GREAT DEPRESSION AND THE NEW DEAL Hard Times in the 1930’s

What was the Great Depression?  The worst economic crisis of the century  Over 13 million people unemployed  That’s 35 % unemployment / 50% for African- Americans and Latinos  A crisis in the banking industry  “Dust bowl” as a result of drought and poor farming practices  Farmers lost crops  Many people lost their homes  A social and psychological crisis

Three areas of problems Consumer spending: Credit Banking industry: Reckless practices Farming Sector: Dust Bowl overproduction

normal business cycle

Great Depression Business cycle

Business cycle since the Great Depression: healthier

What caused the Great Depression?  Unequal distribution of wealth  Stock market crash of 1929  Industrial overproduction – farmers and businesses were producing more goods than could be bought and used.  Easy credit  Banks had made unwise loans  Banks lent too much money  People could not pay back their loans

Causes of 2008 “Recession”  Deregulation of banking industry leads to reckless home lending practices (ARM loans) and to inflated home values  Homeowners used equity in homes to take out loans (used houses as ATM machines)  Stagnant (low wage growth) wages  Easy credit  Jobs continuing to move overseas  Unequal distribution of wealth

EFFECTS Great Depression 2008 “recession” EFFECTS Great Depression 2008 “recession”  Stock market crash  Bank failures  Loss of people’s money  Widespread unemployment over 25%  50% foreclosure rate on existing mortgages  Homelessness  divorce rate  “Hoovervilles”  Rise of movie industry  Housing market collapse  foreclosure rates : CA, NV, AZ  unemployment  Rise of tent cities  Banks / investment firms bailed out before the American people  Budget cuts  Tightening of credit

Presidential leadership Early Depression era 2008 Presidential leadership Early Depression era 2008  Hoover (R) 1929 – 1933  “Rugged Individualism”  Private charity  Some loans to help business create jobs  RFC – Reconstruction Finance Corporation  Bush (R) 2001 – 2009  Bank bailouts  $250,000 amount of money insured in bank accounts  food stamps

Presidential leadership  FDR  Relief, recovery, reform  Government created jobs: New Deal – specific individual programs  “Alphabet agencies” : CCC, WPA, etc CCC, WPA, etc  Dealt with long- lasting reform- Social Security, FDIC  Obama  Relief, only some weak reform/ recovery efforts  ARRA – American Recovery and Reinvestment Act  Provides extended benefits for unemployed plus funds states can apply for “shovel –ready projects.”  Short –term relief, hope that private industry will create jobs, but that is not happening

Presidential leadership FDR AND THE NEW DEAL

FDR + New Deal continued

Presidential leadership ARRA ARRA

ARRA in Kentucky

Causes: Unequal Distribution of Wealth  No middle class  However, because of the availability of credit, people are “buying” goods

Buying on credit creates a false demand for products  Buying on credit created false demand   What happens to demand when people have reached their credit limit?   Remember that banks have made some unwise loans as well.

Industrial Overproduction = too many products and not enough buyers  WAGES NOT KEEPING UP WITH INFLATION  SUPPLY GREATER THAN DEMAND

Chain reaction Fewer goods are sold. Demand drops. In order to stay in business companies cut wages People lose their confidence & start saving their money Demand drops even further. Companies are forced to cut costs by laying people off Even more people Lose their confidence And spend less money People lose their jobs. The Spiral Of Depression

Stock Market Crash Stock Market Crash  Many stocks purchased  Stock prices fell  Huge sums of money lost Thursday, October 24, 1929

Black Tuesday

 Five days before the actual crash, (known as “Black Tuesday” or the “Big Crash”) there was a major sell-off of stocks due those falling prices. As the prices continued to fall, panic struck causing even more calls to pour in to sell stocks. The brokers demanded cash to cover their loans and when the investors couldn't come up with the extra money, they had to sell their stocks leaving them at a loss of money. The dumping of so many stocks on the market jolted investors’ confidence and caused prices to plunge. The plunge in those prices was wiping out the savings of millions of Americans who had invested in the stocks. The Dow had lost over 500 points making the stock market finally crash on October 29, Prices sank to a shocking new low as investors dumped over $16 million shares of stock on the market leaving shareholders at a loss of some $30 billion. Then by November 13th, the prices had hit rock bottom. With all of this money loss and panic, it was sure to cause more problems for the people in the future that was soon to come.

“Migrant Mother”: The Face of the Great Depression

The Results  Bank Failures

The Results: Unemployment

Unemployment

Dustbowl A traveler noticed a nice new hat by the side of the road, and he stopped to pick it up. Under the hat was a man, buried up to his neck in the dust! As he dug the poor fellow out, the traveler asked if he wanted a ride into town. "No, I'll get there myself," the man replied, "I'm on a horse." (Excerpt from THE DUST BOWL by Tricia Andryszewski, p. 33.)

Poor farming practices + drought = Dustbowl

Dust clouds + high winds = terrifying experience

What areas were affected by the Dust Bowl?

OKIES: Refugees from the Dust Bowl. They usually went to California

The Results: HARD TIMES  Loss of homes  “Hoovervilles” Here were all these people living in old rusted-out car bodies.... One family... [was] living in a piano box. This wasn't just a little section, this was maybe 10 feet wide and 10 feet long. People living in whatever they could junk together...."

The Results: Soup kitchens

The results: People on “ relief ”

The results: Social Unrest: Fear of a Socialist Revolution

The Results: Social unrest and labor activity

 Depression

Depression

Depression

Did everyone suffer during the Great Depression?

Two Presidents respond to the Depression: One fails and the other changes the role of government forever!

Hoover fails to respond effectively to the Depression  “rugged individualism”  Thought government relief would be bad for people’s character  Voluntary associations  Charity  Failed to recognize how big the economic crisis was

FDR and the New Deal increase the size of the federal government and bring it into our lives

Worldwide Depression leads to social and political unrest

And the rise of dictators in Europe and Japan

But many in the US are burying their heads in the sand….. AMERICA FIRST!

America First movement..

1933 – FDR TAKES OVER – AND JUST IN TIME

The New Yorker Magazine’s view of the inauguration!

Election of 1932

FDR: The nation’s only 4 term President. Served through the Great Depression and WW II

Families on Relief

“The only thing we have to fear …..is fear itself” “Our greatest primary task is to put people to work” Franklin Delano Roosevelt

FDR: “This generation of Americans has a rendezvous with destiny”

FDR inspires confidence FDR inspires confidence

A New President and a New Deal  I NEVER FORGET THAT I LIVE IN A HOUSE OWNED BY ALL THE AMERICAN PEOPLE AND I HAVE BEEN GIVEN THEIR TRUST.” FDR

Reversing the Spiral of Depression Government Spending $ Alphabet Agencies More Jobs More Spending Demand for goods increases More goods have to be produced More people with Jobs = more pay $ More Spending Demand for goods increases More goods have to be produced More Jobs More Pay = More Taxes Cycle of Prosperity! Democrats called this Process ‘Pump Priming’

FDR’s New Deal: Relief, recovery, reform  Relief for the needy  Jobs provided  Banking, Business and government reformed

FDR gets to work: The First 100 days  Emergency Banking Act  Bank “holidays”: banks are ordered closed on certain days  Glass – Steagall Act creates FDIC: Federal Deposit Insurance

The Alphabet Agencies

FDR’s New Deal: Government grows and takes over parts of the economy  AAA – Agricultural Adjustment Act  CCC – Civilian Conservation Corps  NRA – National Recovery Act  WPA – Works Project Administration  PWA – Public Works Administration  SSA – Social Security Administration  REA – Rural Electrification Administration  TVA – Tennessee Valley Authority

Fireside Chat: May 7, 1933

AAA

CCC: Employed young men for outdoor work. Units were racially segregated

WPA – Works Project Administration

The WPA put artists to work

WPA

Dorothea Lange documents the Depression for the FSA

Her most famous photo: Migrant Mother (and how a photo –and a photographer- can lie)

Dorothea Lange documents Japanese internment 1942

Court – packing scheme: FDR declares war on the Supreme Court FDR’S SURPRISE MOVE TO ADD MORE JUSTICES TO THE SUPREME COURT DIDN’T WORK BUT SCARED IT INTO PASSING HIS NEW DEAL LEGISLATION

Homework: A New Deal for the Arts  A NEW DEAL FOR THE ARTS WEBSITE A NEW DEAL FOR THE ARTS WEBSITE A NEW DEAL FOR THE ARTS WEBSITE

Problems and Criticisms of the New Deal  Some programs were wasteful  Charges of socialism  At first, the U.S. Supreme Court struck down some of FDR’s New Deal programs  FDR responds to this threat to his New Deal with the court- packing scheme