•
Roosevelt started this type of spending
– deficit spending
•
How many workers remained unemployed in 1935?
•
•
10 million
How many justices was FDR hoping to pack the court with if the bill he sent to
congress passed?
– 6
•
During FDR’s presidency, the goal of this was to provide security to the elderly
and unemployed
– Social security
Who won the Election of 1928?
– Herbert Hoover
•
This type of stock market convinced many people to invest in the 20s.
– Bull Market
•
•
•
Making an investor repay the loan at once if a stock price fell
– Margin call
October 29 1929 when the stock market sold 16 million shares and lost between 10 and
15 billion dollars in value is known as
• Black Tuesday
What was the nick name for FDR’s cabinet?
– “The Brain Trust”
•
Name given to Roosevelt’s radio addresses
– “fireside chats”
The Great Depression
and
The New Deal
Chapters 18 and 19
Video
Notes
The Great Depression and the New Deal
The Causes of the Great Depression
• Herbert Hoover- inaugurated on March
4, 1929
– Optimism -drove stock prices to new highs
• Bull market
–many people invest in stocks
– Bought stocks on margin, making only a
small cash down payment –rest as a loan
from a stockbroker
Notes
• Margin call - investor must repay the loan at
once if a stock price fell
– sensitive to any fall in stock prices
• In the late 1920s many investors bid prices
up without considering a company’s
earnings and profits - speculation
Notes
• The Great Crash
– market was running out of new customers
– professional investors sensed danger and
began to sell off their holdings
– The start- October 24- Black Thursdaymarket plummeted –
– Black Tuesday October 29 1929, 16 million
shares of stock were sold - lost between $10
billion and $15 billion in value
– VIDEO
Notes
• Weakened banks in two ways
– Loaned to stock speculators
– had invested depositors’ money in the
stock market
• banks lost money on their investments, and
speculators defaulted on their loans
• Less credit available
• Sends economy into a recession
Notes
• Banks begin to fail
• crisis of confidence in the banking
system.
– Depositors made runs on banks
causing them to collapse- bank run –
many withdraw their money at one
time
• 10 percent closed by 1932.
Notes
• Other factors of the Great Depression
– Overproduction
– Buying on an installment plan – leads to
debt- leads to fewer purchases
• slowdown in retail sales effects the
entire economy
– Hawley-Smoot Tariff - average tariff rate to
the highest level in American history
– Federal Reserve - kept rates low
Notes
• 1931- Hoover increased funding for
public works
– Government financed building projects
– However, Hoover refused massively
increasing government spending
– Instead, focused on expanding the money
supply
– believed that state and local governments
should provide relief
Notes
• By 1932 - Emergency Relief and
Construction Act
– $1.5 billion for public works and $300
million in emergency loans to the states
– first time in United States history, the
federal government was supplying direct
relief funds
– Too late to reverse the collapse
– Newly homeless people put up communities of shacks or
Shanty towns that were eventually called Hoovervilles.
• FDR is elected president
Notes
The New Deal
Video
• By the day of Roosevelt’s inauguration,
most of the nation’s banks were closed
• One in four workers were unemployed
• The first New Deal begins
Notes
• Roosevelt and his advisers - called the
“brain trust”
– send bill after bill to Congress.
– Between March 9 and June 16, 1933
• which came to be called the Hundred Days
• Congress passed 15 major acts to resolve the
economic crisis-First New Deal
Notes
– Roosevelt declared a national bank holiday,
temporarily closing all banks
• Roosevelt began giving radio addresses
known as “fireside chats”
– Let the American people know directly what
he was trying to accomplish
– Ends the banking crisis
Notes
• National Recovery Administration (NRA)
– codes of fair competition
– set prices
– limited factories to two shifts
– shortened workers’ hours, with the goal of
creating additional jobs
– established minimum wages
– right to form unions
– urged consumers to buy goods only from
companies that displayed the Blue Eagle
• NRA problems
Notes
– Gains short-lived
– Small companies complained - large
corporations wrote the codes to favor
themselves
– employers disliked codes that gave workers the
right to form unions and bargain collectively
– paying high minimum wages forced them to
charge higher prices
– industrial production actually fell after the
organization was established
– Declared unconstitutional in 1935
• Constitution did not allow Congress to delegate its
legislative powers to the executive branch
Notes
• Relief Programs
1. Civilian Conservation Corps (CCC)
• young men 18 to 25 years old
• forestry service
2. Federal Emergency Relief Administration
(FERA)
• channeled money to state and local agencies
3. Public Works Administration (PWA)
• awarded contracts to construction companies
Notes
4. Civil Works Administration (CWA)
• hired workers directly
• 300,000 women
• spent nearly $1 billion in just five months
Notes
The Second New Deal
– 1935- economy had shown only a slight
improvement after two years
– 10 million workers remained unemployed
– nation’s total income was about half of what it
had been in 1929
– Roosevelt started deficit spending
Notes
• FDR launched a series of programs
known as the Second New Deal
– Works Progress Administration (WPA)
• largest public works program
• spent $11 billion
• highways, public buildings, parks, bridges,
airports
• VIDEO
Notes
– National Labor Relations Act AKA “The Wagner
Act”
• guaranteed workers the right to organize unions and
to bargain collectively
• set up the National Labor Relations Board (NLRB)
• binding arbitration -dissatisfied union members
could take their complaints to a neutral party who
would listen to both sides and decide on the issues
• NLRB could investigate employers’ actions and
secretly find out if workers wanted to unionize.
Notes
– Social Security Act
• goal –provide security for elderly and
unemployed workers
• viewed primarily as an insurance measure
• collect -stopped working at age 65
• Unemployment insurance
– supplied a temporary income to unemployed
Notes
• An attempt to organize industrial workers
– Committee for Industrial Organization (CIO) in 1935
• unions that included all workers, skilled and unskilled
– Sit-Down Strikes
• employees stopped work inside the factory and
refused to leave-prevented replacement workers
• United Auto Workers (UAW)
– GM factory in Flint – strikers held factory for weeks
– police launched a tear gas assault- wounded 13
strikers –they held
– GM accepted UAW as its employees’ sole
bargaining agent
Notes
• Roosevelt worried about the court ruling on the
NRA and the Agricultural Adjustment Act - both
ruled as unconstitutional
• furious that, “nine old men”, were blocking the wishes of
a majority of the people
– sent Congress a bill to increase the number of
justices – possibly by as much as 6
– court-packing plan
• proposed that if any justice had served for 10 years and
did not retire within six months after reaching the age of
70, the president could appoint an additional justice to
the Court
Notes
– Roosevelt’s actions -forced Supreme Court
to back down
• Court upheld the constitutionality of the Wagner
Act by a vote of 5-4
• upheld the Social Security Act
• Finally- conservative justice resigned, enabling
Roosevelt to appoint a New Deal supporter to
the Court
• Hurt his reputation
Notes
• The New Deal’s Legacy
– limited success in ending the Depression
– Unemployment remained high
– economic recovery was not complete until after
World War II
– Business leaders, farmers, workers,
homeowners, and others now looked to
government to protect their interests
– Established the broker state
– new public attitude toward government- safety
net for Americans- duty of the government