1. The Great Depression & The New Deal APUSH ch. 24

2. Causes? What caused the depression? –Structural causes: Agriculture suffered –Supply high, prices low Industrial sector grew unevenly –Overproduction and low wages –Profits passed along to owners, shareholders – most $ went to the top –Lower wages = lower purchasing power for the masses –Vital industries (e.g. RR, steel) lagged behind consumer good production –Global causes Worldwide depression caused by WWI Europe stopped buying US exports – less $$$

3. Causes? –Monetary causes Failure of the banking system – Federal Reserve decreased money supply Less money available for re-investment in companies $$$ was available to some (upper class) due to tax cuts Speculation & margin buying rampant – stocks purchased recklessly on credit –Borrowing 75% of stock price was common –Novices were investing heavily (and recklessly) in stocks –Prices rose rapidly…to levels too high –“bubble” burst Stock prices fell until they were worthless – payment defaults

4. Black Tuesday How did the Crash occur? –Oct. 29, 1929 – stock prices so low they were worthless Massive trading to try to artificially push prices up Made problem worse - $30 billion in lost stock prices Stock market crashes Banks lose money as speculators default on credit Banks close as people withdraw all funds Chain reaction of bank closings – banks always owe $$$ to each other, so if one closes…

5. Impact How hard did Depression hit? –GNP fell by almost 50% –Farm prices fall 60% –5500 banks closed by 1933 –National unemployment was at 25% (higher in some areas) –Many employed at reduced rates and hours –Many people lost (literally) every penny they had

6. Other problems Dust Bowl –By 1930s, Great Plains so over-farmed that soil erosion led to giant dust storms, and arid landscapes –Over 3 million rural families leave plains, most head to California Forms the backdrop for many Steinbeck novels

7. Response What was Hoover’s initial response to Depression? –Not much –Most people believed economy was cyclical, prone to ups and downs (like weather) –Hoover insisted local gov’t take action, businesses “stay the course” –As the Depression got worse, Hoover was forced into action National Credit Corp. to help small banks make loans Reconstruction Finance Corp. to make loans to large banks and insurance companies Too little, too late – didn’t work –Public blamed Hoover »Hoovervilles, Hoover blankets, etc. –result – Hoover & Republicans lose 1932 election

8. 1932 Election – no surprise here

9. FDR & The New Deal FDR comes into office in 1933 promising New Deal – what was the goal? –Industrial recovery via gov’t regulation and “pump-priming” –Agricultural recovery via reduction of supply (drive up prices) –Direct relief through local, state, and federal gov’t agencies

10. FDR & the Brain Trust FDR’s cabinet & advisors –Mostly upper class, Ivy-league educated elite Frances Perkins – Sec of Labor Harold Ickes – Sec of Interior Harry Hopkins – Sec of Commerce Henry Wallace – Sec of Agri. Eleanor Roosevelt – wife & social conscience –FDR’s advisors typically rejected laissez-faire philosophy Occasionally went further and adopted leftist principles FDR (and his inner circle) sometimes called “traitor to his class” –What does this mean?

11. Banking/Finance Emergency Banking Act – shuts down all banks, re-organizes & reinforces them, then reopens them (Bank Holiday) Economy Act – reduces federal salaries to reduce deficit Federal Securities Act – sets up SEC (Securities and Exchange Commission) to regulate stock market, prevent reckless trading Banking Act of 1933 – sets up FDIC to insure bank deposits up to $2500 Banking Act of 1935 – FDIC covers up to $5000 in bank deposits (restore faith in banks) Gold Reserve act – crime to possess or trade in gold – –gov’t buys up all gold, then melts it –US essentially abandons gold standard once and for all

12. FDIC Historical insurance limits –1934 - $2,500 –1935 - $5,000 –1950 - $10,000 –1966 - $15,000 –1969 - $20,000 –1974 - $40,000 –1980 - $100,000 –2008 - $250,000

13. Financial Relief Revenue Act – raises taxes substantially on upper income brackets Social Security Act – provides assistance for retirees, unemployed, families w/ dependant children, handicapped (Dr. Francis Townsend)

15. Industry & Labor National Industrial Recovery Act – creates NRA to regulate industries & set labor standards –Declared unconstitutional by SC, replaced by several programs Fair Labor Standards Act – sets fed. Minimum wage, 40- hr work weeks, overtime pay, ends most child labor National Labor Relations Act (aka Wagner Act) – protects rights of unions to organize, collective bargaining, and use of strikes –Sets up NLRB for arbitration – pro-union

16. Employment CCC – provides jobs for over ½ million Americans –Construction jobs in rural areas –Planted trees, forestry projects, etc. WPA – jobs in construction, arts, media –Employed over 3 million (largest employer in US) TVA – built dams, provided irrigation, hydroelectric power in South –Also programs to modernize southern industry Civil Works Admin. – temporary jobs to unemployed, mostly construction NYA – work-study programs, part-time job training for teens/young adults PWA – large scale construction projects

17. Agriculture AAA – raise agri. prices by reducing supply –Subsidies to farmers –Declared unconst., but replaced by another AAA in 1938 Farm Credit Act – helps farmers refinance at low rates Federal Farm Bankruptcy Act – limits ability of banks to repossess farms Taylor Grazing act – fed. Gov’t can regulate grazing to protect against overuse of land Soil Conservation & Domestic Allotment Act – same as AAA FCIC – Federal Crop Insurance Corp. – like FDIC for farmers – insures crops & livestock Farm Security Admin. – educ./econ. Programs for struggling farmers

18. Housing Home Owners Refinance Act – helps homeowners refinance, avoid foreclosure Home Owners Loan Act – helps people get loans to buy homes National Housing Act – gov’t standards for home-building, promotes mortgage loans Resettlement Admin. – relocates struggling urban/rural families to planned communities –Helps tenant farmers, sharecroppers

19. Arts Federal Art Project – commissions artists to make murals, paintings, posters in schools, hospitals, libraries Federal Writer’s Project – commissions writers to make accounts of American folklore Federal Theater Project – commissions dramatists/actors to put on stage production –All these designed to put $$ into economy, but also create artistic diversions from misery of depression All these were under the WPA –They made the posters for the agencies

20. Various things Communications Act – sets up FCC to regulate broadcasting –Also generates revenue by requiring radio (and later TV) stations to pay licensing fee Public Utilities Holding Company act – federal regulation of public utilities, esp. electricity Rural Electrification admin. – to bring elec. Power to rural areas Bankhead Jones Act – more funding for land-grant colleges –Also allows fed gov’t to take over damaged lands, fix them, use for parks, etc. Repeal of Prohibition (21 st Amend.)

21. Were FDR and the New Deal popular? 1936 Election

22. Obstacles What obstacles did New Deal face? –Supreme Court Ruled several New deal programs unconst. Schecter v US –Congress Blocked FDR’s attempt to expand SC to 12 members (and pack court w/ ideological allies) –Left-wing criticism Socialists & communists said New Deal didn’t do enough Thought FDR should restrict big business, not include them in recovery programs Huey Long – Louisiana politician who wanted to “soak the rich” –Right-wing criticism Conservatives felt FDR was leading US down road to socialism Zealots like Father Charles Coughlin attacked FDR and New Deal as dishonest, communist, Zionist, etc. –1937 Recession Why? –FDR tried to end programs too soon –Reduced money supply to curb possible inflation –Then re-instituted programs to recover from recession

23. Organized Labor Behavior during depression? –Formation of CIO –Many strikes Sit down strikes in auto industry Walter Reuther – United Auto Workers (UAW) Also UMW (United Mine Workers) under John Lewis FDR generally backed the unions

24. American Society & Culture Depression’s impact on arts: –Music, art, lit often reflected despair Steinbeck novels Songs - “Brother Can You Spare a Dime?” American Gothic (Grant Wood) –Lit. sometime went further & displayed radical leftist tendencies Clifford Odets Waiting for Lefty

25. American Gothic (Grant Wood)

26. Modern version

27. Society & Culture Distractions? –Movies Provided escapism & air-conditioning Gone With the Wind, The Wizard of Oz –Radio Besides news & music, provided series –Adventures, mysteries, soap-operas –Fireside chats by FDR –Music – jazz & swing (big band era) Benny Goodman, Duke Ellington, Count Basie, Glenn Miller

28. Legacy of New Deal COMPLETELY transforms American gov’t –Brings it into daily life for 1 st time –After New Deal, gov’t involved in countless ways –Many programs still around today (sometimes by other names, in different forms) Welfare & Social Security today Unemployment insurance Farm subsidies FDIC, SEC, FCC, still regulate finance & communication TVA still in South NLRB still handles labor disputes Still no gold standard Still have min. wage, max. hours, no child labor Arts projects later become National Endowment for the Arts Rich were taxed heavily until 1980s Gov’t still regulates building codes Gov’t still promotes loans for home-buying Gov’t is still part of process of aiding business, employment, etc.

29. Current Attacks A recent wave of academic attacks on the New Deal –Mostly by conservative historians and political analysts –Argue that FDR & New Deal went too far Made fed gov’t too big & intrusive Spent too much $$$ Was dangerously undemocratic & authoritarian –Supreme Ct packing attempt Set dangerous precedent Also argue New Deal wasn’t really very effective –Why?