Setup Federal Farm Board to lend money

to farmers•Hawley-Smoot Tariff (1930) – average

tariff rate raised from 38.5% to almost 60%

Great Depression•Oct. 1929 – some investors begin selling

stock after Brit. Raises interest rates•Oct. 29, 1929 “Black Tuesday”

Great Depression•1930 – 4 mil. workers lost their jobs•1932 – 6 mil. workers lost their jobs•5,000 banks collapse (1929-1932)

▫People lose life savings

Causes of Great Depression•US ability to produce

goods greater than its ability to consume goods

•Over expansion of credit created massive individual debt

•European debts to US•Decreased

international trade•Drought in Midwest

Hoover’s Response•No gov’t handouts•Reconstruction Finance Corporation

(1932) – assisted companies hoping to increase employment

•Norris-La Guardia Anti-Injunction Act (1932) – outlawed “yellow-dog” contracts

•Public Works Projects▫Hoover Dam

Bonus Army• 1932 –

Veterans march on Washington demanding payment of a bonus that was due in 1945

• Evicted by Gen. Douglas MacArthur

• Huge blow to Hoover PR

FDR Campaign•“Brain Trust” –

informal team of advisors

•Campaign slogans▫“Happy days are

here again”▫“The worst is past”▫“Prosperity is just around the corner”

Election of 1932•First time blacks shift allegiance to Dem.

Party•Voters voted as much against Hoover as

they voted for FDR

FDR and the 3 R’s

FDR•Emergency Banking Relief Act 1933

▫President could regulate banking transactions

•Glass-Steagall Act▫Set up Federal Deposit Insurance Corp.

(FDIC)▫Guaranteed banking deposits up to $5,000

Creating jobs• Civilian Conservation Corps

(CCC)▫ Gov’t camps for young men for

reforestation, firefighting, etc.• Federal Emergency Relief Act

(FERA)▫ $3 bil. to states for work projects

• Agricultural Adjustment Act (AAA)▫ Paid farmers not to grow crops▫ Inadvertently created

unemployment▫ Struck down by Supreme Court in

1936• Civil Works Administration (CWA)

▫ Provided temporary jobs during harsh winter

Helping Industry and Labor•National Recovery Act

(NRA)▫Designed to assist

industry, labor and the unemployed

▫Encouraged employers to hire more workers

▫Ex. Hire two men to work 30 hrs/week rather than one man to work 60 hrs/week

▫Established minimum wage

Helping Industry and Labor (cont.)•Public Works Administration (PWA)

▫Provided industrial recovery and unemployment relief

▫Built Coulee Dam•21st Amendment – repeals prohibition to

tax alcohol

The Dust Bowl•Caused by:

▫Drought▫Wind▫Poor crop rotation▫No trees

•Grapes of Wrath – John Steinbeck

•Resettlement Administration▫Moved poor

farmers to new land

▫Planted trees

Banks and Big Business•“Truth in Securities” Act

▫Can’t lie about how well a stock is doing•Securities and Exchange Commission

(SEC)▫Regulates stock market

Housing and Social Security• Federal Housing

Administration (FHA)▫ Provided loans and

mortgages to individuals for improving homes and buying new ones

• Social Security Act of 1935▫ Provided money for

unemployment insurance

▫ Provided money for senior citizens, disabled, etc.

▫ Funded by payroll tax

A New Deal for Labor•National Labor Relations (WAGNER Act)

▫Boost to labor movement▫Reassured rights to collective bargaining

•Fair Labor Standards Act▫Established 40 hour work week

FDR v. Supreme Court•Supreme Court strikes

down 7 of 9 New Deal cases

•FDR wants new court in favor of his programs

•Wants to add one new judge for every judge over the age of 70▫Congress and the

American public disagree

Roosevelt Recession

•1937 – people blame tax hike for Social Security

•FDR’s solution: spend more money

Impact of New Deal•Federal gov’t becomes largest employer•Republicans claimed the way out of

Depression was less gov’t restrictions•Some argued it did not fix depression

since farm surpluses still existed