UNIT 5 – CHAPTER 12, 13 DEPRESSION TO NEW DEAL
Chapter 12 – The Great Depression
I. Causes of the Depression
A. Prosperity Hides Troubles
1. Optimism Sweeps Hoover to Victory
a. Republican policies toward Tariffs and Big Business
2. Problems Plague the Agricultural Sector
a. Over Production from the war
b. Drop in prices cause farmers to default on loans
3. Wealth is Distributed Unevenly
a. Rich getting richer – big business laissez faire
b. Wage increase did not match output increase
i. Corporate profits rose, but money did not trickle down
4. Easy Credit Hides Problems
a. Banks over extended themselves
b. People bought everything on credit and did not have money to payback loans
B. The Stock Market Crashes
1. Speculation – no one realized the growing bubble would eventually bust (Yee Haw)
2. Black Tuesday
a. October 29, 1929 – billions of dollars lost
b. Bottom of the business cycle
C. The Great Depression Begins
1. Banks Collapse – didn’t have money requested by creditors to pay back loans or buy basic food
items
a. Over 3,000 banks failed in two years – gov’t didn’t back banks, they were privately owned
b. Federal reserved cut back money supply
2. Businesses Close and Unemployment Rises
a. Consumer spending goes down
b. Business go under and fire their employees
3. Tariffs add to woes
a. Hawley-Smoot Tariff – raised tariffs on imported goods
b. Failing companies couldn’t afford to sell to overseas markets
4. Depression Goes Global
a. Europe falls into depression
i. Germany over produced money(caused inflation)
ii. Countries could afford to pay back war loans
D. What caused the depression
1. Wide variety of answers – no one exact answer, lots of problems compounded on each other
II. American Face Hard Times
A. Misery and Despair Grip America’s Cities
1. Searching for a Job and a Meal
a. Unemployment rate up to 25% by 1933
b. Families sold personal possessions to pay for food
i. Too many families selling things forced prices down (compounds the problem)
c. Breadlines – public soup kitchens
2. Descending into Poverty
3. Looking for a place to live
a. No money to pay house payment – forced forclosures
b. Hoovervilles
i. Shanty towns of tents and shacks built on public land or vacant lots
B. Poverty Devastates Rural America
1. Commodity prices plunge
a. Crop prices fell and farmers debts increased
i. Bushel of wheat in 1919 was $2.16, by 1932 it was 38 cents
2. Farmers lose their farms
a. Banks sold off failing farms
b. Tenant Farming – larger farms bought up smaller ones and let the farmers pay rent to farm
3. The Great Plains Becomes a Dust Bowl
a. Drought hit the Midwest during mid 1930’s
b. No rain = no crops growing
c. Dust Bowl
i. Dust storms from dry dirt acted like tornado’s sweeping across the country
a) 8000 feet high, 100 miles an hour
4. Desperation Causes Migration
a. Okies – families moving from dust bowl region to opportunities elsewhere
i. Moved to California, Oregon, Washington
ii. Rural areas lost population while cities got bigger
C. Few Americans Escape Hard Times
1. The Depression Attacks Family Life
a. Men lost sense of self b/c they could not support family
b. Men who had jobs worried how long it would last, or felt guilty for having a job
c. Children quit school, families broke up because of stress
i. Discipline declines b/c families had other things to worry about
2. Minorities Suffer Hardships
a. Already at the bottom, Minorities were last to get jobs or help
b. Mexicans were asked to return to Mexico (repatriation)
III. Hoover’s Response Fails
A. Cautious Response to Depression Fails
1. Hoover Turns to Volunteerism
a. Believed depression was natural part of business cycle
b. Asked businesses to maintain wages and working levels
c. Cut gov’t tax rates
d. Asked the wealthy to give money to charity
2. Volunteerism Fails to Bring Relief
a. No one volunteered to help (they were worried about their own issues)
b. Localism – wanted problems to be solved at state or local level
i. Did not think the federal gov’t should get involved in peoples lives
B. Hoover Adopts More Activist Policies
1. Plan wasn’t working and Hoover was forced to take more aggressive approach
2. Reconstruction Finance Corporation (FRC)
a. Gov’t loans to big business and railroads
b. Hoped money would trickle down to employees (trickle-down economics)
i. Didn’t work
c. Hoover Dam (Boulder Dam)
i. Hoover’s best project, after completion it was world’s largest hydroelectric power source
ii. Over 100 people died while making the dam
C. Americans Protest Hoover’s Failures
1. Some Urge Radical Changes
a. Capitalist creates unequal wealth – need to follow European leaders of Italy and Germany
b. Socialism to Communism
2. The Bonus Army Marches on Washington
a. Bonus Army – WWI veterans who wanted money promised to them after the war
i. Adjusted Compensation Act – money would be paid to veterans in 1945
ii. They wanted the money early
b. Bonus Army marches on Washington
3. Hoover Orders the Bonus Army out
a. President felt bad for veterans, but turned U.S. Military on protesters and forced them out of
capital
i. Troops fixed bayonets and readied tear gas to use against Bonus Army
b. Turned public opinion against Hoover
D. The Aftermath Dooms Hoover
1. Pictures from Bonus Army protest shocked the nation
2. Nation was Ready for a change from republican Policies
CHAPTER 13 – THE NEW DEAL
I. FDR Offers Relief and Recovery
A. Roosevelt Takes Charge
1. Franklin D. Roosevelt, Democratic Governor of New York
2. Roosevelt Overcame Obstacles
a. Cousin of Teddy Roosevelt
b. Diagnosed with Polio in 1921
i. The people didn’t know he could not walk
3. Voters Elect a New President
a. “New Deal”
i. A new start for the American People (Teddy Roosevelt had a Square Deal)
ii. Use the National Government to help (opposite of Hoover)
4. Putting Together a Winning Team
a. Brought together “Brain Trust” of different people from different backrounds
i. Republics and his Wife
B. The First Hundred Days
1. Passed 15 bills in his first 100 days in office
a. Relief, recover, reform – his motto
2. FDR Swiftly Restores the Nations Confidence
a. Closed banks first day in office for 4 days
i. Gave banks time to reorganize
b. The Emergency Banking Bill
c. Fire Side Chats – Presidents way of communicating with the people over the radio
3. The ABC’s of Helping
C. The ABC’s of helping the American People
1. Agricultural Adjustment Act (AAA)
a. Government paid farmers to leave land unfarmed – Supply and Demand
b. Wasted a lot of food but did bring down prices
2. Civilian Conservation Corps (CCC)
a. Put young men to work on roads, developing parks, planting trees
b. Small but constant wage
3. Federal Emergency relief Administration (FERA)
a. Direct aid to the needy of food and clothing
b. “A loaf of bread feeds a man for a day, a job feeds a man for life”
4. Public Works Administration (PWA)
a. Money to states to create jobs – mostly construction jobs
5. Civil Works Administration (CWA)
a. Money to employ men to build schools “make-work” projects
6. National Industrial Recovery Act (NIRA)
a. Codes for fair practice in industries
7. Nation Recovery Administration (NRA)
a. Created by NIRA Set prices for fair competition
b. Standards for working conditions
c. Workers right to unionized and collectively bargain
8. Tennessee Valley Authority (TVA)
a. Renovated five damns and constructed 20 new ones
b. Created many jobs in very poor area
9. Home Owners Loan corporation (HOLC)
a. Government loans to homeowners who faced foreclosure
10. Federal Housing Administration (FHA)
a. Created by National Housing Act
b. Provide loans and home mortgages – still around today
D. Opposition To the New Deal Emerges
1. Right says too much (Conservatives)
a. Gov’t was destroying Free Enterprise
b. Gov’t was threats to individual freedom
c. FDR was supporting Socialism
2. Left says “Not Enough”(Liberals)
3. Populist Critics Challenge FDR (Radicals)
a. Gov’t should proved $200 a month for all Americans
b. Charles Coughlin and Huey Long
i. Wanted “Share our Wealth” program
ii. Tax the rich and give to the poor.
4. The Supreme Court
a. Struck down National Industrial Recovery Act
i. Executive Branch does not have power to establish fair labor practices
b. Agricultural Adjustment Act
i. Farming is a local matter and should be handled by the state
c. Court Packing Bill
i. FDR’s attempt to have congress give him authority to reform Supreme Court
II. The Second New Deal
A. Extending Social and Economic Reform
1. New Programs Provide Jobs
a. Works Progress Administration
i. Built highways, cleaned rivers, Harbors, and promoted soil and water conservation
ii. Employed 8 million people and built 650,000 miles of highways
b. Federal Deficit soared
i. It was actually cheaper to give people money than create jobs for people
2. Social Security Eases the Burdon on Older Americans
a. Social Security Act
i. Unemployment insurances for workers who lost their jobs
ii. Insurance for workers who were hurt on the job
3. More Aid goes to Farmers
a. Rural Electrification Administration
i. Gov’t loaned money to private companies to run power lines
ii. Gave a lot of farmers electricity they never had before
iii. Price supports for farmers – regulating the price of food
4. Water Projects Change the Face of the West
a. Dam’s and irrigation in the West
B. Labor Unions Find a New Energy
1. Granting New Rights to Workers
a. National Labor Relations Act (Wagner Act)
i. Right of employees to collectively bargain – unions negotiating with companies over
pay/hours
b. Fair Labor Standards Act
i. Minimum Wage, 44 hour workweek, outlawed child wabor
2. Workers Use their Newfound rights
a. Unions began to work for better wages b/c the gov’t would protect them
C. Challenges to the New Deal
1. FDR wins election of 1936 big
2. Supreme Court opposed New Deal
a. Ruled many of his reforms were unconstitutional
i. Not the job of the government to set prices and control private industry
3. FDR Proposed “Packing” the Court
a. Wanted to create piece of legislation that would allow him to appoint 6 new justices to the
supreme court
D. A New Downturn Spurs Conservative Gains
1. Unemployment fell 10% under Roosevelt in the first 4 years
2. Attempting to slow gov’t role, FDR cut back spending, and Federal Reserve raised interest rates
a. Unemployment rose, and depression worsened again
b. Republicans began to gain momentum
III. Effects of the New Deal
A. Women help lead the way
1. Eleanor Roosevelt changed the way the nation thought about a first lady(very proactive)
B. African American Make Advances and Face Challenges
1. President invited black leaders to white house for opinions and political views
2. Eleanor Roosevelt was anti-separate but equal
C. The New Deal Affects Native Americans
D. The New Deal Creates a New Political Coalition
1. Southern Whites, Northern Blue Collar workers, Midwestern farmers, and African Americans all
became staunch democratic followers
a. Following allowed many democrats to win seats in house and senate
2. Roosevelt helped unify the nation
E. The Role of Government Expands
1. New Deal programs increased the size and scope of the Federal Government
2. Playing a Larger Role in the Economy
a. ND broke away from Laissez Faire economics
b. Some accused FDR of practicing Socialism
3. Creating a Welfare State
a. Government that assumes responsibility for providing for the welfare if children, poor, and
needy
4. Restoring the Environment
5. Changing the Nature of the Presidency