The Great Depression & the New Deal

AP U.S. History

The Bull Market

Stocks rise more than twice as much as production.

1928: 4M Americans own stock (of 120M). Buy on margin (credit)

10% down and repay broker after you have made a profit.

Instead of investing in technology, large companies lend $ to brokers to lend to people to invest in their corporations.

Crash Market peaks in September, 1929.

Oct. 23, 1929, Dow Jones loses 21 points in one hour.

Oct. 28: Loses 38 points. Oct. 29: “Black Tuesday” 16 million shares

traded but no buyers. causes landslide.

November: $30B is lost. Half the value of the stock market is

destroyed in 10 weeks.

Economic Weaknesses

Workers aren’t paid enough. Output: Increased 32% Wages: Increased 8%. Leads to unequal distribution of wealth.

Top .1% = wealth of bottom 42%. 24,000 families hold the same wealth as the

bottom 11.5M.

Causes panic and business lay off workers. Undermined economic confidence. 1929–1933 Agricultural prices plummet 86%.

Unemployment: 1929–1945

Unemployment

1930: 4.2M (9%) 1931: 7M1933: 12.6M (25%)

Hoover’s Solutions

Fund Business (Reconstruction Finance Corporation)

No relief for states or individuals. Chicago and Detroit have 50%

unemployment. Created Reconstruction Finance

Corporation: lend $ to businesses. Problem is not production, but consumerism.

Hoover (Cont.) WWI vets had been

promised $1000 bonus in 1945 (a bond).

Want payment now.

Hoover (Cont.) “Bonus Army” camps

out near White House in camps.

20,000 people camp out all summer. Eventually dwindle to 2,000. Hooverville

Gen. MacArthur and army come in and destroy camp.

Franklin Delano Roosevelt: 1932

Democrat, Governor of NY. Aristocrat. Got polio in 1921. Married distant cousin: Eleanor Roosevelt (TR’s

niece). Only 3 or 4 term president. “New Deal” for American people.

Redistribute wealth. Anyone would have beat Hoover.

Democrats win House and Senate. Begins 40 year period when Democrats rule

politics.

The Election of 1932

FDR: First 100 Days

March to June 1933 Begins “Fireside Chats”: Opens

communication. Reform and relief measures to provide

relief to banks, farming and unemployed Out of Many, p. 857 for all measures of 1st

New Deal. Spend $4.2B on schools, roads, bridges, &

internal improvements. These programs put people to work for

government.

Critics from the “Left” Upton Sinclair

Not going far enough to left. Need to create pension for elderly.

Huey Long: Greatest rival to FDR. Louisiana politician. (governor) “Share our Wealth Society”: Break up the wealthy

and spread it to the poor by limiting the size of fortunes

Large following locally and begins to grow nationally. Assassinated in 1935. Possible 3rd party candidate that could have hurt

FDR’s chances.

Critics from the “Right”

Business owners: Owners of DuPont to GM. The U.S. is not a welfare state. Rise in government power = decline of

personal liberty. Socialistic programs do not belong in

U.S.

2nd 100 Days FDR turns “left”.

$5B for large scale programs.

Followed John Maynard Keynes: Each government $ spent has a multiplier effect of $2-3 to the GNP.

“Keynesian Economics” Employs 8M in

construction. Out of Many, 2nd New

Deal programs, p. 860. : Social Security!!!

Labor

1932: Labor union movement is almost dead.

Prosperity had diminished power. 1932: 2.8M Union Members 1942: 10.8M Union Members Key event of depression.

Labor union becomes permanent place in industry.

Demands are essential to economic recovery

LaborCIO Congress of

Industrial Organization

Organized by industry.

Accepts all workers.

AFL American

Federation of Labor

Organized by craft.

Only skilled workers.

No African Americans or women.

Election of 1936

FDR beats Alfred Landon. Wins every state but VT and ME. 61% of popular vote. Republicans thought they would win.

Phone survey conducted talked to those who had phones and registered cars.

The Dust Bowl, 1935–1940

New Deal in the West Most profound impact in west.

Agriculture, water and Indian policy.

Agriculture Dust bowl: KS, CO, OK, TX and

NM. Ecological and economic disaster.

Drought, dust storms, wheat production stripped native vegetation.

Soil erosion, top soil is gone. Migrate to CA: Okies.

300,000 exodus. Take jobs from Mexican

laborers. Cause racial hostilities. Deport 500,000 Mexicans.

New Deal in the WestWater Provide irrigation,

cheap power & prevent floods.

Hoover began building Boulder Dam. Finished in 1935. Largest man made

lake: 115 miles. $114M cost offset by

selling hydroelectric power.

Picture by Dorthea Lange

New Deal in the West

Indians 320,000 people in over 200 tribes live in OK,

NM & SD. Infant mortality is 2x national rate. Alcoholism, TB, measles plague reservations. Bureau of Indian Affairs is corrupt.

Still trying to assimilate the Indians. Give $ to schools, stop selling their land. 181 tribes accept treaty and 71 reject because they

don’t understand language.

Depression Era Culture

Communist Party Russia is the example. Many of the young and intelligent flirt with

communism. African Americans like the CP because of their

anti- lynching stand. Langston Hughes is advocate. Height of party is in 1935.

Support New Deal.

Depression Era CultureHollywood in 1930 Popular culture booms.

60% of people attend movies once a week. Largest form of entertainment.

escapism (Wizard of Oz)

Walt Disney become powerful.

Depression Era CultureRadio Most powerful form of communication. 1930: 12M homes or 30%. End of decade: 90%. Soap opera, comedy, & direct and immediate

coverage of events. 70% of people: Prime source of news. Jazz Duke Ellington, Count Basie & Benny

Goodman. “Swing Era” big bands. Provides a temporary escape.

Court Packing Plan

Schecter v. US New Deals’ National Recovery Administration is

unconstitutional. Can’t regulate farming or business. Limits FDR’s New Deal programs

Six of Nine judges are over 70. FDR wants to add new judge for every

one over 70 for a total of 15. Wants to control Supreme court.

Women & The New Deal

24% of workers in 1930. 1940: 25%. Labor was less affected than industrial jobs.

“Women’s network” network of women at work and at home.

Eleanor Roosevelt becomes key first political wife. FDR will appoint first female cabinet member:

Frances Perkins, Labor Secretary. She defines feminism as: Women who participate in

service to society.

African Americans & The New Deal

Lynching of working blacks. No right to have a job while whites

are out of work. Little to combat racism. Relief payments for blacks 1/3

compared to whites. FDR appoints African Americans to

positions in administration.

Results of New Deal 1937 unemployment “only” at 14% (9M).

Need to reduce federal spending. Deficit is at $4B. Stock market collapses in August 1937.

1938 unemployment: 20%. Blame business for not investing and wanting FDR to

fail. Republicans gain in 1938 election making it hard to boost

federal spending in Congress. 1938 passed Fair Labor Standards Act : Min wage at 25 cents an

hour.

End Result of New Deals Overall did little to alter distribution of wealth or help

country. Increased role of government. Established welfare state.