Chapter 33Chapter 33

The Great Depression The Great Depression and the New Deal and the New Deal

1933-19381933-1938

CrashCrash

• October 29, 1929 – Stock Market crashed.October 29, 1929 – Stock Market crashed.

• Why?Why?

1.1.Over-speculation in the market.Over-speculation in the market.

2.2.Very low farm pricesVery low farm prices

3.3.Industries which once did well…nope.Industries which once did well…nope.

4.4.Housing market slumped.****Housing market slumped.****

5.5.People had bought stock on margin.People had bought stock on margin.

AttemptsAttempts

o Congress passed the Congress passed the Hawley-SmootHawley-Smoot Tariff to help farmers.Tariff to help farmers.

o The act was too little and too late.The act was too little and too late.o It offered price supports and farm It offered price supports and farm

subsidies which exist even today.subsidies which exist even today.o Hoover had run on Republican prosperity Hoover had run on Republican prosperity

and those days were over.and those days were over.

Hoover TriesHoover Tries

Hoover tried to institute policy to Hoover tried to institute policy to aggressively attack the Depression.aggressively attack the Depression.

At first, he thought the government should At first, he thought the government should stay out and let people pull themselves up.stay out and let people pull themselves up.

Then, thru the Reconstruction Finance Then, thru the Reconstruction Finance Corporation, he funneled money to states.Corporation, he funneled money to states.

This went against his philosophy, but This went against his philosophy, but people needed help. people needed help.

Bonus ArmyBonus Army

As part of Hawley-Smoot, veterans of As part of Hawley-Smoot, veterans of WWI were to get a bonus.WWI were to get a bonus.

Thousands marched on Washington Thousands marched on Washington demanding early payment.demanding early payment.

Some were paid bonuses, but thousands Some were paid bonuses, but thousands were not and set up camp.were not and set up camp.

Later, they were dispersed by the military Later, they were dispersed by the military under MacArthur.under MacArthur.

Election of 1932Election of 1932

Election of 1932Election of 1932

Hoover grudgingly accepted the Hoover grudgingly accepted the Republican nomination.Republican nomination.

He was blamed for everything and really He was blamed for everything and really wasn’t fired up about 4 more years.wasn’t fired up about 4 more years.

Neither were his constituents.Neither were his constituents.

Franklin Delano Roosevelt was chosen by Franklin Delano Roosevelt was chosen by the Democrats.the Democrats.

It was a two-for-one deal. Eleanor.It was a two-for-one deal. Eleanor.

Democratic VictoryDemocratic Victory

FDR won in a landslide.FDR won in a landslide.

It was as much a slap in the face at It was as much a slap in the face at Hoover as it was a victory for FDR.Hoover as it was a victory for FDR.

FDR ran on his platform known as the FDR ran on his platform known as the New Deal.New Deal.

His campaign was high-spirited and His campaign was high-spirited and hopeful.hopeful.

That’s what people wanted to hear.That’s what people wanted to hear.

New Deal ReformsNew Deal Reforms

Many of the reforms were a throwback to Many of the reforms were a throwback to Progressive ideals.Progressive ideals.

Child labor was once again restricted.Child labor was once again restricted.

Minimum wage laws would be passed.Minimum wage laws would be passed.

Unemployment insurance as well as Unemployment insurance as well as retirement insurance became law.retirement insurance became law.

Social welfare became the new Social welfare became the new democratic platform.democratic platform.

Banking ReformBanking Reform

Passage of the Glass-Steagall Act set up Passage of the Glass-Steagall Act set up the Fed. Deposit Ins. Corp.the Fed. Deposit Ins. Corp.

Up to $5,000 would be insured by the gov’t Up to $5,000 would be insured by the gov’t in all banks that participated.in all banks that participated.

Instructed the gov’t to buy gold at inflated Instructed the gov’t to buy gold at inflated prices to get us off the gold standard.prices to get us off the gold standard.

Gov’t could more easily manipulate Gov’t could more easily manipulate inflation with paper currency. inflation with paper currency.

JobsJobs

Americans didn’t want hand-outs. They Americans didn’t want hand-outs. They wanted work and fair pay.wanted work and fair pay.

Programs like the CCC were created to Programs like the CCC were created to put the youth to work.put the youth to work.

Revolution is not carried out by the old, but Revolution is not carried out by the old, but the young and desperate in cities.the young and desperate in cities.

FDR got them out of the cities and put FDR got them out of the cities and put them to work.them to work.

More ProgramsMore Programs

FERA – handed out money to states for FERA – handed out money to states for projects.projects.

AAA – farm aid for mortgagesAAA – farm aid for mortgages

HOLC – mortgage aid for homeownersHOLC – mortgage aid for homeowners

CWA – money for leaf rakers or watchersCWA – money for leaf rakers or watchers

Not all programs were good or successful.Not all programs were good or successful.

Detractors played up the bad programs Detractors played up the bad programs and ignored the positive ones.and ignored the positive ones.

Real ProgressReal Progress

WPA – built the infrastructure in America. WPA – built the infrastructure in America. Towns all over America got real schools, Towns all over America got real schools, post offices, bridges, courthouses, etc…post offices, bridges, courthouses, etc…

Some jobs were meaningless, but rather Some jobs were meaningless, but rather than hand out gifts, people worked.than hand out gifts, people worked.

TVA – Tennessee R. was dammed up to TVA – Tennessee R. was dammed up to bring hydro-electricity to S and E KY & TNbring hydro-electricity to S and E KY & TN

The idea spread all over the country.The idea spread all over the country.

Fireside ChatsFireside Chats

During the worst of the Depression, FDR During the worst of the Depression, FDR used the radio to reach America.used the radio to reach America.

Today, we don’t think much of hearing the Today, we don’t think much of hearing the Pres., but it eased tensions.Pres., but it eased tensions.

Occasionally, opponents of FDR would Occasionally, opponents of FDR would also take to the airwaves.also take to the airwaves.

He used these fireside chats over 30 times He used these fireside chats over 30 times during his presidency.during his presidency.

Hundred Days CongressHundred Days Congress

The President cannot pass The President cannot pass laws by himself – it is up laws by himself – it is up to Congress.to Congress.

For the first 100 days, For the first 100 days, Congress passed Congress passed everything FDR wantedeverything FDR wanted

Congress basically gave Congress basically gave FDR dictatorial powers.FDR dictatorial powers.

This demonstrates how This demonstrates how bad things were in U.S.bad things were in U.S.

National Recovery Admin.National Recovery Admin.

NRA designed to get the economy going NRA designed to get the economy going again.again.

Industry, labor, and the unemployed were Industry, labor, and the unemployed were to work together.to work together.

Hours were limited per worker to get more Hours were limited per worker to get more people hired.people hired.

Minimum wages were set.Minimum wages were set.

Yellow dog contracts were abolished.Yellow dog contracts were abolished.

Farmless Farming FarmersFarmless Farming Farmers

AAA was designated as a program to AAA was designated as a program to increase prices by decreasing supply.increase prices by decreasing supply.Farmers were paid to not grow crops and Farmers were paid to not grow crops and the price of food went up.the price of food went up.People starved and the gov’t slaughtered People starved and the gov’t slaughtered pigs for fertilizer.pigs for fertilizer.Supreme Court struck down the law but it Supreme Court struck down the law but it was later passed under conservation was later passed under conservation measures.measures.

The New DealThe New Deal

Roosevelt’s plan was to bringRoosevelt’s plan was to bring

1.1. Relief – immediate help to the hurtingRelief – immediate help to the hurting

2.2. Recovery – long termRecovery – long term

3.3. Reform – long term and permanentReform – long term and permanent

Congress was desperate to help.Congress was desperate to help.

Hundred Day’s Congress met in Special Hundred Day’s Congress met in Special session to pass everything FDR wanted.session to pass everything FDR wanted.

2121stst Amendment Amendment

FDR wanted to grow FDR wanted to grow the economy by the economy by allowing the sale of allowing the sale of wine and beer.wine and beer.Federal law Federal law established that established that alcoholic beverages alcoholic beverages w/ < 3.2% were legal.w/ < 3.2% were legal.Finally, in 1933, Finally, in 1933, prohibition was prohibition was repealed.repealed.

HousingHousing

FHA – Fed. Housing Admin. FHA – Fed. Housing Admin. supplied loans at low supplied loans at low interest to Americans.interest to Americans.

Wildly popular, this Wildly popular, this continued after Roosevelt’s continued after Roosevelt’s death.death.

This was meant to force This was meant to force slumlords into building slumlords into building better structures.better structures.

It worked. It worked.

Social SecuritySocial Security

1935 – Soc. Sec. Act.1935 – Soc. Sec. Act.

Designed to be funded by the Designed to be funded by the federal and state governments for federal and state governments for old age pensions.old age pensions.

Taken from models in Europe who Taken from models in Europe who had been using similar programs.had been using similar programs.

Republicans were angered over the Republicans were angered over the idea of the new entitlement.idea of the new entitlement.

They thought it inspired laziness.They thought it inspired laziness.

Wagner ActWagner Act

Created National Labor Relations Board.Created National Labor Relations Board.

Protected workers rights to unionize and Protected workers rights to unionize and bargain collectively.bargain collectively.

United Mine Workers and the Committee United Mine Workers and the Committee for Industrial Organization formed.for Industrial Organization formed.

First great victory under new law was First great victory under new law was against General Motors.against General Motors.

FDR was seen as a friend of labor.FDR was seen as a friend of labor.

Labor DisputesLabor Disputes

As labor gained more ground As labor gained more ground under New Deal reforms, they under New Deal reforms, they also capitulated.also capitulated.

Minimum wage and maximum Minimum wage and maximum hour levels were set by Fair hour levels were set by Fair Labor Standards Act.Labor Standards Act.

But the AF of L and the CIO But the AF of L and the CIO could not get along.could not get along.

They fought with one another They fought with one another until they split in 1938 – Civil War until they split in 1938 – Civil War so to speak. so to speak.

IssuesIssuesThe Depression was still the The Depression was still the issue in ’36issue in ’36

FDR was the reigning champ FDR was the reigning champ and the Republicans nominated and the Republicans nominated Landon from KSLandon from KS

Republicans lacked a platform Republicans lacked a platform that offered relief or reform.that offered relief or reform.

The campaign was a battle of The campaign was a battle of class warfare.class warfare.

Republicans are rich and Dems Republicans are rich and Dems are poor.are poor.

Supreme CourtSupreme Court

Roosevelt believed that the elections of Roosevelt believed that the elections of ’32, ’34, and ’36 were a mandate.’32, ’34, and ’36 were a mandate.

He also believed that the Supreme Court He also believed that the Supreme Court stood in the way of the people.stood in the way of the people.

He proposed appointing a new Justice for He proposed appointing a new Justice for every one that is over 70.every one that is over 70.

He was rightly rebuked! Bad idea.He was rightly rebuked! Bad idea.

Impact of Court-PackingImpact of Court-Packing

SCOTUS became a bit more liberal.SCOTUS became a bit more liberal.

They quit overturning New Deal programs They quit overturning New Deal programs with regularity.with regularity.

Some of the Justices even gave up their Some of the Justices even gave up their seats on the bench.seats on the bench.

However, Congress was appalled by However, Congress was appalled by FDR’s move and refused to pass leg.FDR’s move and refused to pass leg.

FDR hurt himself politically.FDR hurt himself politically.

Second New DealSecond New Deal

After several failed programs, criticisms, After several failed programs, criticisms, a new New Deal was introduceda new New Deal was introduced

It was meant to silence critics and offer It was meant to silence critics and offer more social programs.more social programs.

1.1. WPA – Work Projects Admin.WPA – Work Projects Admin.

2.2. Wagner Act – outlawed spying on unionsWagner Act – outlawed spying on unions

3.3. Social Security Act – Old-age pensions, Social Security Act – Old-age pensions, unemployment ins., aid to disabled. unemployment ins., aid to disabled.

Election of 1936Election of 1936

FDR ran against the Republican – LandonFDR ran against the Republican – Landon

It was a landslide victory for FDR.It was a landslide victory for FDR.

People were unsure if the New Deal was a People were unsure if the New Deal was a solution, but it did help.solution, but it did help.

A balanced budget was not possible but A balanced budget was not possible but people didn’t seem to care.people didn’t seem to care.

They wanted to eat.They wanted to eat.

LaborLabor

Minimum wage was est, but it was low – Minimum wage was est, but it was low – $0.25 per hour.$0.25 per hour.

Women and minorities were actually Women and minorities were actually helped by the minimum wage.helped by the minimum wage.

However, discrimination in terms of hiring However, discrimination in terms of hiring and firing continued.and firing continued.

Both women and Blacks continued to Both women and Blacks continued to support FDR.support FDR.

CriticsCritics

Anytime someone tries to do something Anytime someone tries to do something big, there will be critics.big, there will be critics.Republicans often blamed FDR for Republicans often blamed FDR for creating a class of lazy people. creating a class of lazy people. Am. Liberty League claimed New Deal Am. Liberty League claimed New Deal was unconstitutional - Bolshevismwas unconstitutional - BolshevismThe government was not supposed to The government was not supposed to raise people.raise people.Others argued that FDR didn’t do enough. Others argued that FDR didn’t do enough.

DebtDebt

The New Deal helped millions of The New Deal helped millions of Americans, but at a cost.Americans, but at a cost.

Our national debt ballooned to over $40 Our national debt ballooned to over $40 million by 1940.million by 1940.

A federal income tax on the wealthy was A federal income tax on the wealthy was implemented to help curb the debt. 90%implemented to help curb the debt. 90%

We would recover, but jump right back in We would recover, but jump right back in to debt during the Cold War.to debt during the Cold War.

Impact of the New DealImpact of the New Deal

Most Americans loved FDR Most Americans loved FDR and the New Deal.and the New Deal.

Although the debt soared, Although the debt soared, millions found jobs.millions found jobs.

The Depression received a The Depression received a band-aid with the ND, but it band-aid with the ND, but it did stop some bleeding.did stop some bleeding.

Many ND prgrams still exist Many ND prgrams still exist today.today.

Historical PerspectiveHistorical PerspectiveSupporters of the ND point to the Supporters of the ND point to the drop in unemployment as a sign drop in unemployment as a sign of success.of success.

Detractors argue that the gov’t Detractors argue that the gov’t got too big and bordered on got too big and bordered on socialism.socialism.

Supporters argue that the ND Supporters argue that the ND restored hope in America.restored hope in America.

Detractors argued that it slowed a Detractors argued that it slowed a natural recoverynatural recovery..

Existing ProgramsExisting Programs

The Securities and Exchange The Securities and Exchange Commission continues to Commission continues to regulate business and regulate business and commercial activities.commercial activities.

The FDIC is still the largest The FDIC is still the largest insurer of bank deposits in the insurer of bank deposits in the U.S.U.S.

Perhaps banks would have Perhaps banks would have never recovered if not for the never recovered if not for the FDIC. FDIC.

Social SecuritySocial Security

The most expansive of the The most expansive of the ND programs was SS.ND programs was SS.It created an entitlement that It created an entitlement that has grown over the decades.has grown over the decades.More benefits are provided, More benefits are provided, but it runs the risk of but it runs the risk of bankruptcy.bankruptcy.Some argue that we lost our Some argue that we lost our anonymity because of it.anonymity because of it.Still, no one wants to see its Still, no one wants to see its demise. demise. It needs to be fixed, but who It needs to be fixed, but who has the courage to do has the courage to do so??????so??????