1. The Great Depression and the New Deal
Chapter 11

2. Essential Questions What were the causes of the Great Depression?
Why was Herbert Hoover unable to cope with the Great Depression?
What were the effects of the Great Depression?
How did the New Deal offer a new approach to confronting the Depression?

3. The Great Depression
The Up and down periods of business activity in an economy are the business cycle.
The down periods are called depressions, which are characterized by business failures, high unemployment, and falling prices.
The Great Depression was the worst in our history

4. Causes of the Great Depression
Overproduction- Manufacturers made and sold new products like cars or radios, but consumers didn’t have the money to buy them. The soon were producing too many goods to sell them all.
Speculation- Many people bought stocks in order to sell them for higher prices and get rich quickly. This drove stock prices up. People sometimes began buying on margin, which meant they only paid 10% of the stock price and borrowed the rest in loans.

5. Causes, continued
Shaky Banking- Good bankers invest their client’s deposited money wisely in order to receive interest (earn money on deposits). There were some shady bankers however that didn’t invest in the right things, and money was lost. The government didn’t regulate the banks.
Restricted International Trade- It was hard to sell goods overseas because of high tariffs.

6. The New York Stock Market Crash
On October 24, 1929, stocks started moving downward, and people started selling all of their shares. No one was willing to buy in order to save it, because no one would support low prices. This was known as Black Thursday. Some bankers tried to buy more time.
Black Tuesday- On October 29, the market crashed, and stock prices were at an all time low.

7. Effects
With the new economic problems and low prices, factories were forced to shut down. Demand for goods decreased. Workers lost jobs, and homeowners lost their houses. With no one to buy foreclosed homes, the economy was in a downward spiral.

8. Human Impact of the Depression
The nation lost it’s optimistic outlook.
Millions lost their jobs and depended on soup kitchens for food.
Writers like John Steinbeck and photographers like Dorothea Lange recorded the misery of the depression.

10. The Dust Bowl
A series of droughts (periods without rain) in the early 1930’s led to the dying of crops and farmers losing their farms because they weren’t making money. This was called the dust bowl.
John Steinbeck wrote articles on the Oakies (those who moved to migrant farmer camps in California). He also wrote The Harvest Gypsies and The Grapes of Wrath.

12. Mexican Repatriation
Mexican Americans came to America to escape the turmoil of the Mexican Revolution. They worked hard jobs for little money, and often lived in small communities called barrios. They were prohibited in Texas from attending “white” public schools.
Herbert Hoover signed the Mexican Repatriation Act in order to send some Mexican Americans back to Mexico and give their jobs to white American farmers in need of work.

14. Hoover Falters
Hoover remained true to his laissez-faire capitalism views.
He believed that giving direct aid to the unemployed of the Depression would hurt the “rugged individualism” incentive.
He believed that eventually, people would resume buying and things would pick back up, but there was a lack of aggregate demand (total demand) overall.

15. Hoover Picks Up
When he realized his plans weren’t working, he cut taxes, funded public projects, and established the Reconstruction Finance Corporation to give emergency loans to banks and businesses.
These policies came a little too late and Americans were unhappy with Hoover.
Little towns of shacks sprang up, called Hoovervilles.
By the end of his term, unemployment was at nearly 25%.

17. Franklin D. Roosevelt
Franklin Delano Roosevelt was nominated as a democratic candidate in He promised a New Deal to put Americans back to work.
He assembled the “Brain Trust” (a group of talented university leaders) to serve under him.
He was famous for his “fireside chats” where he explained his policies in conversational terms.
His Wife, Eleanor Roosevelt, was well known for her political activism and support for women’s rights.

18. Women in the Great Depression
Women had to make ends meet at home while the men searched for jobs.
In 1933, Eleanor Roosevelt wrote a book called “It’s Up to the Women” to encourage women to keep going.
Frances Perkins- The first female member of the U.S. Cabinet, and played a big role in many reform acts of the 30’s.

19. New Deal
Roosevelt submitted a flood of reform proposals in his famous First Hundred Days in office.
He explained the proposals in three terms: Relief, Recovery, and Reform.

20. Relief
These were meant to tide the people over till the economy recovered.
FDR declared a Bank Holiday, which closed all banks until they could be deemed financially sound by inspectors.
Emergency Loans were made available to people so they would not have to lose their homes.
The Civilian Conservation Corps, Public Works Administration and the Works Progress Administration gave jobs to the unemployed.

21. Recovery
FDR wanted to put money into the hands of the public to stimulate demand and spending.
National Recovery Administration and the Agricultural Adjustment Acts were used to put money into the economy.

22. Reform
This was to remedy defects in the economy so that a depression of this scale would not happen again.
The Tennessee Valley Authority, Securities and Exchange Commission, National Labor Relations Act, Federal Deposit Insurance Corporation, and Social Security Act were apart of these reform ideas.

23. Reactions to the New Deal
Liberty League- Conservatives who thought that FDR was trying to establish a popular dictatorship.
Francis Townsend- wanted citizens over the age of 65 to be given a $200 pension every month to encourage spending in the economy.
Huey Long- wanted to give each family a $5000 a year income by taxing the rich, but was assassinated before he could run a campaign.
Father Coughlin- gave radio speeches and was very anti-Semitic. Wanted Nationalization of banks.

24. Supreme Court and the New Deal
Supreme Court ruled two New Deal reforms unconstitutional (the Agricultural Adjustment Act and the National Industrial Recovery Act).
The NIRA allowed the president to make codes of fair practices for commerce in businesses.
Schechter Poultry v. US- appealed their conviction of failing to obey the act. Supreme Court voted in favor.

25. The Court Packing Scheme
After losing his battle in Schechter v. US, FDR wanted to get control of the court.
He proposed that the President could appoint a judge for every judge that is over 70 years old. This would give him six spots to appoint and give him the power.
His proposal was shut down and disliked by the public.