Great Depression

• 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

Trickle Down Example

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

Natural Business Cycle

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)

--To feed themselves:• Dig through garbage• Soup Kitchens• Bread lines

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

Election of 1932

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.

Work Programs

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

Construction of the Dam

by William Gropper

Construction of the Dam

by William Gropper

Women of Flint, MIby Joseph Varak

Women of Flint, MIby Joseph Varak

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

Glen miller orchestra in 1939

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