The Great Depression

“We in America today are nearer to the final triumph over poverty than ever before in the history of any land. The poorhouse is vanishing from among us.”

Herbert Hoover, 1928

“A host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment.”

FDR, 1933

Panic on Wall Street

People crowd Wall Street after the Stock Market Crash of 1929. Commissioner Whalen dispatched an extra detail of 400 police officers to guard the area.

The Great Depression Begins

• By 1930:

– over 4 million were out of work

– banks collapsed

– people lost their savings

– farms were foreclosed

• The crisis seemed to feed on itself as more and more people lost their jobs

What causes the Depression?

• Decade-long Drought • Overproduction by farm and factory• Technological advances limiting employment• Crash of Stock Market • Overexpansion of credit• Hawley-Smoot Tariff

During the Great Depression, people couldn’t even afford DOTted COTs. Everything was plain and

practical.

Consequences of the Depression

• Unemployment averaged 20% plus pay cuts– By 1933 over 13 million were out of work

• Changes in lifestyle: housing, diet, leisure• Decline in birthrate in the 1930’s• Psychological impact: depression and suicide• Homelessness & migration (eg. “exodusters”)• Rise in racial tensions & nativism• Lack of safety net

BUT “life goes on” (eg. movies as affordable escapism)

The Election of 1932

• The Republicans re-nominated Hoover– Hoover had won the election in 1928 by promising a

“chicken in every pot”

• The Democrats nominated Franklin D. Roosevelt (a distant cousin of Theodore)

• Roosevelt was well-educated and well-spoken, he had also held many important positions in past administrations, but had suffered from polio which left him wearing leg braces

• During the campaign Roosevelt promised a New Deal for America, but did not elaborate

• He blamed Hoover and the Republicans for the Depression

• Roosevelt won the election 472-59

• In the Winter of 1932-3 the situation continued to get worse

Political Cartoon

FDR

Inauguration Speech

Women in the Administration• First Lady Eleanor Roosevelt

– “conscience of the New Deal”.

– Most active first lady in US history.

• Lobbied for her husband, gave speeches, wrote a newspaper column, fought for the impoverished and oppressed.

• Secretary of Labor Frances Perkins

– First woman cabinet member

The Gameplan

• His plan – the 3 R’s:

– Relief: Relieve the conditions of the unemployed

– Recover: Stimulate industry and economy

– Reform: prevent another such depression

Game Plan Specifics• Focus on the first two years for relief and recovery• Long term goals to reform current abuses which

had produced the boom or bust• Return to Progressive ideas side-tracked by WWI

and the 1920’s:– Unemployment insurance– Old-age insurance– Minimum wage regulations– Conservation and development of natural

resources– Restrictions on child labor

Banks need immediate attention• Roosevelt called Congress to meet for a special

session and then closed the banks for a four day holiday– Congress passed the Emergency Banking Relief

Act which allowed sound banks to reopen and provided managers for those in trouble

Bank Rushes

A "bank run" in Detroit,

1933. Panicking customers rushed to withdraw savings.

Fireside Chats

• On March 12, Roosevelt talked to the nation in the first of his “fireside chats”

• He told the people to keep their money in the banks and reassured the nation that he was working to solve the problem

Cleaning Up Wall Street (1932)

• In April the country abandoned the gold standard

• The Federal Securities Act required full disclosure of information about stocks and bonds

• The Glass-Steagall Banking Act created the Federal Deposit Insurance Corporation to guarantee bank deposits up to $5,000. It also increased the power of the Federal Reserve to regulate credit

Securities & Exchange Commission

The First Hundred Days

• From March 9 to June 16 was known as the Hundred Days

• Congress received and enacted 15 major pieces of legislation

• After solving the banking problems the administration focused on RELIEF for workers and unemployed

The Workers

Relief for the People

• Congress created the Civilian Conservation Corps (CCC) which was intended to create work for the unemployed and unmarried men between 18 and 25. – Employed nearly 3 million young men and paid

about $30 a month and spent their time building roads, campgrounds, and planting trees

Relief for the People

• The Federal Emergency Relief Administration (FERA) sent money through state agencies in the form of grants to create education programs as well as direct cash payments to individuals

• The first federal attempt at work relief was through the Civil Works Administration– Roosevelt advocated giving people jobs as

opposed to financial hand-outs– Provided federal jobs for those who could not find

work. – Dissolved in the spring of 1934, but immediately

afterwards the number of unemployed skyrocketed

• Congress created the Works Progress Administration (WPA) to manage the programs

Industrial Relief• Two parts to The National Industrial

Recovery Act:– Economic recovery through the National

Recovery Administration (NRA)• NRA symbol was the “Blue Eagle” with the words

“We do our part”• The legislation was terminated by the Supreme

Court in 1935 because it was deemed unconstitutional in the Schechter Poultry Corporation v. United States case

– Public Works Administration (PWA)

Congress’ Response• With NRA terminated by the courts, the

Congress passed the Wagner Act of 1935 (National Labor Relations Act)– Created a new National Labor Relations Board– Reasserted the right of labor to organization and

bargain collectively through representatives of their choosing.

• Led to unskilled workers organizing – led by John. Lewis

• Formed the Committee for Industrial Organization (CIO) within the AFL – eventually broke away

• Used the sit-down strike – to stop strikebreakers being used – in Flint with GM

More Reform for Labor• Fair Labor Standards Act (Wages and Hours

Bill)

– Minimum wage (.40 an hour)

– Maximum hour levels (40 hours a week)

– No labor by children under 16

– Excluded agricultural service and domestic workers

• Minorities and women did not benefit

The Farmers

Relief for Farmers• With the drop in farm commodities prices, many

farmers could not afford to plant crops

• The Agricultural Adjustment Act (AAA) of 1933 planned to pay farmers to destroy their crops in an attempt to raise prices– Eventually animals were slaughtered as well as

crops destroyed

• The decline in supply did increase the prices, but the shortage was as much due to the “dust bowl” which wiped out many farms on the Great Plains between 1932 and 1935

One Farmer’s balance sheet

.

1928 Income 1932 Income

Cream Sales for full year

$ 105.90Cream Sales for full year

$ 6.45

Egg Sales for full year 161.07 Egg Sales for full year 1.85

Wheat, in March sold 614 bushels @ $1.21/bu. & Sept. 205 bu @ .84/bu.

920.24Wheat, in May sold 226 bushels @ $.42/bu.

68.75

Corn, in August sold 435.5 bushels @ .83/bu.

361.80Corn, in August sold 901 bushels @ .25 and .26/bu.

231.50

Livestock, throughout the year he sold a steer, 26 hogs, an "old cow" and bull calf.

608.74Livestock, in July he sold one bull

25.00

"Western land rent" on wheat land Otto owned near Hayes Center, Nebraska, in Dec.

238.50"Western land rent" in March

68.75

Parity• Gov’t studies

showed that farmers’ costs were “on par” with the crop prices in 1910-1914

• AAA states the gov’t goal to keep prices need parity

RELIEF for Farmers Review

Name of Act Year Passed

Summary Upheld by the Courts?

Agricultural Adjustment Administration AAA

1933 Artificial scarcity and parity

No – struck down in 1936

Soil Conservation and Domestic Allotment Act

1936 Allow land to lie fallow and be paid – focus on conservation

Yes

2nd Agricultural Adjustment

Administration New AAA

1938 Conservation payments and parity payments

Yes

Dust Bowl

Farmer and sons...dust storm, Cimarron County, Oklahoma. 1936.

Other New Deals

The Tennessee Valley Authority

• One of the largest and most successful programs was the creation of the Tennessee Valley Authority (TVA)

• The Tennessee Valley was a very underdeveloped and impoverished area

• The idea was to build a series of dams on the Tennessee River. The result would be more industry, better schools and libraries, and cheap hydroelectric power.

Helping Housing• Federal Housing Administration (FHA)

– Goal: speed recovery and better homes– How? Provided small loans t householders to

improve homes or complete new homes– Very popular and long-standing

• Added to the FHA with the United States Housing Authority (USHA)– Goal: Build low-income housing– How? Lend money to states or communities– Helps to shrink slum areas

The Elderly• Traditional economic security: family, labor, or

charity

• First 150 years of American history, most citizens are farmers– Close to family and assumed elderly would be

cared for

• Second Industrial Revolution change this – now dependant on wages to live– Also left elderly parents on the farm to move to the

city

• People now living longer

Social Security Administration (SSA)

• What can you do?– Nothing– Hoover’s Volunteerism– Expand current state welfare– FDR’s proposal of social insurance

• SSA Included two major programs:– Federal system of old-age benefits for retired

workers who had worked in industry and commerce– Federal-State system of unemployment insurance.

Most important New Deal agency

Repealing Prohibition• Congress passed the Beer-Wine Revenue

Act which amended the Volstead Act and permitted the sale of low levels of alcohol– Provided taxable revenue and employment

• The Twenty-First Amendment was passed in December of 1933 ended Prohibition

Native Americans• Indian Reorganization Act of 1934

– Encouraged tribes to establish local self-governments and preserve native crafts and traditions

– Worked to reverse the Dawes Act of 1887

– Some Indians worried it was “back to blankets”

– Nearly 200 tries organized tribal governments

New Deal Critics

• Not everyone approved of the New Deal legislation and attacks from all sides– H. L. Mencken complained that Roosevelt was creating a

welfare state – Father Charles Coughlin “the radio priest” by 1934 he had

turned against Roosevelt – calling the president a liar.• Dr. Francis Townsend suggested that all people over

60 receive $200 a month, the money could be raised through a sales tax.

• The most vocal critic was Huey Long, once governor and senator of Louisiana – Long was nicknamed the modern-day Robin Hood for his

“share our wealth” plan – limit income of the rich• Communist party felt the New Deal was too

conservative

Election of 1934• Overwhelmingly for Democrats

– FDR’s appeal to the “forgotten man”– South, unions, blacks, urbanites, New immigrants,

and the poor vote Dem

• In new term, FDR sought to pack the Supreme Court– 6 of the 9 justices were over 70– Had ruled against FDR in 7 of 9 cases– Asked Congress to add a new justice to the Court

for every member over 70– STRONGLY opposed

End of the 1930’s• New Deal does not end the Depression

• A recession hits in 1937

• Roosevelt turn to Keynesian economics– British economist John Maynard Keynes– Deficit spending

• By 1938 no more rabbits to pull out of FDR’s hat

THE NEW DEALOPPONENTS

• Waste, incompetence, confusion

• Lefty socialists• Too much improvising

without a real plan• Growth of bureaucracy –

states fade further• National debt• Business and republicans

hated it• Too much presidential

powers• DIDN’T FIX THE

DEPRESSION!!

SUPPORTERS• Some waste, but relief was

needed• Headed off a more radical

swing with a moderate option

• Government was morally bound to prevent mass hunger – gov’t is to be used, not feared

• Citizens retained self-respect• Deflected hatred of business

• New Deal did relieve the worst of the crisis in 1933