The Great Depression
Hoover and FDR’s Handling of the Crisis
The Stock Market
Dow-Jones Industrial Average: measures values of 30 widely held stocks on the New York Stock Exchange.
New York Stock Exchange: can be traced back to 1789 when George Washington called for the sale of $80 million in bonds. The exchange is where approximately 1700 of the nations top companies, such as General Electric and General Motors.
Bull Market: Prices are going up in market-seller’s market
Bear Market: Prices decline and a buyer’s market.
The Crash in 1929
Black Thursday, October 24, 13 million shares sold Monday, October 28, J.P. Morgan and others buy
stock to try and stop slide. Black Tuesday, October 29, 16 million shares sold. Within 2 weeks there had been a loss of $30 billion.
This equals the total amount of wages for the entire U.S. in 1929!!!!!!!!!!!!
1.5 million investors were in the stock market. RCA $101 in 1929 and $2.50 in 1932! Many lost
everything and some profited from lower prices. Impact of the Crash????
Herbert Hoover 1929-1933
Special Session of Congress:Farm relief & tariff (April 1929)
Agricultural Marketing Act Agricultural Coops and stabilization corporations $500m loans; limit production 1931 ends purchasing & 1933 terminated $180m
Decentralized work relief: National voluntary self-help programs “individual & local responsibility” $100-150m public works construction
Herbert Hoover’s Views
The Rugged Individual Welfare was a local and a private matter Free enterprise capitalism was best Direct handouts from the government could cause a
loss of self-respect He vetoed Garner-Wagner Act which would have
provided direct relief and the Norris Bill which would have sold electricity in competition with private companies
First elected office was president!
Hoover (cont.)
Hoover and the 18th Amendment Bonus for Veterans (1924) Hoover veto (Congress
overrides) government economy and issue of need by all Reconstruction Finance Corporation: Loans to banks and
railroads check deflation in agriculture and industry debt to $2b and pump priming principal
Relief and Construction Act RFC debt $3b $1.5b loans public works All public works had to generate revenue, e.g., dams for electricity or roads with tolls. $300m loan states for relief
Hoover (cont.)
Hawley-Smoot Tariff: Increase from Fordney-McCumber. Economists call for veto. Hoover signs it and 25 nations raise their rates. Some U.S. corporations move overseas to sell goods without tariff.
Federal Home Loan Bank Act reduce foreclosures, push housing construction, and encourage home ownership $125m
Democrats win control of the House of Representatives in 1930.
Bonus Army: Douglas MacArthur disregards Hoover’s orders
Election of 1932
FDR and the New Deal and the Democrats (472) and both houses!
From “Great” to Greater” as national income went from $81 billion to $41 billion.
20th Amendment & lame-ducks Economic crisis 1930-March 1933 5,054 banks ($3.5b) shut
down Toledo, Ohio provides meals for 2 cents-New York City
provides welfare for a family for $2.39 a week! Apples sold for 5 cents as surplus of apples in Northwest sell basket 100-120 apples for $1.75. Demand for selling apples results in price increase to $2.25 a crate. Now need to sell ½ of apples to make profit.
March 4 FDR gives his inaugural address. “The only thing we have to fear is fear itself.”
FDR’s First Inaugural Address
FDR & New Deal
100 days
FDR & the New Deal
Banking Holiday 4 days within week 75% fed. Reserve banks reopen…stocks up 15%
1st Fireside Chat Mar 12
Special Session Mar 9 The 100 Days
Relief & recovery Emergency Banking Relief Act
Economy Act 15% cut in govt. salaries & pensions and govt reorg.
Beer-Wine Revenue Act 4% $5 tax
1st New Deal
Civilian Conservation Corps 18-25 $1 diem
Federal Emergency Relief Act $500m $1 fed for $3 state/local grant NOT loan
Agricultural Adjustment Act (1)subsidy principle + processing tax
Tennesse Valley Authority electricity, fertilizers& explosives Muscle Shoals WW1 power plants & munitions $145m Construct 9 dams and develop economic and social well being of Tenn, KY, NC, VA, Miss, & GA
Public Works Administration roads, public bldg $4.2b 34,000 projects – pump priming
Glass-Steagall Act FDIC $5000 insurance
National Industrial Recovery Act industrial self-regulation and competition codes Section 7a labor’s right to organize for collective bargaining
Commodity Dollar $.66 gold fixed at $.59 Gold Reserve At
Civil Works Administration 4m employed ends 1934 180,000 projects $933m-$740 to salaries
21st Amendment ends 18th Securities Exchange Act & SEC Communications Act & FCC Home Owners Loan Corp:refinance $2b
bonds
The Fireside chats
2nd Phase New Deal (1935-1936) Works Progress Administration
8.5m, 1.4m projects $11b Construction & arts
Resettlement Administration homesteads & greenbelt towns Greenhills, OH
Rural Electrification Administration Lend $ 3% build electrical plants
Social Security Act Townsend/Long influence: unemployment, pension $10-$85 mos, grants for homeles and disabled
National Labor Relation over 50% union recog.
Revenue Act 75% $5m+ National youth Administration
(16-25) work relief for non school youth and part time for students
Re-election 1936
Supreme Court & FDR
Schecter v U.S. NIRA “intrastate” and executive power over legislative (1935)
Butler v U.S. AAA “processor’s tax”Judiciary Reorganization Act Justice 70
add 1 up to 6 “packing” the court
The Supreme Court
The court packing plan
Opponents to the New Deal
Dr. Townsend “Ham & Eggs” $200 month spend it all (2% tax)
Rev. Charles Coughlin “Radio Priest” attack international bankers, communists, and Jews and favor fascism and Hitler
Huey Long “Share Our Wealth Movement” $2,000 income & homestead or $6,000 for home nationalize banks no one over $10m Assassinated Sept 10, 1935
New Deal Phase 3 1938
AAA (2) “parity payment” fed govt $
Fair Labor Standards Act Minimum wage $.40 interstate work week = 44 hours children under 16 not work
END TO NEW DEAL
Reasons: Court packing, conservative, Europe & Asia
IMPACTS??