The Great Depression

And the New Deal

Herbert Hoover

Republican Herbert Hoover became president in 1929.

He opposed too much government interference in business.

Unfortunately for Hoover he took office at a time when the US economy was

about to collapse and was ultimately blamed for the Great Depression and lost

the 1932 election for Franklin Roosevelt.

In 1928, the new Republican president, Herbert Hoover confidently stated, "We in America today

are nearer to the final triumph over poverty than ever before in the history of any land.” He also

promised the American people a chicken in every pot and a car in every garage.

Great Depression

Worse economic crisis in US history that led to massive unemployment and left

many US citizens without jobs or money.

Causes of the Great Depression

Overproduction and under consumption that led to falling prices.

Buying risky stocks on Speculation and “Buying on the Margin”

Stock Market Crash of 1929 ("Black Tuesday")

Overproduction

Producing more goods than consumers can buy, thereby causing a fall in

prices.

Under Consumption

When consumers don't consume enough in relations to how many goods

have been produced and are available.

Buying Stock on Speculation

High-risk investments people made in the stock market during the 1920s in

hopes of making large returns on their money.

Such investments eventually contributed to the start of the Great Depression.

Buying on the Margin

Practice in which investors purchased stocks for only a portion of what they cost.

They then borrowed the difference and paid interest on the loan.

Black Tuesday

October 29, 1929, the day the stock market crashed. It is generally

acknowledged as the beginning of the Great Depression.

Stock Market: Before and After “Black Tuesday”

US Economy Following the Stock Market Crash of

1929

People rushed to withdraw money from banks, causing them to close.

Back then, the government did not insure bank accounts and if a bank

closed and went out of business, anyone who had money in the bank

lost all their savings.

Economic Conditions During the Great Depression

1. Unemployment- 13 million people were out of work.

2. Industrial production dropped by 45 per cent between 1929 and 1932.

3. House building fell by 80 per cent between 1929 and 1932.

4. The entire American banking system reached the brink of collapse.

5. From 1929 to 1932, 5,000 banks went out of business.

Although many people went hungry, the number of

recorded deaths from starvation during the

Depression was 110, although many other illnesses

and deaths were probably related to a lack of

nutrition.

Hoovervilles

" Unable to pay rent, many families were evicted from their former homes and

forced to crowd into shantytowns called “Hoovervilles” (named after president

Herbert Hoover). These areas sprung up from coast to coast, crowded with the

homeless who erected shacks out of whatever construction materials they could

salvage.

Many people lived in primitive conditions close to famine. One New York family moved into a cave in

Central Park. In St Louis, more than 1,000 people lived in shacks made from scrap metal and boxes.

There were many similar Hoovervilles all over America. Between 1 and 2 million people traveled the

country desperately looking for work.

How Farmers Were Affected:

From 1909 through the war years, farmers did well due to the high demand for

their products.

New machinery, such as tractors, allowed farmers to produce far more than

needed.

This resulted in overproduction and caused agricultural prices to drop

drastically in the 1920s.

Mechanization Increased use of machinery for production.

Farmers refused to harvest crops because prices were so low as a result farmers were hurt the

most and many lost their land.

Droughts

Lack of rain that results in not enough water for farming.

Dust Bowl

A series of storms that hit the Midwest during the early '30s, causing enormous

clouds of dust to be created by the high winds.

These black clouds would blanket farms, and even entire cities, as they

destroyed areas and left them uninhabitable.

Bonus Army (1932)

Facing the financial crisis of the Depression, WW I veterans tried to

pressure Congress to pay them their retirement bonuses early. Congress

did not approve so angry veterans marched on Washington. Hoover

mobilized the U.S. Army, under General Douglas MacArthur, to suppress

the angry veterans by using aggressive tactics that summarized the crisis

and unrest taking place all over the nation.

Franklin Delano Roosevelt

Elected president in 1932.

Roosevelt helped instill confidence and was a much-needed image of hope

for a nation battered by the Great Depression.

Franklin D. Roosevelt: Offered

hope and a way out of the

depression.

Franklin D. Roosevelt served

13 years, the longest time for

any U.S. President. After his

death, Congress passed an

amendment limiting the time in

office of a U.S. President to no

more than two full terms.

Eleanor Roosevelt

Franklin Roosevelt's wife and one of the most influential first ladies in US

history.

She worked for reforms in government and campaigned for legislation

regarding public housing, fought for the rights of working women, and

supported the distribution of information about birth control.

Fireside Chats

Roosevelt believed that unless Americans were confident about the economy,

the crisis would remain. Therefore, he went directly to the people in the first

of his radio "Fireside Chats", boldly explaining his actions and coming out

for direct support from the people. This demonstrated that Roosevelt was

bold enough to take action. His actions proved successful, as restored people’s

faith in the economy.

Key Quotes: FDR’s Inauguration Speech

The only thing we have to

fear… is fear itself.

New Deal Roosevelt's domestic programs that involved government spending and were

designed to give the nation relief from the Great Depression.

Goals of the “New Deal”

Relief- provide relief for those Americans in need of financial assistance.

Recovery- Spur the economy to promote recovery.

Reform- Prevent future depressions.

Direct Relief

Federal help to those hurting from the financial crisis.

Soup Kitchens and Breadlines

Provided food for the poor during the Great Depression.

“New Deal” Programs (Alphabet Soup)

Emergency Banking Relief Act (March 11, 1933)

By 1933, over 5000 banks had failed. So, in response to the banking crisis,

Roosevelt shut down all national banks on a four day holiday to prevent

people from withdrawing their money. During this time, Roosevelt and

Congress introduced the Emergency Banking Relief Bill which authorized

the government to examine the finances of banks that were closed during

the holiday and reopen those judged to be solvent. It also authorized the

use of federal funds to back private banks.

Federal Deposit Insurance Corporation (FDIC)

Established in 1933 under the Federal Reserve Act to insure bank deposits of

up to $100,000 in case of bank failure.

This insurance was intended to prevent people from withdrawing their money

out of panic.

Civilian Conservation Corps (CCC)

Established in 1933, it provided employment for unmarried men between the

ages of 18 and 25.

These young men worked in the national parks installing electric lines, building

fire towers, and planting new trees in deforested areas.

Agricultural Adjustment Act (AAA)

Passed in 1933, this act approved government loans to farmers and paid

farmers not to grow certain crops in order to increase the price of

agricultural products.

National Industrial Recovery Act (NIRA)

Passed in 1933, this law sought to bolster industrial prices and prevent US

business failures.

Public Works Administration (PWA)

Launched a number of public works such as the construction of dams,

highways, and bridges.

These projects helped provide citizens with desperately needed jobs.

Tennessee Valley Authority (TVA)

Established in 1933, the TVA built hydroelectric dams to create jobs and bring cheap electricity to parts of the South that had previously been without power.

The southern Appalachians were historically one of the poorest areas in the nation. With the help of the TVA, this region prospered as never before.

The TVA built 20 dams, conducted

demonstration projects for farmers,

and engaged in reforestation to

rehabilitate the area.

Share the Wealth

The Share the Wealth society was founded in 1934 by Senator Huey Long

of Louisiana. He called for the confiscation of all fortunes over $5 million

and a 100% tax on annual incomes over $1 million.

Huey P. Long

Huey Long served as the governor of Louisiana, supporting the common

people and criticizing Roosevelt for favoring businesses in the New Deal. In

response, he created the Share Our Wealthy Society.

Huey P. Long would run for president in 1936, however, he was assassinated

in 1935.

Carl Weiss

(The Assassin)

Huey P. Long

Second New Deal

Some thought the first New Deal (legislation passed in 1933) did too much

and created a big deficit, while others, mostly the elderly, thought it did

not do enough.

Most of the 1933 legislation was ineffective in stopping the Depression,

which led F. D. R. to propose a second series of initiatives in 1935,

referred to the Second New Deal.

National Labor Relations Act (Wagner Act)

Passed in May 1935 and created a board to monitor unfair management

practices such as firing workers who joined unions.

It protected the right of workers in the private sector to organize unions,

engage in collective bargaining, and go on strike.

Fair Labor Standards Act (June 1938)

Maximum hours and minimum wage.

Set maximum hours at 40 hours a week and minimum wage at 20 cents an

hour (gradually rose to 40 cents).

Social Security Act

Passed in 1935, this act established retirement income for all workers once

they reach the age of 65.

Social Security Act is funded by a tax on wages

paid equally by employee and employer.

Frances Perkins

She was the first woman in history to be appointed to a US president's

cabinet as Roosevelt's Secretary of Labor.

Revenue Act of 1935

This law raised taxes on those making above $50,000/year as well as corporate

and estate taxes.

It won the favor of many on the left and was nicknamed the "soak the rich

tax."

Court-Packing Scheme

Plan put forth by Roosevelt in February 1937 to enlarge the size of the

Supreme Court which would allow him to "pack" the Court with justices

favorable to his programs.

The Constitution did not specify the number of US Supreme Court

justices, the president proposed enlarging the Court from nine to as many

as fifteen judges.

When fierce opposition to the measure arose Roosevelt was forced to

withdraw his request.

Effects of the New Deal on Women and Minorities

• Programs tended to show favoritism towards men.

• Businesses paid women less money than male employees.

• As for minorities, what jobs African Americans did get were credited

to Roosevelt and his programs.

• As a result, the African American community began to shift its

political loyalty to the Democratic Party.

Tariffs

High taxes on foreign imports.

Neutrality Act

Law passed by Congress in 1935 which prohibited the sale of weapons to

warring nations and was meant to keep the US from forming alliances that

might drag the nation into war.

Criticisms of the “New Deal”

•Disliked by many businessmen and people with money.

•Government raised money to pay for the “New Deal” through taxes.

People with the highest income had to pay the highest taxes.

•Many feared that the government was becoming too powerful.

•Critics claimed it was destroying the “American way of life.”

•Thought it resembled communism too much.

The outbreak of the Second World

War finally ended the Great

Depression.