THE GREAT
DEPRESSION
“Brother, Can You Spare A Dime?”
The Coming of the Depression

Although the economy of the “Roaring 20s” seemed to
be running like a well-oiled machine, there were a
number of signs/factors that would be either ignored or
unnoticed, eventually leading to an economic collapse:
 The
economic cycle driven by the overextension of credit,
 Overproduction in agriculture and manufacturing,
 Laissez faire politics,
 Buying of stocks on margin,
 Excessive consumerism,
 High tariffs, and
 The collapse of the stock market.
The Coming of the Depression

Overextension of credit
 Credit
was given [through
loans, “buy now, pay later”
schemes, and so forth] to
millions of Americans, who
promptly took advantage of
their newfound “wealth” by
using the credit to buy just
about anything they wanted.
 How
did this contribute to the
economic collapse of 1929?
The Coming of the Depression

Overproduction in
agriculture and
manufacturing
 Both
farms and
factories were
producing much more
than was being
purchased, even with
the abundant credit.
 How
did this contribute
to the economic collapse
that occurred in 1929?
Thousands of bales of cotton sit unpurchased.
The Coming of the Depression

Laissez faire politics
 The
Republican
administrations of the
1920s left business
[and the stock market]
almost totally
unregulated.
 How
did this contribute
to the economic
collapse of 1929?
The Coming of the Depression

Buying of stocks on
margin
 Despite
the fact that
stock value can go up
or down, many
Americans bought
stocks “on margin,”
meaning they bought
the stocks using credit.
 How
did this contribute
to the economic collapse
of 1929?
The bustling floor of the NYSE in the
“Roaring 20s.”
The Coming of the Depression

Excessive consumerism
 The
economy of the
1920s was rooted in
people buying things,
even if they bought
things they didn’t need
with money they really
didn’t have [credit].
 How
did this contribute
to the economic
collapse of 1929?
The Coming of the Depression

High tariffs
 In
an attempt to
protect American
industry, Hoover
passed the HawleySmoot Tariff, which
only caused the
European nations to
raise their tariff rates.
 How
did this contribute
to the economic
collapse of 1929?
In case you can’t read under the headline, it says
“Professors in 179 Colleges… Assail Rise in Rates as
Harmful to Country and Sure to Bring Reprisals.
[Spoiler alert: IT DID.]
The Coming of the Depression

The crash of the stock market

Throughout the 1920s, the stock
market was going up, up, and
up. As a result, Americans sank
much of their money into it…
and then it crashed.
 How did this contribute to the
economic collapse of 1929?

[Please note the many instances
of headlines that say economic
conditions were “sound.”]
 When “they” say “Don’t
worry,” start worrying.
“The Crash”

“Black Thursday”
 24
October 1929
 Investors
in the stock
market, many already in
debt after having bought
their stocks “on margin,”
worry and begin selling
their stocks wholesale.
 Bankers/investors see the
possibility of a collapse
and try to stabilize the
market by dumping money
into the market.

“Black Tuesday”
 29
October 1929
 Investors
are still afraid
of losing all their money,
so they sell their stocks –
16.4 million shares
sold… in one day!!!
 Within two weeks, over
$30 billion in stocks and
banking investments
would be lost. POOF.
“The Crash”
Effects of “The Crash”


With the underconsumption of goods of the late 1920s,
industries had already begun to compensate by laying
off workers.
After the stock market crash, factories began to close at
a much higher pace, and unemployment shot up.
 By
1932, over 13 million Americans were unemployed [this
constituted 25% of the nation’s labor force].

With a public traumatized by the possibility of a
depression, there were runs on the banks… and those
banks had to close.
Effects of “The Crash”
A common scene
in America after
“the Crash,” this
being in front of
a bank in New
York City.
It’s probably
small wonder that
there was a crime
wave in the 30s,
with folks like
John Dillinger
making frequent
withdrawals.
The Impact of the Depression – A
Quick Look

Who was affected?
 Everyone.
No level of society was untouched, although the
rich were able to absorb the loss far better than the poor.
 Prior
to the Depression, there was a significantly disproportionate
distribution of wealth.

Those at the bottom end of the economic ladder would thus be the
hardest hit.
 Farmers
 Before
were particularly affected.
the Great Depression would end, approximately 60% of
the farmers in the Great Plains region would lose their farms.
The Impact of the Depression – A
Quick Look

Blacks were also especially hard hit by the Depression.
 By
1932, 56% of Blacks were unemployed, having lost
their jobs to whites.
 During
the Depression, frustration was directed toward Blacks,
causing even more discrimination [esp. in the South].

See the case of the Scottsboro Boys for an illustration of this trend.
The Impact of the Depression – A
Quick Look



Americans were forced from their homes or their farms,
not being able to pay their mortgages. As a result, the
homeless built “Hoovervilles,” or shantytowns, often
constructed from scrap metal or even cardboard.
Many Americans, including teenagers, became drifters
and rode around the country on trains.
By 1933, two million Americans were simply “on the
move,” migrating from place to place in search of work.
The Impact of the Depression – A
Quick Look
A sample
“Hooverville.”
As dreadful as
the conditions
must have been in
this encampment,
some people
didn’t even have
a shack.
The Impact of the Depression – A
Quick Look
And, of course,
where there is a
large gathering of
poor, desperate
people, the police
are there to bust a
few heads.
Nothing convinces
a desperate
population of
happy days
ahead like a
concussion!
Dealing with the Depression - Hoover


Naturally, Americans looked to the President to lead
them out of the worst financial crisis they had ever seen.
Though he blamed the Depression on worldwide rather
than domestic conditions, Hoover did respond by
 Calling
for more money to be spent on government projects,
such as the previously approved Hoover Dam.
 Establishing the Reconstruction Finance Corporation.
 The
RFC gave government credit to banks so they could extend
loans, feeling the wealth would eventually trickle down.

People standing in soup kitchens and bread lines couldn’t wait that long.
 Passing
 Meant
the Hawley-Smoot Tariff.
to protect American industries, but it backfired. Bigtime.
Dealing with the Depression - Hoover

Seeming cold and uncaring, Hoover quickly grew
unpopular with many Americans.
 The
“Bonus Army” tries to fight Hoover in the spring of 1932.
 Comprised
of about 20,000 jobless Great War veterans, the socalled “Bonus Army” would march on Washington, DC, demanding
payment of the bonus they’d been promised for their service.
 Though
he sympathized with the members of the “Bonus
Army,” Hoover feared its members might be radicals or
socialists.
 As
a result, he ordered the Army to clear the area “without delay.”

Under the command of Gen. Douglas MacArthur, this was done with some
measure of brutality – two adults and one infant died as a result.
The “Bonus Army”
The “Bonus Army” exercising its Constitutionallyprotected right to peaceable assembly.
And the government’s response…
To his credit, Hoover actually ordered the Army
to stop its attacks, but MacArthur ignored the
order, feeling the assembled vets were a bunch of
Communists trying to overthrow the
government…
And ordered a new attack, killing three…
The “Bonus Army”
Ok, so it is probably
fairly callous of me to
represent the “Bonus
baby” like this… but
seriously, can you get
much more callous
than killing an infant?
Fate would not be
much more kind to the
Bonus Army.
The Election of 1932

By 1932, voters had seen no real improvement in
their situation and wanted a new President.
 The
Republicans nominated Hoover [without much aplomb].
 Hoover
would actually campaign on the pledge that his policies
prevented the Depression from being worse than it could’ve been.
 The
Democrats nominated Franklin Delano Roosevelt.
 FDR
had contracted polio in 1921, and during this time his wife
Eleanor became his political partner [she would become the most
politically active First Lady ever].
 Attacking Republicans for their laissez faire policies, FDR promised
the American people a “New Deal.”

He was, however, not very specific at all about how it would work!
The Election of 1932

Hoover had been swept into the presidency in 1928, but
would be swept out in 1932, losing by an electoral vote
count of 472 to 59.
 Worth
noting is how many Blacks shifted from the Republican
party to the Democratic party in this election.

During the “lame duck” period, Hoover tried to initiate
some Roosevelt-like, New Deal-ish plans, but he was met
with resistance.
 From
whom do you suppose this resistance came, and why?
Dealing with the Depression - FDR
Upon inauguration, FDR said “the only thing we
have to fear is fear itself.”
 FDR immediately called for a nationwide banking
holiday [to eliminate a run on the banks] and then
commenced work on his 3 R’s:

 Relief
[to the people]
 Recovery [to the economy]
 Reform [to the economic system]
Dealing with the Depression - FDR

The Democrat-controlled Congress was willing to do what
FDR said, and the first 100 days of his administration were
filled with more legislative activity than ever before.
 Many

of these reforms had been tried in Europe a decade prior.
Whether borrowed from what the Europeans had tried or
dreamed up by the so-called “Brains trust,” FDR’s “New
Deal” would radically shift the role of government as
well as the nation’s citizens’ perception of it.
 Contrary
to what Hoover said of “rugged individualism” in
1928, the “New Deal” would put ever more power in the
hands of an increasingly centralized government.
Dealing with the Depression - FDR

One of the “100 Days Congress’” earliest acts
was to legalize light wine and beer with an
alcoholic content of 3.2% or less [and taxed $5
for every barrel manufactured].
 Prohibition
was officially repealed shortly thereafter
with the passage of the 21st Amendment in 1933.
 Clearly,
when legalizing alcoholic beverages, the government
was thinking of raising revenue in hopes of getting out of the
Depression. What sort of comparison is there to contemporary
efforts to get out of the so-called “Great Recession”?
The New Deal

One of the first programs
created by the New Deal was
the Civilian Conservation
Corps [1933].
 The
CCC gave millions of young
men [the “wild boys of the road”
Hoover thought would start a
communist revolt] jobs, typically
working in the great outdoors.


They would reforest areas, cut
trails, and so forth.
Some critics thought FDR was
militarizing the youth [like Hitler].
The New Deal

The Federal Deposit Insurance
Corporation [1933] would
provide help to banks as well
as to anxious Americans by
guaranteeing deposits made
into FDIC-member banks up to
$5000.
 The
agency was initially
temporary, but was made
permanent a few years later.
 As
of 2014, the FDIC will insure
up to $250,000.
The New Deal

FDR signed the National
Industrial Recovery Act
into law in 1933,
creating the National
Recovery Administration.
 The
act gave labor [and
labor unions] a leg up,
but was later ruled to be
unconstitutional by the
Supreme Court in what
was dubbed “the sick
chicken case.”
The New Deal

The New Deal tried to
help farmers with the
Agricultural Adjustment
Act [1933].
 The
Much like the NIRA, the AAA was struck
down by the Supreme Court.
[But Congress would bring it back in 1938,
without the unconstitutional parts, natch!]
act got off to a bad
start when it forced
farmers to kill lots of pigs
for no good reason.
 By essentially paying
farmers not to farm, the
act actually increased
unemployment.
The New Deal

In an effort to regulate the
one-time casino that is the
stock market, FDR signed the
Securities and Exchange
Commission into being.
 FDR
appointed Joseph
Kennedy to serve as the first
chairman of the SEC.

This was an interesting choice
given the fact that Kennedy was
a notorious bootlegger and
generally a crook, overall.
The SEC [not referring to the
Southeastern Conference] was created in
1934. But you already knew that if you
could read Roman numerals.
The New Deal

Part of the Second New
Deal, the Works Progress
Administration [1935] set
out to create as many jobs
as possible, spending over
$11 billion to give jobs to
more than eight million
[mostly unskilled] workers.
 Mockingly
dubbed the “We
Piddle Around,” the WPA
did give working people a
sense of hope and purpose.
The New Deal

The flagship of all New Deal
programs, the Social Security
Act [1935] would theoretically
be a trust fund with three
major components:
 Old-age
insurance to retirees
65 or older [and their spouses].
 Unemployment compensation.
 Aid to families with dependent
children and people with
disabilities.
The New Deal

In 1938, the Fair Labor
Standards Act was passed,
and established a minimum
wage as well as maximum
hours standards. The act also
forbade children under
sixteen from working.
Obviously, FDR and his New
Deal were hugely popular
with labor unions.
 Republicans hated it, saying
it steered the government
toward a socialist stance.

Tennessee Timeout

The Tennessee Valley Authority
[1933] constructed dams on the
Tennessee River to produce
electricity at reasonable rates.


Electric companies had been gouging
the public with high rates.
The TVA also helped the 2.5 million
citizens of the area overcome their
destitute conditions.

Some farmers would not be terribly
happy that their land would be
seized and turned into a lake, tho’.
Tennessee Timeout
A picture of a
pair of
Tennesseans [in
Knoxville, if you
can read the
paper] who
were obviously
happy that the
federal
government
would finally…
Uhm…
Give a dam.
Tennessee Timeout

Speaking of dams,
they were built as
much for flood control
as for hydroelectric
power. But what if the
construction of a dam
resulted in the flooding
of an entire town?
 Just
ask the citizens of
Willow Grove, TN.
 It’s
now referred to as
Dale Hollow Lake.
If you want to see the Willow Grove School,
you still can…
Just remember to bring your SCUBA gear.
Tennessee Timeout
Farmers were
usually pretty
happy about the
TVA, especially
given the fact that
TVA-produced
phosphates would
allow them the
chance to grow
much more healthy
[and just plain
more] crops.
Looks like a
Miracle-Gro ad.
The Dust Bowl

Thanks to the drought of 1933 [and certain farming
practices], a huge portion of the Great Plains – which
included parts of Kansas, Texas, New Mexico, Colorado,
and Oklahoma – turned into what became known as the
“Dust Bowl.”
 “Black
Blizzards” wreaked havoc on the farmers in the
region, contributing to crop failures as well as simply being
hazardous to both man and machine.
 With
the combination of drought and years of poor farming
practices, the land in the Great Plains was literally blowing away.
The Dust Bowl
Uhm, yeah… it’s time to pack.
The Dust Bowl

Many farmers responded to the hard times by moving
en masse, mostly to California.
 These
farmers, many of whom sought work as migrant
laborers became known by the pejorative term “Okies.”
 John
Steinbeck [who was given work counting dogs by the WPA]
would write of their struggles in books like The Grapes of Wrath.
 To help displaced farmers find work [doing what they knew best],
FDR set up the Resettlement Administration.

With the Dawes Act under attack, and with the New
Deal making a special effort to help women and
minorities, the Indian Reorganization Act of 1934
[dubbed the “Indian New Deal” would be passed].
The Dust Bowl
Once the “Okies”
fled the Dust Bowl
to… well, anywhere
else, really [but most
often to California],
they were met by the
sort of warm
welcome illustrated
by this billboard.
Good times!
Opposition to the New Deal

Although many Americans
were in desperate shape,
the New Deal did not win
support from everyone in
the country.
A
rather large number of
American citizens were
alarmed at just how much
power had been suddenly
concentrated in the hands of
the federal government.
Opposition to the New Deal

Even some supporters of
the New Deal would be a
little uneasy at the thought
of so much power being
concentrated in one place.
 As
the saying goes, “Power
corrupts; absolute power
corrupts absolutely.”
 With
Americans seeing the
actions of dictators in Europe,
FDR’s own behavior was, on
occasion, rather troubling.
Opposition to the New Deal

FDR basically controlled Congress, but the Supreme
Court kept blocking his programs. As a result, he
proposed his infamous “court-packing” plan.
 The
plan would add a justice to the court for every existing
justice over age 70, with a maximum number of 15.
 Even the Democrat-controlled Congress voted against the
plan, and FDR was given a drubbing in the press for what
was obviously an attempt to grab yet more power.
Opposition to the New Deal

Even tho’ his “court packing”
plan failed, FDR managed to
scare some justices into
voting his way, including the
“conservative” Justice
Roberts.
 This
was dubbed the “switch
in time that saved nine.”
 So,
in the battle of the man in a
wheelchair versus nine old men,
FDR won. In a sense, he
managed to “outlive” the Court.
Opposition to the New Deal


After FDR’s first term, the Depression had not gone
away, and unemployment had only gone down ten
percent [from 25% to 15%].
Additionally, the economy took another [albeit brief]
downturn in 1937.
 Caused
by government spending, this became known as the
“Roosevelt recession.”
 To
stem the tide, FDR embraced the “pump priming” policies of
English economist John Maynard Keynes.
 In 1937, FDR announced a program meant to stimulate the
economy through planned deficit spending.
New Deal, or Raw Deal?


Many critics balked at FDR’s “whatever works” attitude,
which had caused the federal to mushroom from $19.5
billion in 1932 to $40.5 billion in 1939, with no real
relief from the Depression in sight.
Nearly everyone agrees that it was really World War II
that brought the country out of the Great Depression.
 Some
argue that the New Deal actually made the
Depression even worse than it was, arguing that the
economy would have “worked itself out.”
 Since
we’re in much the same situation, do you agree?
 Does massive government intervention help or hurt in the long run?