Presentation on theme: "Chapter 17 and 18. Section 1 I Can Statements Discuss the weaknesses in the economy of the 1920s. Explain how the stock market crash contributed."— Presentation transcript:
Chapter 17 and 18
I Can Statements Discuss the weaknesses in the economy of the 1920s. Explain how the stock market crash contributed to the coming of the depression. Describe how the depression spread overseas.
Causes of the Depression During the Roaring Twenties, many Americans enjoyed what seemed like an endless era of prosperity. Then, in October 1929, the mighty bull market crashed. As production fell and unemployment rose, the US economy lurched into a period of dramatic decline. Years after the Great Depression began, many Americans came to see this contraction as a regular feature of the nation’s business cycle.
Causes of the Depression In 1928, Republican leaders exuded confidence about their party and their country. The Roaring Twenties had been a Republican decade. In 1920, Americans sent Warren G. Harding to the White House and four years later Calvin Coolidge—neither election was close.
Causes of the Depression Both Presidents watched the country grow increasingly prosperous. Consumption went up, the gross national product went up, and the stock market went up. Economist said, times were good in America—and they were only getting better. Republicans took credit for the bullish economy, and Americans agreed.
Causes of the Depression 1928—Republicans chose Herbert Hoover—a public servant. Born in Iowa, he was orphaned as a child. He overcame personal tragedy and eventually graduated from Stanford University with a degree in geology, and worked as a mining engineer. Retired early and devoted himself to public service.
Causes of the Depression
He came to attention of America during WWI, first as the coordinator of the Belgium relief program and head of the Food Administration. He had also served as Secretary of Commerce. His philosophy was simple but effective. Stressed the importance of competition, but also voluntary cooperation between labor and management.
Causes of the Depression He promised “a chicken in every pot, a car in every garage” and spoke about ending poverty in America. Americans voted for Hoover, prosperity, and the continuation of a Republican government. When he took office America was full of confidence. Few could image the economic disaster that was just 7 months in the future.
Causes of the Depression Prosperity was not as deep or as sturdy as Hoover claimed. All through the economy, there was troubling signs. Farmers were struggling. They made up one fourth of the workforce. Crop demands created by WWI, harvest yields had been increase and more land put under the plow.
Causes of the Depression Farmers had bought costly tractors and other mechanized farm equipment. They amassed huge debt and additional mortgage payments followed. After the war, demand for American crops fell sharply. Despite the drop, postwar production remained high because of increasing mechanized farm equipment and more intensive farming methods.
Causes of the Depression Farms were getting bigger and yielding bumper crops at harvest. However, farmers were failing to sell off their huge crop surpluses and pay their debts to banks and other institutions. The result was a rural depression that affected millions of Americans. Hard-pressed to pay their debts, forced to sell in a glutted and competitive world market, and confronted by several natural disasters, farmers did not share in the boom of the 1920s.
Causes of the Depression They did not have the cash to buy the new consumer goods produced by industries. They lived on credit from month to month, often on the verge of financial ruin. Any downward slide hit farmers first and hard.
Causes of the Depression Unlike farmers, industrial workers participated in the success of the nation. Many purchased Model T Fords along with a variety of other consumer products. Though not wealthy, industrial laborers were in a better financial position than their fathers had been a generation before.
Causes of the Depression Problem was while wages grew gradually, workers productivity increased dramatically. Between 1923 and 1929, output per person-hour jumped 32%, but worker’s wages went up only 8% During the same period, corporate profits from worker output rose 65%. All these figures pointed to the fact that during the 20s, the rich became much richer, and industrial workers simply became less poor.
Causes of the Depression There was such a small number of rich Americans dominated such a large percentage of the country’s total wealth. In 1929, the wealthiest 0.1% of the population earned about the same amount of money as the bottom 42%. This uneven distribution of the nation’s wealth created economic problems.
Causes of the Depression More than 60% of all Americans had a yearly income of less than $2,000 a year. 24,000—of the wealthiest families had an annual income of more than $100,000, which was 50x more than most families were earning. But these wealthy families did not eat 50x more food than lower-income families.
Causes of the Depression They did spend a great deal on consumer products, but not enough to keep the economy booming. A healthy economy needs more people to buy more products, which creates even more wealth. In this way, a healthy economy avoids underconsumption that can limit economic growth.
Causes of the Depression The uneven distribution of wealth pointed to an uncertain future. From overproduction of the farmers to underconsumption of the low-income industrial worker, these problems created economic instability. Too many did not have enough to buy what they needed or wanted. For a time, the expansion of credit partially hid this problem.
Causes of the Depression Americans bought automobiles, appliances, radios, and other goods on credit. Using installment plans, they paid a small percentage down and the rest over a period of months or years. By the end of the decade, 80% of radios, and 60% of cars were purchased on installment credit.
Causes of the Depression Americans even bought stock on credit, making such stock purchases on margin. Every year, Americans accumulated more debt. In the past, they feared debt and put off buying goods until they had cash to pay for those items. However, easy credit changed this behavior during the 1920s.
Causes of the Depression The growing credit burden could mask the problems of Americans living beyond their means for only so long before the economy imploded.
The Stock Market Crashes By 1929, some economist observed that soaring stock prices were based on little more than confidence. Prices had no basis in reality. Although other experts disagreed, it became clear that too much money was being poured into speculation. Investors were gambling; often with money they did not even have, on stock increases to turn a quick profit.
The Stock Market Crashes If the market’s upward climb suddenly reversed course, many investors would face economic devastation. September 3, 1929, the stock market began to sputter and fall. Prices peaked and then slid downward in an uneven way. After the Dow Jones average dropped 21 points in one hour on Oct. 23, many investors concluded that the boom was over.
The Stock Market Crashes They lost confidence—the very thing that had kept the market up for so long. The next day, Oct. 24, came to be known as Black Thursday. With confidence in the stock market failing, nervous investors started to sell. Stock in General Electric that one sold at $400 a share plunged to $ 283.
The Stock Market Crashes Across the US, investors raced to pull their money out of the stock market. On Oct. 29, Black Tuesday, the bottom fell out. More than 16 million shares were sold as the stock market collapsed in the Great Crash. Billions of dollars were lost. Whole fortunes were wiped out in hours.
The Stock Market Crashes Many speculators who had bought stock on the margin lost everything they had. President Hoover tried to soothe Americans by insisting that the “business of the country is on a sound and prosperous basis.” But by Nov. 13, the Dow Jones average had dropped like a brick from its September high 381 to The Great Crash represented another hallmark of the nation’s business cycle, which explained the periodic growth and contraction of the economy.
The Stock Market Crashes
The Great Depression Begins The stock market crashed marked the beginning of the Great Depression, a period lasting from in which the economy faltered and unemployment soared. It did not start the depression by itself; the crash sparked a chain of events that quickened the collapse of the US economy.
The Great Depression Begins One of the first institutions to feel the effects of the stock market crash was the country’s banking system. The crisis in confidence continued as frightened depositors feared for their money and tried to withdraw it from their banks. Few banks could survive a sustained “run” of requests by depositors for their money.
The Great Depression Begins In 1929, 641 commercial banks failed. A year later, 1,350 failed. And a year after that, 1,700 went under. By 1932, many Americans believed that no banks would be left standing. Another cause of many bank failures was misguided monetary policy. During the 1920s, the Federal Reserve, which regulates the amount of money in circulation, cut interest rates to stimulate economic growth.
The Great Depression Begins But in 1929, worried about investor’s over- speculation, the “Fed” limited the money supply to discourage lending. As a result, there was too little money in circulation to help the economy after the stock market crash. When stock prices fell this sent investors to the banks to secure whatever hard money they had left and the banks were cleaned out of currency and forced to close.
The Great Depression Begins
The collapse of stock prices, combined with reduced consumer spending, spelled trouble for American business. Business leaders believed that the survival of their companies depended on production cutbacks, to maintain price levels, and layoffs, to reduce payroll. While their stocks were still falling, companies began closing plants and forcing workers onto the growing list of the unemployed.
The Great Depression Begins Henry Ford closed several of his Detroit factories, putting 75,000 out of work. Problems of production cut kept getting bigger and bigger. As businesses closed plants and fired workers to save money, more Americans lost their jobs. As unemployment grew and income shrank, consumers spent less money- businesses cut production even more, closing more plants and firing more workers.
The Great Depression Begins 1933—25% of all workers had lost their jobs. Government tried to protect products from foreign competition. Hawley-Smoot Tariff—raised tariffs on foreign imports to a level that they could not compete in the American market. European countries retaliated and enacted their won protective tariffs.
The Great Depression Begins The Hawley-Smoot Tariff added to the problems of the Depression. American manufactures and farms had a glut of unsold products, internationally high tariffs closed markets. Disastrous to American producers and globally as well. This helped to destroy international trade. Hawley-Smoot Tariff was one cause of the depression spreading globally.
The Great Depression Begins Reparations payments, war debt payments, and an international imbalance of trade caused a shaky economic structure. Germany ceased reparations payments, and the US agreed to suspend France and Britain’s war debt. European nations experienced the same cycle of business failures, bank collapses, and high unemployment.
What Caused the Great Depression People disagree on the exact causes of the Great Depression. Some believe that the contraction in the money supply, the twin events of the stock market crash in 1929, and bank failures in 1930 left too little money in circulation. John Maynard Keynes said a lack of government interference in the economy led to the depression. He recommended the government spend more money when the economy slows.
What Caused the Great Depression For sure, problems in consumption contributed to it. Economic hardships in 1929 in Europe and rural America, coupled with an uneven distribution of wealth and over-speculation in the stock market, created dangerous economic conditions. When combined with poor and misinformed economic decision by Congress and President Hoover, the Great Depression resulted.
The Great Depression
I Can Statements Examine the spread of unemployment in America’s cities. Discuss the impact of the depression on rural Americans. Explain the human and geographical factors that created the Dust Bowl.
Section 2: Americans Face Hard Times The stock market crash signaled the end of boom time and the beginning of hard times. As investors mourned their losses, Americans watched the economy stagger into the Great Depression. In the cities and on the farms, desperate poverty gripped the nation. Even after prosperity returned, those who lived through the crisis would remember the pain and worries of the depression. Tested by extreme hardship, this generation of Americans forged a character and will strong enough to overcome economic ruin and restore prosperity.
Misery and Despair Grip America’s Cities The depression touched every American, Americans either experienced it or knew someone who experienced the hardships and loss caused by the catastrophe. —annual average unemployment rates never rose above 3.7%. 1933—it was 24.9%
Misery and Despair Grip America’s Cities Millions of workers were able to keep their jobs, however, most had their wages or hours cut. Many brought home paychecks that were 10, 20, and sometimes 30% less than pre-depression checks. Many families turned to public soup kitchens or breadlines to get free scraps of food.
Misery and Despair Grip America’s Cities Whole families descended into hunger and homelessness. As Americans lost their jobs and used their savings they had to scrounge to keep from going hungry. They sold furniture, pawned jewelry to buy food or pay rent. If they ran out of money, they were evicted from their homes, and ended up on the street.
Misery and Despair Grip America’s Cities Homeless people slept on park benches, in empty railway cars, or in cardboard boxes. Many lived together in Hoovervilles, makeshift shantytowns of tents and shacks built on public land or vacant lots. Many built homes out of scrap lumber, tar paper, tin, and glass.
Misery and Despair Grip America’s Cities One of the largest Hoovervilles sprang up in the middle of Central Park in New York City. They covered themselves with newspapers, called Hoover blankets, to keep warm. They looked for jobs with their empty pant pockets turned inside out, a sign of poverty, known as Hoover flags.
Misery and Despair Grip America’s Cities Thousands found no escape from their misery.
Misery and Despair Grip America’s Cities
Poverty Devastates Rural America The number of unemployed, homeless, and hopeless increased like a causality list in some great war. In rural America, people fared no better, and sometimes their conditions were worse. Farmers had suffered before the Depression, falling commodity prices, and accumulating debt had left them devastated. Many lost their farms.
Poverty Devastates Rural America Crop prices fell and new debts added. To add to the problem, the Great Plains were suffered through a drought that lasted for years. Many lost their farms and traveled around looking for work trying to survive. Low prices were paid for crops they grew. 1919—wheat $ —wheat $ —cotton $ —cotton 4.6 cents
Poverty Devastates Rural America They could not generate enough money to continue farming; they could not pay their debt, purchase seeds, repair equipment, and buy necessities. Frustration caused some farmers to protest by burning or dumping their product. Example—farmers dumped 1,000 gallon of milk. —Nearly 1 million farmers failed to pay their mortgages and lost their farms.
Poverty Devastates Rural America Banks foreclosed on lands and homes, and repossessed farming equipment. Banks then sold what they could at public auctions. Some remained tenant farmers, other left looking for other work. Water was a constant source of problem on the Great Plains. Normal rainfall seldom exceeded 20 inches a year. This means, drought on the Great Plains were often more devastating than those in the East and Midwest.
Poverty Devastates Rural America New farming methods made the drought conditions worse. Farmers plowed under natural grasses to plant winter wheat. This caused a shift of the ecological balance of the region. The grass was not there to prevent the topsoil from blowing away. 1932—Drought, loose topsoil, and high winds resulted in a disaster on the Plains.
Poverty Devastates Rural America Wind kicked up dust storms that began to blow east. These clouds of dust and dirt could rise to 8,000 feet off the ground and travel as fast as 100 miles per hour and blotted out the sun. Most started in the southern Plains, in Texas, Oklahoma, Kansas, New Mexico, and Colorado. This area became known as the Dust Bowl.
Poverty Devastates Rural America These storms killed cattle, birds, and blanketed rivers, and suffocated fish. Dust seeped in to homes covering everything. The dust storms displaced twice as much dirt as Americans had scooped out to build the Panama Canal. Many had no choice but to migrate from the region. Most were called Oakies no matter where they were from.
Poverty Devastates Rural America They packed their cars and trucks with their possessions and headed west. Some 800,000 migrated out of Missouri, Arkansas, Oklahoma, and Texas. Many moved to California, thinking jobs were there, to find they were few and far between. Big operations survived on the Plains and eventually dams provided irrigation.
Poverty Devastates Rural America
Few Americans Escape Hard Times Hoover used the word depression to describe the state of affairs thinking it sound better than “panic” or “crisis.” The depression became a very personal affair; men who lost their jobs and couldn’t find work felt they betrayed their family. Some men deserted their families. Those that did work lived in fear of losing their job and also guilty they had a job.
Few Americans Escape Hard Times Wives and children also suffered. Birthrates plummeted. Mothers tried to stretch incomes, sew clothes, and take on odd jobs, anything to help the family survive. Family discipline declines, children quit school, ran away from home, some families grew stronger, and others broke apart.
Few Americans Escape Hard Times Americans on the bottom rung of the economic ladder—the poorest of the poor, often minorities were left with no financial resources. In 1932, unemployment among African Americans was around 50%. They often relied on emotional resources of family, and religion to cope. As the Oakies moved west, competition was intense between them and Mexican American farm workers.
Few Americans Escape Hard Times
I Can Statements Discuss how Hoover’s initial conservative response to the depression failed. Explain the changes in the President’s policies as the crisis continued. Describe how Americans reacted to Hoover's relief programs.
Section 3: Hoover’s Response Fails From big cities to small towns, the Great Depression spread misery far and wide across America. The unemployed and the homeless crowded into shantytowns. Giant dust storms swallowed the Great Plains. Yet as the crisis depended, Herbert Hoover struggled to respond to the nation’s problems. As a result of Hoover’s failed response, in 1932 Americans would turn to a new leader and increased government intervention to stop the depression.
Cautious Response to Depression Fails Herbert Hoover did not cause the depression, but many looked at him to solve the crisis. He will try many different approaches, but fail to find the right formula. In the beginning, he tried a hands-off policy. He thought this was a natural occurrence in the business cycle.
Cautious Response to Depression Fails He asked business and industrial leaders to keep employment, wages, and prices at current levels. He called for the government to reduce taxes, lower interest rates, and create public-works programs. Felt this would encourage more production and consumption; he also asks wealthy Americans to give to charity.
Cautious Response to Depression Fails However, it relied too much on voluntary cooperation. He then asked state and local government to provide jobs and relief measures, however most did not have the means necessary to combat the crisis. He opposed public assistance.
Hoover Adopts More Activist Policies Poor Americans called trucks pulled by horses or mules “Hoover wagons,” campfires “Hoover heaters,” and cardboard boxes “Hoover houses.” He then decided to use federal resources to battle the depression. Established Reconstruction Finance Corporation to give a billion dollars in loans to railroads and large business.
Hoover Adopts More Activist Policies Also gave loans to banks to help struggling businesses. Hoover believed if the government lent money to bankers, they would lend to businessmen, businessmen would hire workers, production, and consumption would increase —known as trickle-down economics. Didn’t help because banks did not increase their loans or use loans to hire workers.
Hoover Adopts More Activist Policies One success was the construction of a dam on the Colorado River— Hoover Dam. Brought much- needed employment to the Southwest.
Hoover Adopts More Activist Policies
Americans Protest Hoover’s Failures The President became a symbol of failure. Some blamed capitalism, while others wondered about the responsiveness to democracy. Many felt the answer was a rejection of capitalism and the acceptance of socialism or communism.
Americans Protest Hoover’s Failures Although some questioned the ability of America’s capitalistic and democratic institutions to overcome the crisis, most Americans never lost faith in their country. World War I veterans were seeking the bonus that Congress had promised them. Bonus Army —1924 Congress provided for a lump sum payment to veterans in 1945.
Americans Protest Hoover’s Failures They started calling for early payment to support themselves. Congress passed a bill to provide for early payment, but Hoover vetoed the bill. To protest, veteran groups marched on Washington. 20,000 set up camps and occupied empty government buildings.
Americans Protest Hoover’s Failures Riots broke out when the police tried to evict them. Hoover, called for General Douglas MacArthur and federal troops to clear the area. MacArthur used force—1,000 marchers were tear-gassed and many injured. This shocked Americans—this guaranteed Hoover no chance of winning reelection.
Americans Protest Hoover’s Failures
Charts and Graphs Causes Overproduction and underconsumption of agricultural crops. Uneven distribution of income. Gradual accumulation of consumer debt. Widespread stock market speculation. The Great Depression Effects Banks and businesses fail. Unemployment soars. Personal incomes shrink. Countries enact high tariffs to protect their products from foreign competition; world trade declines. American loans to Europe dry up.
Charts and Graphs
I Can Statement Analyze the impact Franklin D. Roosevelt had on the American people after becoming President. Describe the programs that were part of the first New Deal and their immediate impact. Identify critical response to the New Deal.
Section 1: FDR Offers Relief and Recovery The Great Depression challenged the faith of Americans that democracy could handle the crisis. Faced with similar circumstances, people in Germany, Italy, and Japan had turned to dictatorships to deliver them from despair. The New Deal had great significance because America’s response to the Great Depression proved that a democratic society could overcome the challenges presented by the severe economic crisis.
Roosevelt Takes Charge Franklin D. Roosevelt had enjoyed a privileged life. Franklin married his distant cousin Eleanor Roosevelt. Teddy Roosevelt gave the bride away. Franklin Roosevelt served in the New York Senate, as Assistant Secretary of the Navy, and governor.
Roosevelt Takes Charge 1921—FDR slipped off his boat into the cold water of the North Atlantic. He later awoke with a fever and severe pain in his back and legs. Two-weeks later he was diagnosed with Polio. He will never recover full use of his legs.
Roosevelt Takes Charge
With Eleanor’s help, he made a political comeback—Elected governor of New York. When he ran for president he pledged a “New Deal” to combat the depression. 1932 Election Democrat: Roosevelt Republican: Hoover
Roosevelt Takes Charge Both advocated different approaches to solving the Great Depression. Hoover—relief should come from the state and local governments and private agencies. Roosevelt—strong action and leadership from the federal government. Roosevelt won by more than 7 million votes.
Roosevelt Takes Charge To help plan the New Deal, Roosevelt sought advice from a diverse group of men and women— “Brain Trust” He chooses two Republicans to be in his Cabinet, and Frances Perkins, the first women Cabinet member in history. He relied heavily on Eleanor; she served as his eyes and ears.
Roosevelt Takes Charge
The First Hundred Days During the first hundred days in office, Roosevelt proposes and Congress passed 15 bills —First New Deal. It had 3 goals: relief, recovery, and reform —relief from the immediate hardship and to achieve long-term economic recovery.
The First Hundred Days Achievements of the First Hundred Days: Federal Deposit Insurance Corporation (FDIC) National Recovery Administration (NRA) Civilian Conservation Corps (CCC) Public Works Administration (PWA) Agricultural Adjustment Administration (AAA) Tennessee Valley Authority (TVA) Home Owners’ Loan Corporation (HOLC)
The First Hundred Days His first issue— bank. A banking panic gripped the nation as depositors lined up at the banks to withdraw their savings as more and more banks failed. He called Congress into special session and convinced them to pass the Emergency Banking Bill that gave the President many powers—including declaring a 4-day bank “holiday”
The First Hundred Days This gave banks time to get accounts in order before re-opening. Eight-days into his Presidency he gave an informal radio speech to Americans— fireside chats. This became a way for him to communicate with the American people. In the first fireside chat he tried to calm fears about the banking system—this helped when banks reopened—people didn’t rush to withdraw their funds.
The First Hundred Days
Federal Deposit Insurance Corporation (FDIC), insured banks deposits up to $5000. Glass-Steagull Act —banks not allowed to invest in the stock market. Securities and Exchange Commission (SEC) —regulates stock market and makes it safe for investments.
The First Hundred Days
These reforms helped restore confidence in the economy; runs on banks ended and the stock market stabilized. Next a number of programs tried to help the plight of the farmer. For years, the supply of crops grown by farmers exceeded demand and prices dropped so low that it was no longer profitable to grow them.
The First Hundred Days Agricultural Adjustment Act– sought to end overproduction and raise crop prices, by providing financial aid, paying farmers subsidies not to plant on part of their land or kill excess livestock. Many Americans felt this was wrong when so many where going hungry, but farm prices did rise.
The First Hundred Days
Americans living in the Tennessee River Valley were some of the poorest; few had electricity, running water, or sewage systems. Tennessee Valley Authority (TVA) built dams in the Tennessee River Valley to control floods and generate power. They also replanted forests, built fertilizer plants, created jobs, and attracted industry with the promise of cheap labor.
The First Hundred Days
Civilian Conservation Corps (CCC)—provided more than 2 million jobs to young men. They replanted forests, built trails, dug irrigation ditches, and fought forest fires.
The First Hundred Days Federal Emergency Relief Act (FERA)— federal funds to state and local agencies to help unemployed. Civil Works Administration (CWA)– provided jobs on public-works projects. Home Owners’ Loan Corporation (HOLC)—loaned money at low interest rates to homeowners who could not meet mortgage payments.
The First Hundred Days Federal Housing Administration– bank loans used for building and repairing homes. 500 million appropriated for FERA was the largest peacetime expenditure by the government to that time. National Recovery Administration (NIRA)— developed codes intended to govern whole industries—established minimum wages and minimum prices for goods that business sold.
The First Hundred Days The idea was to increase the wages of workers so they would buy more goods and raise prices so companies could make a profit. Public Works Administration– built bridges, power plants, and government buildings. Ex. NYC’s Triborough Bridge, the Overseas Highway (links Miami and Key West), and Bonneville Dam on the Columbia River.
The First Hundred Days
Opposition Emerges to the New Deal Some thought the changes were too radical; others thought it was not radical enough. The chief complaint was it made the federal government too powerful. Critics said the government was telling business how to operate, spending large sums of money, and piling up a huge national debt.
Opposition Emerges to the New Deal Many felt it was destroying free enterprise and undermining individualism. They formed the American Liberty League. Others said that Roosevelt hadn’t done enough, especially the socialists. His most significant criticism came from those rooted in the populist movement— Spokesmen of the poor, challengers of the power of the elite.
Opposition Emerges to the New Deal Francis Townsend—wanted a program to give $200 a month to citizens over 60 (filter out society). Father Charles Coughlin—had a weekly radio program, which at first supported the New Deal, but later accused FDR of not doing enough to end the depression.
Opposition Emerges to the New Deal Senator Huey Long—gave folksy speeches in which he proposed high taxes on the wealthy and large corporation and redistributing their income among the poorest Americans
I Can Statements Discuss the programs of social and economic reform in the second New Deal. Explain how New Deal legislation affected the growth of organized labor. Describe the impact of Roosevelt's court-packing plan on the course of the New Deal.
Section 2: Second New Deal FDR’s goals for the first New Deal were relief, recovery, and reform. Progress had been made, but there was still much work that needed to be done. Beginning in early 1935, Roosevelt launched an aggressive campaign to find solutions to the ongoing problems caused by the Great Depression. This campaign known as the second New Deal, created Social Security and other programs that continue to have a profound impact on the everyday lives of Americans.
Extending Social and Economic Reform In his fireside chats, press conferences, and major addresses, he explained the issues facing the nation. He said that the complexities of the modern world compelled the federal government to “promote the general welfare” and to intervene to protect citizen’s rights.
Extending Social and Economic Reform Second New Deal—addressed problems of the elderly, the poor, and the unemployed; created new public- works projects, helped farmers, and enacted measures to protect workers’ rights.
Extending Social and Economic Reform Works Progress Administration--$5 billion for new jobs. Harry Hopkins was in charge—built or improved roads, dredged rivers, and promoted soil and water conservation. Even provided for displaced artists. Employed 8 million Spent 11 billion Built 650,000 miles of highway 125,000 public buildings
Extending Social and Economic Reform Funded projects like San Antonio River Walk and part of the Appalachian Trail. Federal deficit--$461million in 1932 → $4.4 billion in This lead to criticism about wastefulness, but economist John Maynard Keynes said deficit spending was needed to end the depression.
Extending Social and Economic Reform Putting people to work on public projects put money into the hands of consumers who would buy more goods; stimulating the economy— pump priming. The US was one of the few industrialized nations that did not provide some form of pension for the elderly.
Extending Social and Economic Reform Social Security Act—created a pension system for retirees, unemployment insurance for workers who lost their jobs. Also created insurance for work-related accidents and provided aid for poverty- stricken mothers and children, the blind, and disabled. Second New Deal tried to further help farmers.
Extending Social and Economic Reform Only 10% of all farms had electricity, because it wasn’t profitable. Rural Electrification Administration (REA)—loaned money to electric utilities to build power lines, bringing electricity to isolated rural areas—more than 80% of American farms had electricity by 1950.
Extending Social and Economic Reform Changed the relationship of the federal government and farmers—government was committed to providing price supports, or subsidies for agriculture. Many projects had a huge impact on the development of the American West Central Valley irrigation system (California) Bonneville Dam
Labor Unions Find a New Energy During the Great Depression there was an upsurge of union activity. Roosevelt felt the success of the New Deal depended on raising the standard of living for industrial workers, improving the whole economy. National Labor Relations Act– called the Wagner Act recognized the rights of employees to join unions and gave workers the right to collective bargain.
Labor Unions Find a New Energy This meant they could negotiate with unions about hours, wages, and working conditions. Created the National Labor Relations Board to look into workers’ complaints. Fair Labor Standards Act—gave workers more rights. Established a minimum wage, initially 25 cents per hour. Maximum workweek of 44 hours Outlawed child labor
Labor Unions Find a New Energy American Federation of Labor— represented skilled workers. Congress of Industrial Organizations (CIO)—a competing organization 1936—United Automobile Workers Union (UAW) staged a sit-down strike, in Flint Michigan. They refused to leave the workplace until a settlement was reached. Lasted 44 days General Motors recognized their union 1940—9 million belonged to unions
Challenges to the New Deal 1926—FDR received 61% of the vote. Main challenger to the New Deal—The Supreme Court Schechter Poultry v. US—the Supreme Court ruled the President had no power to regulate interstate commerce, and the National Industrial Recovery Act unconstitutional.
Challenges to the New Deal Later ruled a key part of the Agricultural Adjustment Act unconstitutional. Feb. 1937—FDR unveiled a plan to dilute the power of the sitting Justices of the Supreme Court. Called for adding 6 new Justices. Said Constitution doesn’t specify a number. Court-packing plan—many accused him of trying to increase presidential power and upset the balance between the 3 branches.
Challenges to the New Deal Court turned his way. 1927—Court was more willing to accept a larger role in the federal government. But the court-packing plan weakened him politically and the public began to be much less willing to support further legislation. —conditions were improving, and FDR cut back federal spending, Federal Reserve raised interest rates, making it difficult for business to expand and for consumers to buy new goods.
Challenges to the New Deal Unemployment soared and nearly all the gains in employment and production were wiped out. Republicans gained seats in Congress, even though the Democrats retained control, FDR chose not to force more reforms.
Chart ProgramYearEffects Social Security Act (SSA)1935 Established a pension system and unemployment insurance, provided payments to workers injured on the job, the poor and people with disabilities. Works Progress Administration (WPA)1935 Employed millions of people for government projects ranging from highway construction to arts programs. Rural Electrification Administration (REA)1935 Provided loans to eclectic companies to build power lines, bring electricity to isolated areas. National Labor Relations Act (Wagner Act)1935 Outlawed unfair labor practices, granted workers the right to organize unions and to bargain collectively; created the National Labor Relations Board. National Youth Administration (NYA)1935 Trained and provided for jobs and counseling for unemployed youth between the ages of 16 and 25. Banking Act of Finalized the creation of the FDIC and made insurance for dank deposits permanent; created a board to regulate the nation’s money supply and interest rates on loans. US Housing Authority (USHA)1937 Subsidized construction of low-cost public housing by providing federal loans. Fair Labor Standards Act1938 Banned child labor, established a minimum hourly wage, and set the work week at 44 hours. Food, Drug, and Cosmetic Act1938 Prohibited the mislabeling of food, drugs, and cosmetics, and ensured the safety and purity of these products.
I Can Statements Describe how the New Deal affected different groups in American society. Analyze how the New Deal changed the shape of American party politics. Discuss the impact of Franklin D. Roosevelt on the presidency.
Section 3: Effects of the New Deal The New Deal provided desperately needed relief from the depression and enacted reforms that guarded against economic catastrophe. It did not end the depression. World War II, with its massive military spending, would do that. Yet, the New Deal mattered enormously because it brought fundamental change to the nation. It changed the role of the federal government in the economy, the power of the presidency, and the relationship of the American people and their government.
Women Help Lead the New Deal The New Deal helps provide some women opportunities to increase their political influence and promote women’s rights. Eleanor Roosevelt– transformed the office of First Lady to that of action and deep involvement in the political process.
Women Help Lead the New Deal She represented the President; toured the nation Helped in campaigns Offered advice on political matters Wrote a newspaper column Causes included: public health, education, arts in rural areas, and flood control. Once traveled 60,000 miles in 2 days. Frances Perkins —Secretary of Labor— first women Cabinet member. Helped to end child labor and establish a minimum wage.
African Americans Make Advances and Face Challenges 1934—50% of African Americans were unemployed. Eleanor urged the President to improve the situations for African American. She protested against racial discrimination. President invited many African American leaders to advice him— Black Cabinet. He didn’t always take their advice.
African Americans Make Advances and Face Challenges Supported no civil rights reforms and many New Deal programs hurt African Americans.
The New Deal Affects Native Americans FDR attempted to improve the lives of Native Americans, by making changes to policies. Indian New Deal—reverses the conditions started by the Dawes Plan in Provided funding for the construction of schools and hospitals.
The New Deal Affects Native Americans Indian Reorganization Act—gave tribal control over American Indian land, and stopped discouraging the practice of Indian religious and traditional customs. Gave them more control over their destiny. Other programs of the New Deal hurt Native Americans. Ex. Navajo Livestock Reduction the government said Navajo sheep were causing soil erosion on the Colorado Plateau. Ordered thousands of sheep be sold or killed.
The New Deal Creates a New Political Coalition New Deal Coalition—political force that brought together southern whites, northern blue-collar workers—especially those with immigrant roots—poor mid- western farmers, and African Americans. Before the New Deal, most African Americans voted Republican, in the 1930s they started to vote Democratic.
The New Deal Creates a New Political Coalition This coalition gave Democrats a majority in both houses of Congress, and helps to elect Roosevelt in 1932 and secures the White House six out of the next 8 presidential elections. New Deal also helps to unify the nation; social and ethnic divisions diminished and immigrant communities gained a deeper sense of belonging.
The Role of Government Expands New Deal greatly expands the size and scope of the federal government. It did not end the depression, but it helped to restore the American economy. The federal government also broke with the tradition of laissez-faire, now the government accepted responsibility for spurring economic growth, or pump priming.
The Role of Government Expands For the first time, the government became the employer for the unemployed and sponsor of work projects. The New Deal helped to strengthen capitalism and make possible the economic boom of the post-World War II era.
The Role of Government Expands FDIC and SEC—restored trust in banks and the stock market. FHA—low-interest loans and increasing homeownership. Wagner Act—boosted union membership Minimum wage—improved purchasing power of the bottom rung of the economic ladder.
The Role of Government Expands Created child labor laws, workers’ compensation laws, and unemployment insurance. Had a huge impact on rural America. TVA and Booneville Dam—reduced flooding Rural Electrification—electricity to the Southeast and Northwest. Welfare State—assumes responsibility for providing welfare of children, poor, elderly, sick, disabled, and unemployed.
The Role of Government Expands Broker State—government as a mediator Safety Net—government provides safeguards and relief programs that protected them against economic disaster. CCC—restored forests and preserves the environment. New land for national parks—Shenandoah, Kings Canyon, and Olympic.
The Role of Government Expands Some projects had mixed results—TVA projects on the Columbia River generated power, but destroyed traditional hunting, fishing, and Native American burials. The greatest changes made in the office of President itself—gave the executive branch much more power.
The Role of Government Expands Also the style of President—use of the media and his communication method. During WWII he exercised a tremendous authority over every aspect of American life. When he ran for an unprecedented 3 rd term, he broke an unwritten rule, established by George Washington. 1951— Twenty-second Amendment was ratified, limiting the President to two consecutive terms.
Charts Cause and Effect Causes Stock market crash Failure of farms and business Sharp decline in prices and production Failure of banks Massive unemployment and low wages Homelessness and Hooverville's Drought, crop failures, and Dust Bowl ▼ The New Deal Effects Millions employed in new government programs Banking system is stabilized Regulated stock market restores confidence Social-insurance programs aid elderly and poor Agricultural subsidies help farmers Government takes a more active role in economy ▼ Connections to Today Social Security and other New Deal programs still exist Size and role of federal government still debated Costs and benefits of social welfare programs still debated
Chart FDR’s Effect on the Presidency Increased power of the President and the executive branch. Made mass media, such as radio, and essential tool in advertising and promoting policies. Expanded the role of the President in managing the economy. Expanded the role of the President in developing social policy. Won third and fourth term leading to passage of the Twenty-second Amendment, which limited Presidents to two consecutive terms.
I Can Statements Trace the growth of radio and the movies in the 1930s and the changes in popular culture. Describe the major themes of literature of the New Deal era.
Section 4: Culture of the 1930s Mass entertainment, such as The Wizard of Oz, flourished during the New Deal years as Americans sought escape from the worries of the depression. And, for the first time, the government played an active role in the arts, creating programs that put artists to work. It was the golden age for entertainment, and the movies, music, and works of literature produced during this era hold a unique place in American culture.
Movies and Radio Captivate Americans Entertainment was big business during the 30s. 1935—2 in 3 houses owned a radio 1939—9 in 10 did 1939—2/3 of Americans attended one movie a week. Stars in the industries made fortunes.
Movies and Radio Captivate Americans Americans went to the movies during the Depression, as a means of escapism—sought relief through a good laugh, a good cry, a lyrical song, or seeing good triumph over evil. The Wizard of Oz —had all 4; promised weary audiences that their dreams really would come true. mZmBfnU mZmBfnU
Movies and Radio Captivate Americans Snow White and the Seven Dwarfs — animated film KYChq4 KYChq4 Top Hat —stared dancers Ginger Rogers and Fred Astaire. Gone With the Wind —Civil War epic CXMC4xY CXMC4xY
Movies and Radio Captivate Americans Movies reflect the public’s mistrust of big business and government—Gangster movies very popular. Often showed declining trust in the government and law enforcement—later showed confidence restored. Some showed the faith and strength of average people—Frank Capra Showed everyday people struggling with hardship.
Movies and Radio Captivate Americans Mr. Smith Goes to Washington — celebrated American idealism and triumph of the common man over adversity. The radio broadcasts featured comedians (Bob Hope), soap operas, (Guiding Light), variety shows and humorists (Will Rogers), and dramas (Lone Ranger)
Movies and Radio Captivate Americans
Also used for information—news, fireside chats, and political commentary. Music was also a diversion for hard times. Swing music played by big bands— introduces disc jockeys. Most popular vocalist Bing Crosby. HMlbYGA HMlbYGA
The New Deal and the Arts First funding for the arts by the federal government. Federal Art Project—offered a variety of opportunities to artists. Funded theaters, musicians, writers (recorded history and folklore of the nation), artists (murals on buildings), and photographers (Dorothea Lange— “Migrant Mother” documented the plight of the farmer). Grant Wood—American Gothic
The New Deal and the Arts
The Literature of the Depression Many featured working class heroes— blamed failure on political and business leaders. John Steinbeck— The Grapes of Wrath was about a family escaping the Dust Bowl only to encounter exploitation, disease, hunger, and political corruption. William Faulkner— The Sound and the Fury. Comic strips and Comic books—Flash Gordon, Dick Tracy, and Superman.