The Great Depression and New Deal

The Great Depression and New Deal

• Causes of the Depression

• Hoover’s Response

• FDR’s First New Deal

• Critics of the New Deal

• Second New Deal

• “Court-Packing” and the Third New Deal

The Great Depression: How bad was it?

The Great Depression: How bad was it?

• Gross National Product (GNP) declined by half during Hoover’s term in office alone!

• 25%+ unemployment by 1933

• 20% of US banks failed

• Dow Jones Average (measure of the value of common stocks):– Sept. 3, 1929: 381– Dec. 1, 1929: 198– 1932 low: 41

Causes of the Great DepressionCauses of the Great Depression

• Underconsumption– excessive gap between rich and poor/working

class– workers’ wages failed to keep up

• Consumer Debt Crisis

• Agricultural Depression

• Tariffs and declining overseas trade

• Banking Crisis– Stock Market Crash of 1929

Stock Market CrashOctober 1929

Stock Market CrashOctober 1929

• The market grew in popularity as it soared throughout the 1920s.

• Americans began to see it as easy money.

• Between September and November of 1929, the market lost half its value.

Banking CrisisBanking Crisis

• The stock market crash contributed to a developing banking crisis.

• Banks invested heavily in the market.• Loan defaults rose dramatically in the wake of the

crash.– Buying on margin

• Thousands of banks failed.

Herbert HooverHerbert Hoover• Born in Iowa• Stanford-educated

engineer• Ran Belgian Relief

and Food Administration in WWI

• Actually considered a progressive Republican

Hoover’s Response to the DepressionHoover’s Response to the Depression

A Conservative Philosophy1. Voluntary Action

2. Indirect Government Assistance

3. Private Charity

Hoover’s ActionsHoover’s Actions• 1929 Tax Cut• Agricultural Marketing Act of 1929

– $500 million to help farmers organize marketing cooperatives (to voluntarily set minimum prices)

• Federal Home Loan Bank Act, Glass-Steagall Banking Act (1932)– Attempts to expand the availability of credit

• Reconstruction Finance Corporation (1932)– Hoover’s largest program– $3 billion in loans to banks, mortgage companies,

insurance companies

Hoover’s Image ProblemHoover’s Image Problem• Americans

blamed Hoover for the ever-worsening economy.

• He was seen as aloof, uncaring, and out of touch

• “Hoovervilles”• Bonus Army

(1932)

1932 Election:A Contrast in Styles1932 Election:A Contrast in Styles

1932 Election:The “New Deal Coalition” is Born

1932 Election:The “New Deal Coalition” is Born

Franklin Delano RooseveltFranklin Delano Roosevelt• Born into wealthy NY

family

• distant cousin of TR

• married Eleanor Roosevelt

• Secretary of the Navy

• 1920 VP candidate

• paralyzed by polio in 1922

• Governor of New York

First New Deal:The Hundred Days (1933)

First New Deal:The Hundred Days (1933)

• An unprecedented number of bills passed Congress.

• trial and error strategy (not particularly ideological)

• FDR relied on a group of advisors known as the “Brain Trust” led by Harry Hopkins.“The only thing we have

to fear is fear itself.”

--FDR’s First Inaugural

A Crisis of Epic ProportionsA Crisis of Epic Proportions

Addressing the Banking CrisisAddressing the Banking Crisis

• “Bank Holiday”

• Emergency Banking Relief Act (1933)

• Banking Act (1933)– established FDIC to

insure bank deposits The banking crisis was the topic of FDR’s first “fireside chat.”

Federal Emergency Relief Administration (FERA)

Federal Emergency Relief Administration (FERA)

• Federal aid to state and local governments to provide for the unemployed

CWA/PWACWA/PWA

National Industrial Recovery Act/National Recovery Adm.

(NRA)

National Industrial Recovery Act/National Recovery Adm.

(NRA)• Set wage and price controls

• businesses voluntarily became “members” of the NRA

• backed by big propaganda campaign The NRA was struck down by the USSC

in 1934.

Agricultural Adjustment Act (AAA)

Agricultural Adjustment Act (AAA)

Paid farmers to produce less

Fed. Govt. bought and destroyed underpriced farm products

Civilian Conservation Corps (CCC)

Civilian Conservation Corps (CCC)Employed mostly

young men on conservation projects

Lived in camps

Sent large % of money home

Tennessee Valley Authority (TVA)

Tennessee Valley Authority (TVA)Massive federal

experiment in regional planning and improvement

Dams

Electrification

Flood Control

Fertilizer

Critics of the New Deal

• CONSERVATIVE (too much)– American Liberty League (ALL)

• LIBERAL (too little)– Socialists – Upton Sinclair (EPIC), Norman

Thomas (Socialist Party)– Dr. Francis E. Townsend– Fr. Charles Coughlin– Huey Long

Critics of the New DealCritics of the New Deal

Charles Coughlin (blamed “bankers”/Jews)

Dr. Francis Townsend (old-age pension plan)

Huey Long (“Share Our Wealth”)

Second New DealSecond New Deal

• Works Progress Administration– Massive public works

spending

– Employed 3 million Americans per year

Social Security Act (1935)Social Security Act (1935)• Old-age pensions• Unemployment

insurance• Disability insurance• Aid to dependent

children

Who received it?

How was it paid for?

New Deal and LaborNew Deal and Labor

• National Labor Relations Act (Wagner Act)– Guaranteed right of workers to organize

labor unions and bargain collectively

Congress of Industrial Organizations (CIO)

-- “brass-knuckle unionism” (more aggressive tactics)

-- John L. Lewis, David Dubinsky

GM Sit-Down StrikeFlint, Michigan - 1936

New, more aggressive tactics came with more government support for labor unions like UAW (CIO)

The Dust BowlThe Dust Bowl

• Severe drought in Southern Plains

• Dust storms• Economic, ecological disaster

Dust Bowl PhotosDust Bowl Photos

“Okie” Migration“Okie” Migration

• 355,000 people left OK for CA

• Immortalized in novel, film:– The Grapes of Wrath

(1939, 1940)

Race RelationsRace Relations

• Marian Anderson and Eleanor Roosevelt

Eleanor Roosevelt’s Letter to the

DAR

Women in the New Deal EraWomen in the New Deal Era

• Frances Perkins – Secretary of Labor

• Eleanor Roosevelt – activist First Lady

FDR v. Supreme Court

• Re-elected overwhelming in 1936, FDR believed the time was right to take on the “nine old men” who, he believed were the greatest threat to the success of his New Deal.

FDR’s “Court-Packing” Scheme (1937)

FDR’s “Court-Packing” Scheme (1937)

• FDR proposed to appoint one new justice to the Court for every justice over the age of 70 (there were 6)

• Public reaction was negative• Congress defeated his plan• For the first time, FDR

appeared politically vulnerable

Third New Deal (1937-38)Third New Deal (1937-38)

• Keynesian Economics again employed

• Fair Labor Standards Act– First minimum wage– 40-hour work week

Long-Term Significance of New DealLong-Term Significance of New Deal

• American welfare state

• Increased federal government power

• Completed fundamental change in the relationship between government and the economy/business begun in Progressive Era

• Increased presidential power