Adline Rahmoune Amsco Chapter 24: The Great Depression and the New Deal, 1929‐1932 Previous Panics vs. The Great Depression (pg. 492) ● In the past, banks & businesses went into brief panics like those of 1819, 1837, 1857, 1873, and 1893 ○ The depression of the 1930s was much different: it lasted longer, affected more people & businesses, and it had Americans fearing for their survival Wall Street Crash (pg. 493) ● Economy boomed during the 1920s & there were changing stock prices prior to Oct. 1929 ● On September 3, the Dow Jones Industrial Average of major stocks reached a high of 381 ○ Investors who bought stocks at the 韲�me lost them in 1929 when the market collapsed ● True panic began on B
lack Thursday (Oct. 24, 1929) when there was selling on Wall Street unlike ever before and stock prices dropped ○ To stabilize prices, a group of bankers brought millions of dollars of stocks, but this only worked on Friday Oct. 25, 1929 ■ On B
lack Tuesday ( Oct. 29) even more investors were buying, but there were barely any buyers. Ever since then, prices on Wall Street con韲�nued to fall (Dow Jones ‐ 381 → 198) Causes of the Crash (pg. 493‐494) ● The collapse of the stock market was not the only reason for the Great Depression: ○ Uneven distribution of income ■ The top 5% of richest Americans got over 33% of all income ○ Stock market speculation ■ People no longer invested their $ to share profits of a company. Instead, they were selling stock for quick profit when its price increased (pg. 494) ■ Buying on margin allowed people to buy assets & when stock prices increased, they would have enough to repay loans (if stock prices dropped, investors lost) ○ Excessive use of credit ■ Businesses and consumers believed that the economic boom would last, so they con韲�nued to buy installments and other new appliances / technology ○ Overproduction of consumer goods ■ Workers with stagnant wages couldn’t afford to buy goods ○ Weak farm economy ■ Farmers con韲�nued to suffer from overproduc韲�on, high debt, and droughts ○ Government policies ■ The government had faith in business so it did li挀le to control/regulate it ■ High tariffs were passed that hurt farmers and interna韲�onal trade ○ Global economic problems (interdependent na韲�ons) ■ Europe never recovered from WW1, its difficul韲�es contributed to the depression ■ The U.S. didn’t recognize Europe’s problems, insis韲�ng that all of its war韲�me loans to European na韲�ons be repaid in full Effects of the Crash (pg. 494‐496) ● The U.S’s GNP (value of all goods & services produced in a year) dropped $104B → $56B in 4 yrs ● The na韲�on’s income declined by over 50% and by 1933, 13M were unemployed (25% of the workforce minus farmers) ● 20% of all banks closed, wiping out 10M savings accounts (pg. 495) ● The power of the federal gov increased & ppl were more accep韲�ng of drama韲�c changes in poli韲�cs ● There was poverty, homelessness, mortgage foreclosures, and evic韲�ons (pg. 496) Hoover’s Policies (pg. 496) ● Hoover believed that hard work and volunteerism would solve the depression and he urged businesses not to cut wages, unions not to strike, & chari韲�es to increase efforts for the needy ● Hoover ini韲�ally hesitated to ask for legisla韲�ve ac韲�on, believing that relief should come from state and local governments, not the federal government Responding to a Worldwide Depression (pg. 496) ● The Wall Street Crash affected Europe through trade and the Dawes Plan ○ The Dawes Plan helped Germany’s economy ‐ the U.S. loaned Germany money to help it pay repara韲�ons to Britain and France ● Hawley‐Smoot Tariff (1930) ○ Passed by Republican Congress (Republicans supported high protec韲�ve tariffs) ○ Highest tariff rates in history ‐ tax increases ranging from 31‐49% on foreign imports ○ Purpose was to protect U.S. markets from foreign compe韲�韲�on, but European countries passed even higher tariffs against U.S. goods, leading na韲�onal & interna韲�onal economies into deeper depression ● Debt moratorium ( delay or suspension in payment of debts) ○ By 1931, the Dawes Plan couldn’t con韲�nue because of condi韲�ons in the U.S. and Europe so Hoover proposed a moratorium on the payment of interna韲�onal debts ■ Britain and Germany accepted, France didn’t Domestic Programs: Too Little, Too Late (pg. 497) ● In 1931, Hoover signed into law programs that offered assistance to indebted farmers and struggling businesses: ○ Federal Farm Board (created in 1929 before the crash) ■ Helped farmers stabilize prices by temporarily storing extra grain and co挀on ■ Could not handle the overproduc韲�on of farm goods, didn’t do enough ○ Reconstruction Finance Corporation ( created in 1932 by Congress) ■ Federally funded and government‐owned ■ Created to help struggling RRs, banks & insurance companies w/ emergency loans ● Democrats disliked this, because they thought it would only help the rich Despair and Protest (pg. 497) ● There were millions of unemployed workers + impoverished farmers by 1932 & some took ac韲�on ○
○
Unrest on the farms : Farmers formed groups to stop banks from foreclosing farms & evic韲�ng them from homes ■ Midwestern farmers formed the F arm Holiday Association , which tried to increase prices by stopping grain harvests from reaching the market in 1932 Bonus March: I n the summer of 1932, thousands of unemployed WW1 veterans marched to DC and camped there demanding an early bonus payment ■ Congress didn’t pass the bonus bill and Hoover ordered the army to disperse The Election of 1932 ( pg. 497‐498) ● Republicans renominated Herbert Hoover ● Democrats nominated Franklin D. Roosevelt for president and John N. Garner for vice president ○ FDR’s idea was a “new deal”, the repeal of Prohibi韲�on, aid for the unemployed, and cuts in government spending (pg. 498) ■ Most people voted for Roosevelt because they wanted change, and he won ○ The 20th Amendment was passed in Feb. 1933 to shorten the period between the presi‐ den韲�al elec韲�on & inaugura韲�on from March to January 20. It was ra韲�fied by Oct. 1933 Franklin D. Roosevelt’s New Deal (pg. 498) ● FDR was president for 12 years & 2 months and during that 韲�me, he expanded the size of the federal gov & the powers of the presidency FDR: The Man (pg. 498‐499) ● Roosevelt was a NY state legislator and U.S. assistant secretary of the navy before his presidency ● In 1921, FDR was paralyzed by polio but con韲�nued in poli韲�cs, only using his upper body (pg. 499) ● FDR’s strengths: admirable personality, gi㌀ed speaker, able to work with & inspire people ● Eleanor Roosevelt ○ FDR’s wife became the most ac韲�ve first lady & she influenced him to support minori韲�es ■ She wrote a column in the paper, gave speeches, and traveled the country New Deal Philosophy (pg. 499) ● FDR was willing to take ac韲�on & experiment w/ poli韲�cal solu韲�ons to end economic problems ● The three R’s : r elief for the unemployed, r ecovery for businesses & the economy, r eform of American economic ins韲�tu韲�ons ● Brain Trust and other advisers ○ Roosevelt relied on a group of advisers to help him with this New Deal program ■ Louis Howe was his chief poli韲�cal adviser ■ The Brain Trust (a group of university professors) advise him on economic ma挀ers (Rexford Tugwell, Raymond Moley, Adolph A. Berle, Jr.) ■ Roosevelt had a very diverse cabinet with African Americans, Catholics, Jews, and women like F rances Perkins The First Hundred Days (pg. 499‐501) ● In March 1933, Roosevelt called Congress into a 1
00‐day‐long special session , in which Congress passed all of his requests into law, leading to the passage of many laws & agencies (pg. 500) ○ Bank Holiday : So many banks failed in early 1933 that FDR closed them for reorganiza韲�on ○ Repeal of Prohibition ■ FDR passed the Beer‐Wine Revenue Act, which legalized the sale of beer & wine ■ Later that year, the ra韲�fica韲�on of the 21st Amendment repealed the 18th Amendment and ended prohibi韲�on ○ Fireside Chats ■ FDR went on the radio & cha挀ed with the American people. In one of his chats, he assured listeners that a㌀er the bank holiday, banks would be safe for deposits ○ Financial Recovery Programs: ■ The Emergency Banking Relief Act allowed the gov to examine finances of banks that were closed during the bank holiday and reopen them ■ The Federal Deposit Insurance Corporation insured bank deposits up to $5,000 ■ The Home Owners Loan Corporation provided struggling homeowners with money to refinance small homes and prevent foreclosures ■ The Farm Credit Administration h
elped indebted farmers by giving them low‐ interest farm loans to prevent foreclosures of property ○ Relief Programs for the Unemployed: ■ The Federal Emergency Relief Administration ( directed by Harry Hopkins) offered grants of federal money to state/local govs that ran soup kitchens & other forms of relief for the jobless + homeless ■ The Public Works Administration (directed by Harold Ickes) distributed $ to state & local govs for building roads, bridges, dams, & other public works (pg. 501) ■ The Civilian Conservation Corps employed men on federal land and paid their families monthly ■ The Tennessee Valley Authority f ocused on regional development and public planning, hiring thousands of ppl from the TN Valley to build dams, operate electric power plants, control flooding, manufacture fer韲�lizer, & it sold electricity ○ Industrial Recovery Program: T he National Recovery Administration ■ The NRA was directed by Hugh Johnson and a挀empted to guarantee reasonable profits for business & fair wages for working hours ■ The NRA help industries set codes for wages, hours of work, levels of produc韲�on, the prices of finished goods, and workers had the right to bargain collec韲�vely ■ In Schechter v. U.S, the NRA was declared uncons韲�tu韲�onal ○ Farm produc韲�on control program: T he Agricultural Adjustment Administration ■ The AAA encouraged farmers to reduce produc韲�on (increasing prices) by offering to pay gov subsidies for every acre they plowed under ■ It was declared uncons韲�tu韲�onal in a 1935 Court decision Other First New Deal Programs (pg. 501‐502) ● The Civil Works Admin created jobs by hiring laborers for fed. sponsored construc韲�on projects ● The Securities and Exchange Commission w
as created to regulate the stock market and limit specula韲�on, like what caused the Wall Street Crash in the first place (pg. 502) ●
The Federal Housing Administration i nsured bank loans for building & repairing houses, helping homeowners and the construc韲�on industry The gold standard was removed to stop defla韲�on (falling prices) ●
The Second New Deal (pg. 502) ● FDR was reelected so he returned to office focusing on relief & reform in the 2nd New Deal (1935) ● Relief Programs: ○ The Works Progress Administration: v ery large organiza韲�on focusing on employment ■ The WPA spent billions providing ppl w/ jobs and employed 3.4M men & women ■ Most WPA workers constructed bridges, roads, airports, and public buildings, while paying unemployed ar韲�sts to paint murals, perform in plays, etc. ■ The National Youth Administration (part of the WPA) provided part‐韲�me jobs to help young people stay in high‐school and college ○ The Resettlement Administration p
rovided loans to sharecroppers, tenants, and small farmers, as well as establishing federal camps for migrant workers ■ Directed by Rexford Tugwell, a member of the Brain Trust ● Reforms: ○ The National Labor Relations (Wagner) Act o
f 1935 allowed workers to join unions, for unions to nego韲�ate, and it outlawed business prac韲�ces that were unfair to labor (pg. 503) ■ The National Labor Relations Board enforced the law, businesses disliked the act ○ The Rural Electrification Admin g ave loans to electric companies for power in rural areas ○ A 1935 Revenue Act increased tax incomes of the wealthy ● The Social Security Act of 1935 m
ade monthly payments to re韲�red persons over 65, workers who lost jobs, the disabled, and dependent children & mothers The Election of 1936 (pg. 503‐504) ● Because of the New Deal, workers and small farmers liked FDR, but businesses disliked him ● Democrats renominated R
oosevelt ● Alfred Landon was the Republican nominee ● Roosevelt won over 60% of the popular vote ● Democrats were mainly Southerners, urban whites, farmers, labor unions, & African‐Americans Opponents of the New Deal (pg. 504‐506) ● Majority of Americans supported FDR, but his New Deal programs were controversial ● Liberal Critics cri韲�cized the New Deal for doing too much for businesses and not enough for the poor, elderly, ethnic minori韲�es, and women ● Conservative Critics c ri韲�cized the New Deal for giving the federal gov too much power and associated relief programs with socialism and communism ○ In 1934, Conserva韲�ve Democrats joined with leading Republicans to form the American Liberty League, an an韲�‐New Deal organiza韲�on ● Demagogues ○ Several cri韲�cs used the radio to reach the American people ○ Father Charles E. Coughlin was a Catholic priest who a挀racted a following from his ●
weekly radio broadcasts in the early 1930s (he became an韲�‐Semi韲�c and Fascist) ■ He also founded the Na韲�onal Union for Social Jus韲�ce, which called for the infla韲�on of currency and na韲�onalizing of all banks ○ Dr. Francis E. Townsend proposed that a 2% fed sales tax would be used to create a special fund from which every re韲�red person over 60 received $200 a month (pg. 505) ○ Huey Long proposed a “Share Our Wealth” program that taxed the wealthy to promise a minimum annual income of $5k for every family The Supreme Court challenged Roosevelt’s leadership & programs so he proposed a judicial‐ reorganiza韲�on bill in 1937 that appointed a new jus韲�ce for each current jus韲�ce over 70 ○ Basically everyone rejected it, including Congress ■ Several jus韲�ces re韲�red during his 2nd term, so he was s韲�ll able to appoint Rise of Unions (pg. 506‐507) ● Because the Na韲�onal Industry Recovery Act (1933) and Wagner Act (1935) legalized labor unions, membership increased from 3M to 10M+ in about ten years ● Formation of the C.I.O ○ Growing unions → tension between rival unions increased ■ Small unions within the AFL wanted to extend membership to all races & genders ○ In 1935, these industrial unions joined together to form the Commi挀ee of Industrial Organiza韲�ons (CIO) later renamed the Congress of Industrial Organiza韲�ons ■ Led by John L. Lewis ■ Organized unskilled workers in automobile, steel, and southern tex韲�le industries ■ Later became rivals to the AFL ● At the General Motors plant in Michigan, workers par韲�cipated in a sit‐down strike in 1937 ● On May 29, 1937, a strike in Chicago regarding the steel industry resulted in 4 deaths ● The Fair Labor Standards Act was passed by Congress in 1938 and established: ○ A minimum wage (ini韲�ally 40 ¢ an hour) ○ A maximum workweek of 40 hrs ○ Child‐labor restric韲�ons on those under 16 (pg. 507) Last Phase of the New Deal ( pg. 507‐508) ● In the late 1930s, the New Deal weakened ● Recession 1937‐1938 ○ From 1933‐1937, the economy was recovering (stable banks, decline in unemployment) but in late 1937, it entered another recession ■ A cause for this was that the new Social Security Tax reduced consumer spending ■ Keynesian economics: deficit spending was acceptable ● Weakened New Deal (pg. 508) ○ People and Congress no longer followed Roosevelt automa韲�cally ○ The 1938 Elec韲�ons reduced the Democra韲�c majority in Congress ○ Republicans and conserva韲�ve Democrats blocked further New Deal reform legisla韲�on ○ In 1938, fears about Nazi Germany increased Life During the Depression (pg. 508‐509) ● Women were accused of taking jobs from men when they looked for work ● Dust Bowl Farmers ○ In the early 1930s, a severe drought ruined crops in the Great Plains (region → dust bowl) ○ Okies ( farmers from Oklahoma) migrated to CA looking for a farm or factory work ■ Novelist J ohn Steinbeck wrote about their hardships in T he Grapes of Wrath ● For African Americans, racial discrimina韲�on con韲�nued, as they were the last hired and first fired ○ They had the highest unemployment rate and were o㌀en excluded from relief programs ○ The WPA and CCC provided low‐paying jobs for African Americans (o㌀en segregated) ○ They also received support from E leanor Roosevelt and Secretary of Interior H
arold Ickes ○ FDR appointed over 100 African Americans to posi韲�ons in federal departments (pg. 509) ■ Mary McLeod Bethune ‐ leader of efforts to improve educa韲�on, opportuni韲�es for women, and establisher of the Federal Council on Negro Affairs ○ In 1941, the F air Employment Practices Committee w
as set up to assist minori韲�es in gaining jobs ■ FDR took ac韲�on a㌀er A. Philip Randolph (head of the RR Porters Union) threat‐ ened a march to DC to demand equal job opportuni韲�es for African‐Americans ● Native Americans ○ John Collier , advocate of Na韲�ve Americans rights ■ He was appointed commissioner of the Bureau of Indian Affairs in 1933 ■ He established conserva韲�on and CCC projects on reserva韲�ons and gained Na韲�ve American involvement in the WPA and other New Deal programs ■ In 1934, Collier won FDR’s support for the repeal of the Dawes Act, which was replaced by the I ndian Reorganization Act / Wheeler‐Howard Act ● This act returned land to the control of tribes and supported the preserva韲�on of Na韲�ve American cultures ● Mexican Americans also suffered discrimina韲�on in the 1930s ○ During the depression, high unemployment and drought in the Midwest led many white migrant workers west looking for work ■ Compe韲�韲�on for jobs forced thousands of Mexican Americans to return to Mexico