2“We in America today are nearer to the final triumph over poverty than ever before in the history of any land. The poorhouse is vanishing from among us.” Herbert Hoover, 1928“A host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment.” FDR, 1933
3Panic on Wall StreetPeople crowd Wall Street after the Stock Market Crash of Commissioner Whalen dispatched an extra detail of 400 police officers to guard the area.People were buying on margin - $8.5 billion in loans to stock purchasers.JP Morgan and other bankers bought $20 million of US Steel to try and restore confidence
4The Great Depression Begins By 1930:over 4 million were out of workbanks collapsedpeople lost their savingsfarms were foreclosedThe crisis seemed to feed on itself as more and more people lost their jobsBetween 1929 and ,000 businesses failedCorporate profits fell from $10 billion to $1 billionIn people died in NYC from starvation – many turned to soup kitchens and breadlinesHoover did recognize that "depression" also had a psychological meaning. The country had lost confidence in the future. Hoover tried to encourage them to have faith, but he was unwilling to use the government as an effective tool to restore that confidence.Hoover did authorize loans to banks and big business, but he was not willing to provide federal assistance at the state or local level, to the farmers directly. He believed this would make the federal government too powerful.
51 in four people out of work at the worst time. 13 million workers and many more were underemployed
6What causes the Depression? Decade-long DroughtOverproduction by farm and factoryTechnological advances limiting employmentCrash of Stock MarketOverexpansion of creditHawley-Smoot TariffOutproduced market or ability to pay for productsToo much money in the hands of a few wealthy people, who in turn invested it in factories and other agencies of production. Not enough in salaries and wages.OO TT CDDOT COTCOD TOTDuring the Great Depression, people couldn’t even afford DOTted COTs. Everything was plain and practical.
7Consequences of the Depression Unemployment averaged 20% plus pay cutsBy 1933 over 13 million were out of workChanges in lifestyle: housing, diet, leisureDecline in birthrate in the 1930’sPsychological impact: depression and suicideHomelessness & migration (eg. “exodusters”)Rise in racial tensions & nativismLack of safety netBUT “life goes on” (eg. movies as affordable escapism)
9The Election of 1932 The Republicans re-nominated Hoover Hoover had won the election in 1928 by promising a “chicken in every pot”The Democrats nominated Franklin D. Roosevelt (a distant cousin of Theodore)Roosevelt was well-educated and well-spoken, he had also held many important positions in past administrations, but had suffered from polio which left him wearing leg bracesHoover’s new slogan is “the worst is past” and “prosperity is just around the corner”Believed that, “No president must ever admit he has been wrong.” – was booed and jeered.Accused FDR of seeking destruction of capitalismFDRCautious liberalism – will US turn to socialism as a solution?Polio helped make him compassionate and a strength of will
10He blamed Hoover and the Republicans for the Depression During the campaign Roosevelt promised a New Deal for America, but did not elaborateHe blamed Hoover and the Republicans for the DepressionRoosevelt won the electionIn the Winter of the situation continued to get worseOffered a New Deal for the “forgotten man” and promised a balanced budget along with economic reforms.Offers experimentation – DO SOMETHING!Significant? Distinct shift of blacks from Lincoln’s Republican party. As the “last hired and first fired,” blacks were some of the worst sufferers.
11Political CartoonHoover encourages people to turn to community and church resources to meet needs (salvation army, red cross)Dem’s slogan was “happy days are here again” which signaled Dem optimism in the face of economic problemsDem’s support repeal of Prohibition and increase in federal relief.
12FDRVery experienced – NY legislature, governor of NY, nominated for VP, assistant secretary of the navy.5th cousin to TR – more suave and conciliatory, but both colorful.Strong orator, which benefited him in the era of radio.
13Inauguration SpeechRoosevelt claimed in his inauguration: “the only thing to fear is fear itself”“This great nation will endure as it has endured, will revive, and prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself-nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance…"
14Women in the Administration First Lady Eleanor Roosevelt“conscience of the New Deal”.Most active first lady in US history.Lobbied for her husband, gave speeches, wrote a newspaper column, fought for the impoverished and oppressed.Secretary of Labor Frances PerkinsFirst woman cabinet member
15The Gameplan His plan – the 3 R’s: Relief: Relieve the conditions of the unemployedRecover: Stimulate industry and economyReform: prevent another such depressionThe three goals of the New Deal were relief, recovery, and reform.Relief came first and was aimed at all Americans.Recover would then stimulate the economy and bring the country out of depression.Reform would prevent another such depression from ever happening again.
16Game Plan SpecificsFocus on the first two years for relief and recoveryLong term goals to reform current abuses which had produced the boom or bustReturn to Progressive ideas side-tracked by WWI and the 1920’s:Unemployment insuranceOld-age insuranceMinimum wage regulationsConservation and development of natural resourcesRestrictions on child laborSome advancement on the state level, but behind western Europe – needed social welfare
17Banks need immediate attention Roosevelt called Congress to meet for a special session and then closed the banks for a four day holidayCongress passed the Emergency Banking Relief Act which allowed sound banks to reopen and provided managers for those in troubleThe extraordinary amount of work in such a short amount of time had an immediate positive effect on the country psychologically. Americans felt they were finally getting a new start along with their New Deal.
18Bank RushesA "bank run" in Detroit, Panicking customers rushed to withdraw savings.Between 1929 and 1933, over 6,000 banks failed with over 9 million savings accounts lost ($2.5 billion)Banks had either closed or put restrictions on how much you could withdraw
19Fireside ChatsOn March 12, Roosevelt talked to the nation in the first of his “fireside chats”He told the people to keep their money in the banks and reassured the nation that he was working to solve the problem35 million listeners – banks opened their doors and people began to put money back in.
20Cleaning Up Wall Street (1932) In April the country abandoned the gold standardThe Federal Securities Act required full disclosure of information about stocks and bondsThe Glass-Steagall Banking Act created the Federal Deposit Insurance Corporation to guarantee bank deposits up to $5,000. It also increased the power of the Federal Reserve to regulate creditTook the nation off of the gold standard and order private holding to ge surrendered to the Treasury in exchange for paper currency – bought at a higher price, which helped increase the amount of dollar in circulation as holders of gold cashed it in.Ended the gold-buying scheme in 1934, when FDR returned the nation to a limited gold standard for the purposes of international trade.
21Securities & Exchange Commission For the first time, the business of buying and selling shares in companies was regulated, and the bank accounts of ordinary people were insured. The SEC and FDIC were established by the New Deal. These two agencies – the Securities and Exchange Commission and the Federal Deposit Insurance CorporationBanks could no longer buy stocks with depositors' money. Companies that wanted to sell shares to the public to raise money had to disclose a host of financial information to potential investors. For the first time, investors could find out if a company was worth the stock price it was asking. The SEC also regulated the major stock exchanges, the brokers and dealers, mutual funds and investment advisors.
22The First Hundred DaysFrom March 9 to June 16 was known as the Hundred DaysCongress received and enacted 15 major pieces of legislationAfter solving the banking problems the administration focused on RELIEF for workers and unemployedEven more significantly, when voters had elected Roosevelt in November, they had also swept the Democrats into majorities in both the House and the Senate. Roosevelt's fellow Democrats were ready to work with him to pass sweeping new legislation to meet this emergency. The president called for a special session of Congress to begin on March 9. It would last until June 16, exactly 100 days. During The Hundred Days, Congress passed numerous New Deal programs.Every president since has been judged by their first 100 days.
24Relief for the PeopleCongress created the Civilian Conservation Corps (CCC) which was intended to create work for the unemployed and unmarried men between 18 and 25.Employed nearly 3 million young men and paid about $30 a month and spent their time building roads, campgrounds, and planting treesCCC - Most popular of the “alphabet agencies”Type of jobs? Reforestation, firefighting, flood control, swamp drainage.FERA – first major effort by Congress to deal with million of unemployed$3 billion for direct individual payments of wages on work projects.
25Relief for the PeopleThe Federal Emergency Relief Administration (FERA) sent money through state agencies in the form of grants to create education programs as well as direct cash payments to individualsCCC - Most popular of the “alphabet agencies”Type of jobs? Reforestation, firefighting, flood control, swamp drainage.FERA – first major effort by Congress to deal with million of unemployed$3 billion for direct individual payments of wages on work projects.
27The first federal attempt at work relief was through the Civil Works Administration Roosevelt advocated giving people jobs as opposed to financial hand-outsProvided federal jobs for those who could not find work.Dissolved in the spring of 1934, but immediately afterwards the number of unemployed skyrocketedIn 1935 Roosevelt asked Congress for $4.8 billion in the Emergency Relief Appropriation Act to pay for the programsThe goal was to put unemployed people to work building projects like highways, airfields, public buildings, planting trees and doing rural rehabilitation. Workers were paid $15 to $90 a month, depending on the job.During its eight-year life from 1935 through 1943, the WPA employed 8.5 million workers. They worked on 1.4 million projects, including 651,087 miles of roads, 124,031 bridges, 125,110 public buildings, 8,192 parks and 853 airport landing fields.When the WPA was established, its director Harry L. Hopkins and his staff argued that writers, artists, musicians and theatre people were out of work as well as laborers and farmers. They got Congress to agree to allocate seven percent of WPA funding to employ those groups.The Federal Arts Project hired unemployed artists to decorate hundreds of post offices, schools and other public buildings with murals, canvases and sculptures.The Federal Music Project hired musicians to perform with symphony orchestras and community singing concerts.The Federal Theatre Project experimented with new forms of theatre in New York City. Touring companies traveled the back roads with a variety of old and new plays.And the Federal Writers Project (FWP) published state and local guidebooks, organized archives, indexed newspapers and collected folklore and oral history interviews.The Writers Project had perhaps the greatest impact of the three WPA Arts projects. Fortune Magazine said that the project produced "a sort of cultural revolution in America" by documenting America for Americans. The main result of this effort was a series of guide books that were written for each state and several localities.
28Congress created the Works Progress Administration (WPA) to manage the programs In 1935 Roosevelt asked Congress for $4.8 billion in the Emergency Relief Appropriation Act to pay for the programsThe goal was to put unemployed people to work building projects like highways, airfields, public buildings, planting trees and doing rural rehabilitation. Workers were paid $15 to $90 a month, depending on the job.During its eight-year life from 1935 through 1943, the WPA employed 8.5 million workers. They worked on 1.4 million projects, including 651,087 miles of roads, 124,031 bridges, 125,110 public buildings, 8,192 parks and 853 airport landing fields.When the WPA was established, its director Harry L. Hopkins and his staff argued that writers, artists, musicians and theatre people were out of work as well as laborers and farmers. They got Congress to agree to allocate seven percent of WPA funding to employ those groups.The Federal Arts Project hired unemployed artists to decorate hundreds of post offices, schools and other public buildings with murals, canvases and sculptures.The Federal Music Project hired musicians to perform with symphony orchestras and community singing concerts.The Federal Theatre Project experimented with new forms of theatre in New York City. Touring companies traveled the back roads with a variety of old and new plays.And the Federal Writers Project (FWP) published state and local guidebooks, organized archives, indexed newspapers and collected folklore and oral history interviews.The Writers Project had perhaps the greatest impact of the three WPA Arts projects. Fortune Magazine said that the project produced "a sort of cultural revolution in America" by documenting America for Americans. The main result of this effort was a series of guide books that were written for each state and several localities.
30Industrial Relief Two parts to The National Industrial Recovery Act: Economic recovery through the National Recovery Administration (NRA)NRA symbol was the “Blue Eagle” with the words “We do our part”The legislation was terminated by the Supreme Court in 1935 because it was deemed unconstitutional in the Schechter Poultry Corporation v. United States casePublic Works Administration (PWA)The NIRA also created the controversial National Recovery Administration (NRA) to help businesses by setting wages and prices and to create more jobs
31Congress’ ResponseWith NRA terminated by the courts, the Congress passed the Wagner Act of 1935 (National Labor Relations Act)Created a new National Labor Relations BoardReasserted the right of labor to organization and bargain collectively through representatives of their choosing.Led to unskilled workers organizing – led by John. LewisFormed the Committee for Industrial Organization (CIO) within the AFL – eventually broke awayUsed the sit-down strike – to stop strikebreakers being used – in Flint with GM
32More Reform for Labor Fair Labor Standards Act (Wages and Hours Bill) Minimum wage (.40 an hour)Maximum hour levels (40 hours a week)No labor by children under 16Excluded agricultural service and domestic workersMinorities and women did not benefit
34Relief for FarmersWith the drop in farm commodities prices, many farmers could not afford to plant cropsThe Agricultural Adjustment Act (AAA) of 1933 planned to pay farmers to destroy their crops in an attempt to raise pricesEventually animals were slaughtered as well as crops destroyedThe decline in supply did increase the prices, but the shortage was as much due to the “dust bowl” which wiped out many farms on the Great Plains between 1932 and 1935Slaughtering of animals was condemned while people were hungry, but much of it did go to relief.In 1936 the Supreme Court ruled in United States v. Butler the AAA’s tax on food processors as unconstitutional and ended the AAACongress responded by passing the Soil Conservation and Domestic Allotment Act which removed quotas, but still provided funds for farmers who took land out of productionIn 1938 Congress passed the Second Agricultural Adjustment Act
35One Farmer’s balance sheet 1928 Income1932 IncomeCream Sales for full year$$ 6.45Egg Sales for full year161.071.85Wheat, in March sold 614 $1.21/bu. & Sept /bu.920.24Wheat, in May sold 226 $.42/bu.68.75Corn, in August sold /bu.361.80Corn, in August sold and .26/bu.231.50Livestock, throughout the year he sold a steer, 26 hogs, an "old cow" and bull calf.608.74Livestock, in July he sold one bull25.00"Western land rent" on wheat land Otto owned near Hayes Center, Nebraska, in Dec.238.50"Western land rent" in March.
36ParityGov’t studies showed that farmers’ costs were “on par” with the crop prices inAAA states the gov’t goal to keep prices need parityParity was a statistical model that was used during the 30s to try to find out if farm income was keeping up with farm costs. Here's how it worked.After some study, economists for the U.S. government decided that during the time from 1910 to 1914, the prices that farmers got for their crops and livestock were roughly in balance with the prices they had to pay for goods and services they used in the production of crops and livestock and family living. In other words, a farmer's earning power was on a par with his or her purchasingBut in the 30s, prices for both livestock and cash crops dropped to rock bottom. In 1925, corn had sold at $1.07 per bushel. By November and December 1932, corn was selling for only 13-cents per bushel.
37RELIEF for Farmers Review Name of ActYear PassedSummaryUpheld by the Courts?Agricultural Adjustment Administration AAA1933Artificial scarcity and parityNo – struck down in 1936Soil Conservation and Domestic Allotment Act1936Allow land to lie fallow and be paid – focus on conservationYes2nd Agricultural Adjustment Administration New AAA1938Conservation payments and parity paymentsParity – prices set for a product that gave it the same value as inWhile such measures may seem counter productive, the end result was positive for most farmers; gross farm income increased by 50% between the act's introduction in May 1933 and its being declared unconstitutional by the Supreme Court in Jan 1936.
38Dust Bowl What caused the Dust Bowl? Winds and Drought Dry-farming techniquesHeavy machinary tore up more soil, leaving a powdery topsoil
39Farmer and sons...dust storm, Cimarron County, Oklahoma. 1936. 10,000 flee.350,000 Okies and Arkies trekk to So Cal.The Grapes of Wrath showed people what this was like.
41The Tennessee Valley Authority One of the largest and most successful programs was the creation of the Tennessee Valley Authority (TVA)The Tennessee Valley was a very underdeveloped and impoverished areaThe idea was to build a series of dams on the Tennessee River. The result would be more industry, better schools and libraries, and cheap hydroelectric power.Electric-Power industry had become hugeA public utility – reached directly into the pocketbook of citizensNew Dealers thought they were gouging the publicPlanned economy – one of the most revolutionary of the New Deal schemes – gov’t competing with private
42Helping Housing Federal Housing Administration (FHA) Goal: speed recovery and better homesHow? Provided small loans t householders to improve homes or complete new homesVery popular and long-standingAdded to the FHA with the United States Housing Authority (USHA)Goal: Build low-income housingHow? Lend money to states or communitiesHelps to shrink slum areasUSHA – 650,000 units built
43The Elderly Traditional economic security: family, labor, or charity First 150 years of American history, most citizens are farmersClose to family and assumed elderly would be cared forSecond Industrial Revolution change this – now dependant on wages to liveAlso left elderly parents on the farm to move to the cityPeople now living longerIn three short decades between 1900 and 1930, the average life span increased by 10 years. By 1935, there were 7.8 million aged persons in America.
44Social Security Administration (SSA) What can you do?NothingHoover’s VolunteerismExpand current state welfareFDR’s proposal of social insuranceSSA Included two major programs:Federal system of old-age benefits for retired workers who had worked in industry and commerceFederal-State system of unemployment insurance.Most important New Deal agencySocial insurance already used in Europe, but US was different in that you had to be employed to get coverage.Passed in 1935Financed by a payroll tax on employers and employeesAlso provisions for the blind, handicapped, and other dependents.
45A woman in South Carolina scrawls a note to a man in Washington whom she addresses as "Dear Mr. President." "I'm 72 years old and have no one to take care of me." Another letter comes to the White House from Virginia. "I'm a 60 year-old widow greatly in need of medical aid, food and fuel, I pray that you would have pity on me." Letters such as these came by the thousands from old folks across the country to the President, to Mrs. Roosevelt, to almost every one in Washington whose name was familiar to them.
46Repealing Prohibition Congress passed the Beer-Wine Revenue Act which amended the Volstead Act and permitted the sale of low levels of alcoholProvided taxable revenue and employmentThe Twenty-First Amendment was passed in December of 1933 ended Prohibition
47Native Americans Indian Reorganization Act of 1934 Encouraged tribes to establish local self-governments and preserve native crafts and traditionsWorked to reverse the Dawes Act of 1887Some Indians worried it was “back to blankets”Nearly 200 tries organized tribal governments
48New Deal CriticsNot everyone approved of the New Deal legislation and attacks from all sidesH. L. Mencken complained that Roosevelt was creating a welfare stateFather Charles Coughlin “the radio priest” by 1934 he had turned against Roosevelt – calling the president a liar.Dr. Francis Townsend suggested that all people over 60 receive $200 a month, the money could be raised through a sales tax.The most vocal critic was Huey Long, once governor and senator of LouisianaLong was nicknamed the modern-day Robin Hood for his “share our wealth” plan – limit income of the richCommunist party felt the New Deal was too conservativeLong proposed to make “every man a king” by limiting the amount of money the wealthy could possessThe government would take control of all incomes over $1 million and estates over $5 million. This money would then be distributed to the less fortunateLong and Coughlin both appealed to the mass through populist movements that feed on dissatisfaction and disappointmentIn 1935 Long was assassinated and while the movement continued it did not thrive without LongThe Communist party attacked the New Deal for being too conservativeMembership in the Communist party increased during the Depression. While it communism never really attracted a mass appeal it did became especially appealing to Hollywood people
49Election of 1934 Overwhelmingly for Democrats FDR’s appeal to the “forgotten man”South, unions, blacks, urbanites, New immigrants, and the poor vote DemIn new term, FDR sought to pack the Supreme Court6 of the 9 justices were over 70Had ruled against FDR in 7 of 9 casesAsked Congress to add a new justice to the Court for every member over 70STRONGLY opposedEventually, FDR appoints more judges than anyone besides Washington
50End of the 1930’s New Deal does not end the Depression A recession hits in 1937Roosevelt turn to Keynesian economicsBritish economist John Maynard KeynesDeficit spendingBy 1938 no more rabbits to pull out of FDR’s hat
51THE NEW DEAL OPPONENTS Waste, incompetence, confusion Lefty socialists Too much improvising without a real planGrowth of bureaucracy – states fade furtherNational debtBusiness and republicans hated itToo much presidential powersDIDN’T FIX THE DEPRESSION!!SUPPORTERSSome waste, but relief was neededHeaded off a more radical swing with a moderate optionGovernment was morally bound to prevent mass hunger – gov’t is to be used, not fearedCitizens retained self-respectDeflected hatred of businessNew Deal did relieve the worst of the crisis in 1933Like Jefferson – bold reform without a bloody revolution – at a time when some other nations were suffering armed uprising and Europe was predicting communism or fascism