The Great Depression and
New Deal
(1929-1941)
The Great Depression
• Underlying Causes
• The New Deal
• The Crash
• The Second New Deal
• Hardships
• Limits of the New Deal
• Americans Create Hope
• Lasting Achievements of
the New Deal
• Failures of Hoover
• Miscellaneous Info
• FDR’s Views
The Great Depression
• Underlying Causes: An Unstable Economy
– The prosperous economy of the 1920s lacked
a firm base.
– The nation’s wealth was unevenly distributed.
Those who had the most tended to save or
invest rather than buy goods.
– Industry produced more goods than most
consumers wanted or could afford.
The Great Depression
• Underlying Causes: Overspeculation
– Speculators bought stocks with borrowed
money and then pledged those stocks as
collateral to buy more stocks.
– The stock market boom was based on
borrowed, or sometimes even imaginary
money.
The Great Depression
• Underlying Causes: Government Policies
– During the 1920s, the Federal Reserve System
cut interest rates to assist economic growth.
– There were little to no federal regulations
dealing with Banks and the handling of money.
– In 1929, it limited the money supply to
discourage lending. As a result, there was too
little money in circulation to help the economy
after the Great Crash.
The Great Depression
• The Crash:
– In September, the Dow Jones Industrial Average, an
average of stock prices of major industries, had
reached an all time high of 381.
– On October 23 and 24, the Dow Jones Average quickly
plummeted, which caused a panic.
– On Black Tuesday, October 29, 1929, most people sold
their stocks at a tremendous loss.
– This collapse of the stock market is called the Great
Crash. Overall losses totaled $30 billion.
– The Great Crash was part of the nation’s business
cycle, a span in which the economy grows, and then
contracts.
The Great Depression
• The Crash:
The Great Depression
• The Crash:
– The economic contraction that began with the
Great Crash triggered the most severe
economic downturn in the nation’s history—
the Great Depression.
– The Great Depression lasted from 1929 until
the United States entered World War II in 1941.
The Great Depression
• Overall Hardships:
– People of all levels of society faced hardships
during the Great Depression.
– Unemployed laborers, unable to pay their rent,
became homeless.
– Sometimes the homeless built shacks of tar
paper or scrap material. These shanty town
settlements came to be called Hoovervilles.
The Great Depression
• Overall Hardships:
– Farm families suffered from low crop prices.
– As a result of a severe drought and farming
practices that removed protective prairie grasses,
dust storms ravaged the central and southern
Great Plains region. This area, stripped of its
natural soil, was reduced to dust and became
known as the Dust Bowl.
– The combination of the terrible weather and low
prices caused about 60 percent of Dust Bowl
families to lose their farms
The Great Depression
• Hardships: Health Issues
– Some people starved and thousands went
hungry.
– Children suffered long-term effects from poor
diet and inadequate medical care.
The Great Depression
• Hardships: Stresses on Families
– Living conditions declined as families
crowded into small houses or apartments.
– Men felt like failures because they couldn’t
provide for their families.
– Working women were accused of taking jobs
away from men
The Great Depression
• Hardships: Discrimination and Intolerance
– Competition for jobs produced a rise in
hostilities against African Americans,
Hispanics, and Asian Americans.
– Lynchings increased.
– Aid programs discriminated against African
Americans.
The Great Depression
• Americans Create Hope:
– Throughout the country, people pulled together to
help one another.
– Neighbors in difficult circumstances helped those
they saw as worse off than themselves.
– When banks foreclosed on a farm, neighboring
farmers would bid pennies on land and machines,
which they would then return to the original
owners. These sales became known as penny
auctions.
– Jokes and humor helped many people to fight
everyday despair.
The Great Depression
• Americans Create Hope:
– In February 1933, Congress passed the
Twenty-first Amendment, which repealed the
eighteenth amendment prohibiting the sale of
alcohol.
– Many hoped the legal production and
distribution of alcohol would help boost the
economy.
The Great Depression
• Americans Create Hope:
– Empire State Building becomes symbol of
hope
– 2,500 to 4,000 people worked on the
construction.
– The cost of construction was about $41 million.
– At that time, it was the world’s tallest building
and had 102 stories and 67 elevators.
The Great Depression
• The Failures of Hoover:
– Hoover did not support federal public assistance
because he believed it would destroy people’s
self-respect and create a large bureaucracy.
– Hoover set up the Reconstruction Finance
Corporation (RFC), which gave government credit
to banks, industries, railroads, and insurance
companies. The theory was that prosperity at the
top would help the economy as a whole. Many
Americans saw it as helping bankers and big
businessmen, while ordinary people went hungry.
The Great Depression
• The Failures of Hoover:
– Hoover believed that federal government should
not try to fix people’s problems.
– Argued that federal aid and government policies
to help the poor would alter the foundation of our
national life.
– Hoover slowly gained the reputation that he only
wanted to help the elite, not the entire country.
The Great Depression
• FDR and a “New Deal” for America:
– Believed that government had a responsibility to help
people in need.
– Called for a reappraisal of values and more controls
on big business.
– Much of his support came from urban workers, coal
miners, and immigrants in need of federal relief.
– In the election of 1932, Roosevelt won 57 percent of
the popular vote and almost 89 percent of the
electoral vote.
The Great Depression
• FDR and a “New Deal” for America:
– FDR promised “a new deal for the American
people,” but he did not have a sure plan for it.
– The term New Deal came to refer to the relief,
recovery, and reform programs of FDR’s
administration that were aimed at combating
the Great Depression.
The Great Depression
• The New Deal:
– Stabilizing Banks
• FDR wanted to restore public confidence in the
nation’s banks.
• Congress passed the Emergency Banking Act,
which authorized the government to inspect the
financial health of all banks.
The Great Depression
• The New Deal:
– Providing Relief and Creating Jobs
• FDR persuaded Congress to establish the Federal
Emergency Relief Administration (FERA). FERA put
money into public works programs, government-funded
projects to build public facilities and create jobs.
• One public works program was the Civilian
Conservation Corps (CCC). The CCC put more than 2.5
million men to work maintaining forests, beaches, and
parks.
The Great Depression
• The New Deal:
– Regulating the Economy
• In 1933, Congress passed the National Industrial
Recovery Act (NIRA). NIRA established the
National Recovery Administration (NRA), which
tried to balance the unstable economy through
extensive planning.
• The NRA established codes for fair business
practices. These codes regulated wages, working
conditions, production, and prices, and set a
minimum wage.
The Great Depression
• The New Deal:
– Helping Farmers and Homeowners
• The Federal Housing Administration (FHA) worked to
improve housing standards and conditions, and insure
mortgages.
• The Agricultural Adjustment Administration (AAA)
raised farm prices through subsidies. They paid
farmers not to raise certain crops and livestock, hoping
that lower production would cause prices to rise.
• The Tennessee Valley Authority (TVA) provided jobs,
hydroelectric power, flood control, and recreational
opportunities to farmers in the underdeveloped
Tennessee Valley.
The Great Depression
• Eleanor Roosevelt:
– It was uncommon for First Ladies to engage in politics
prior to 1932.
– Eleanor Roosevelt defied tradition and was one of
FDR’s most important colleagues. She threw herself
into supporting the New Deal.
– Occasionally the First Lady took stands that
embarrassed her husband. For example, she
protested the Jim Crow laws at a meeting of the
Southern Conference for Human Welfare in
Birmingham, Alabama.
The Great Depression
• Second New Deal:
– When the New Deal failed to bring about
significant economic improvement, critics began
to attack the programs. Opponents warned that
New Deal agencies were giving increasing power
to the federal government.
– In response to the critics, FDR’s administration
launched an even bolder set of legislation. The
Second New Deal included more social welfare
benefits, stricter controls over business, stronger
support for unions, and higher taxes on the rich.
The Great Depression
• Second New Deal:
– Help for Unemployment
• One of the most notable agencies that the Second
New Deal created was the Works Progress
Association, or WPA.
• The WPA put millions to work through the building
of playgrounds, schools, hospitals, airstrips, or
artistic creations.
The Great Depression
• The Election of 1936
• FDR carried every state except Maine and
Vermont, winning 523-8 in the electoral
college.
• FDR’s victory showed that most Americans
supported the New Deal.
The Great Depression
• Limitations of the New Deal:
– Most New Deal programs did not help women.
– Most New Deal programs actually hurt African
Americans and promoted segregation.
– Many believed the New Deal was limiting
individual freedom in an unconstitutional, “unAmerican” manner.
– Many Progressives and Socialists attacked the
New Deal because they believed that the
programs did not provide enough help and the
U.S. needed more income equality.
The Great Depression
Court Packing Fiasco:
• Roosevelt, in an effort to gain more support in the Supreme Court, proposed
a major court-reform bill. He recommended that Congress allow him to add
six additional Supreme Court justices, one for every justice over 70 years
old. His argument was that this would lighten the case load for aging
justices. His real intention, however, was to “pack” the Court with judges
supportive of the New Deal.
•
Critics warned that FDR was trying to undermine the constitutional
separation of powers. They were concerned that Roosevelt was trying to
gain unchecked powers, which was a serious concern in a time when several
dictators ruling in Europe tilted their countries toward tyranny.
•
In the end, FDR still wound up with a Court that tended to side with him.
Some of the older justices retired and Roosevelt was able to appoint justices
who favored the New Deal. However, he also suffered political damage.
Many Republicans and southern Democrats united against New Deal
legislation. This alliance remained a force for years to come.
The Great Depression
Lasting New Deal Achievements:
– Politics: Voters began to expect a President to
formulate programs and solve problems.
– Infrastructure: Many New Deal bridges, dams,
tunnels, public buildings, monuments, and
hospitals exist to this day.
The Great Depression
Lasting New Deal Achievements:
– Social Programs: The Social Security system
has gone through some changes, but is a part
of the lives of all Americans.
– Attitudes: People began to accept the
government intervention and less “laissezfaire” approaches.