• EQ’s:– What are the contributing factors to the G.D.?– Which political philosophy was more effective in
combating the economic downturn of the depression?
Problems with the Economy: the Liberal Perspective
• Key industries start to flounder– Railways, steel, mining
• Consumers have less money to spend– Buying less, higher prices for goods– Living on credit, installment plans
• Trickle down theory• Uneven distribution– Rich got richer, poor got poorer– 70% of country earned less than $2,500
Stock Market in 1929
• Dow Jones Industrial was in a Bull Market– Up 300 points from the last five years– S&P 500 and Russell 2000 index also increasing
• But, Stocks were over-inflated– Speculation– Buying on Margin– Prices didn’t reflect the true value of the
companies
Black Thursday
• October 24, 1929• Investors sell a lot of shares• Lack of confidence, prices drop– Dow closes at…
• At the end of the day, leading bankers buy stocks to prevent further drop
Black Tuesday*
• October 29th 1929– Prices significantly drop off as investors try to sell
• Dow drops to ….
– Margin-buyers now in huge debt– Loss of approx. $30 Billion
• Banks and business failures– People panic and withdraw their money– Were owed $ and not being paid back– Had invested in the stock market– 90,000 companies go bankrupt– 9,000 Banks close with 27 million accounts unpaid
World-wide shock
• European countries were already on verge– Stock crash destroyed many foreign investments in
US• German reparations relied on US assistance• Hawley-Smoot Tariff– US protective tariff– European countries passed their own tariffs
• Cuts down on trade, no open markets to help avert the depression
• Dow drops to it’s lowest b/c of this; 62 points
Depression living
• Urban Areas– People lose jobs, can’t pay rent or mortgage,
evicted– Shantytowns (Hoovervilles)
Relief
• In South Texas, the Salvation Army provided a penny per person each day.
• In Philadelphia, private and public charities distributed $1 million a month in poor relief.– Gave families $1.50 a week for groceries.
• In 1932, total expenditures were $317 million– $26 for each of the nation's 12 1/2 million jobless.
Rural Areas
• Advantages:– can feed themselves– More family oriented, sharing
• Even so, 400,000 farms lost due to foreclosure– Increase in productivity to pay off loans led to a
drop in prices which created more debt
Dust Bowl• Midwestern farmers had depleted the land– No crop rotation– 1930-32 drought contributes tons of top soil being
blown away
Herbert Hoover
• Believed the market would correct itself within a few years
• The president’s primary position was to maintain a balanced budget, not overtax or overspend
Bonus Army
• By 1932, unemployment rate had reached 23.6 percent. – Over 12 million were jobless (out of a labor force of 51
million). • 20,000 World War I veterans and their families
marched on Washington.– Purpose was to pressure Congress into voting for
immediate payment of a veteran’s bonus earmarked for 1945.
– The proposal was to pay veterans $1 for each day served in the United States and $1.25 for every day overseas.
Bonus Army
• Democratic House approved it, but the Republican Senate refused. Hoover also opposed it.
• On June 7, as 100,000 watched, some 8,000 veterans marched down Pennsylvania Avenue
FDR
• Package of sweeping reforms called New Deal
• Inaugural Address:– “The only thing we have to
fear is fear itself.”
• Francis Perkins– US Secretary of Labor,
charged with implementing most of his reforms
– First woman to be in the cabinet
First 100 Days
• Passed 15 bills• Declared National bank holiday– Until banks could be reorganized, prevent “run on
banks”• Emergency Banking relief Act– National Banks provided additional funds to Banks
to keep them open– FDIC Insured
First 100 Days
• Federal Emergency Relief Act– pumped $500 million into state-run welfare programs.
• Homeowners Loan Act – first federal mortgage financing and loan guarantees.– By 1936, provided more than 1 million loans totaling $3
billion. • Glass-Steagall Act *– federal guarantee of all bank savings under $5,000– Separated commercial and investment banking– strengthened the Federal Reserve's ability to stabilize the
economy.
First 100 Days
• National Industrial Recovery Act (NRA)– established codes of fair practices that would set
prices, production levels, minimum wages, and maximum hours within each industry.
– Sought to stabilize the economy by limiting competition, overproduction, labor conflicts, and deflating prices.
• Tennessee Valley Authority Act--the first direct government involvement in energy production. – Built dams to provide electricity to rural TN
Agricultural Adjustment Act (AAA)• Farmers who cut production to comply with quota laws would be paid for
land left fallow.
Mixed results:• It raised farm income, but hurt sharecroppers and tenant farmers• Farm incomes doubled between 1933 and 1936, but mainly because of
large farmers• Large landowners used government payments to purchase tractors and
combines– One Mississippi planter bought 22 tractors with his payments and then evicted
160 tenant families. • AAA forced at least 3 million small farmers from the land. • Established the precedence for farm price supports, subsidies, and surplus
purchases
Public Works Administration (PWA)
• Highlights FDR’s idea1. Gov’t creates works projects2. Individual projects create jobs3. Workers spend money to feed, cloth themselves4. Will stimulate the economy
• $6 billion in 6 yrs.
Civilian Conservation Corps (CCC)
• Young men 18-25• $30 a month• planted saplings, built
fire towers, restocked depleted streams, restored battlefields
Works Progress Administration (WPA)
• Started Jan. 1935• Employed 3.5 million workers at a "security
wage"--twice the level of welfare payments• Constructed or improved 2,500 hospitals, 5,900
schools, 1,000 airport fields (including New York's LaGuardia Airport), and nearly 13,000 playgrounds.
• By 1941 it had spent $11 billion• Also employed artists, musicians and actors in
Federal Writers Project
Huey Long • “Share Our Wealth” Plan
– Gov’t guarantee every family in the nation an annual income of $5,000, so they could have the necessities of life, including a home, a job, a radio and an automobile.
– Proposed limiting private fortunes to $50 million, legacies to $5 million, and annual incomes to $1 million.
– Everyone over age 60 would receive an old-age pension.
• "Every Man A King."
1935 Wagner Act
• Aka National Labor Relations Act– Created the National Labor Relations Board– Guaranteed private workers the right to unionize• Collective Bargaining• Collective Action
– Ex. 1937 General Motors Strike• GM forced to recognize United Auto Workers
FDR woes of 1936
• Supreme court declared several parts of the New Deal Unconstitutional• “The Sick Chicken Case” (Schechter v US)
• Election of 1936– FDR vs Alfred Landon• Expansion in WPA… FDR being tricky?
Roosevelt Recession
• FDR introduces “Court-Packing”– Add one Justice for any Justice over age 70– Offered a pension package for 70+ Justices– Political disaster
• Deepening in the depression hits in 1937– Taxes on wealthy--- 70% income tax– Social Security tax– Cut programs like WPA---spike in unemployment
Music of the 1930’s
• Early, Jazz and vocals– Ella Fitzgerald– Bing Crosby
• 1935 on was “Swing”– Benny Goodman, Tommy Dorsey
• Emergence of the “Big Bands”– Glen Miller Orchestra
Writer’s
• Writers of the ‘30’s had a tendency to focus on the conditions of the time– John Steinbeck wrote The Grapes of Wrath, Of
Mice and Men and East of Eden as reflections of the time, esp the Dust Bowl
– Don Passos The Big Money where everyone strives for wealth, but sacrifice everything decent in society
Film
• Increase in technology and film techniques– Hollywood worked independent from the Gov’t
• 1939 “The year of film”– The Wizard of Oz– Mr. Smith Goes to Washington– Gone with the Wind*– Stagecoach– Fantasia