Great DepresssionI. The Stock Market Crash of 1929.

Speculation fuels a wild stock market boom in the late 1920’s.

A. Only a small % of Americans owned stock, yet the money involved was enormous. Many invested on "Margin", borrowing $ to play stocks. People go into debt dreaming of riches

Stock Market Collapse1. Oct. 1929, The market crashes…

within one month it will be only 1/2 it's pre-crash value.10,000’s of investors lose their investment, many on margin.

2. GE fell from $396 in 1929 to $34 in 1932

3. Some people made money and sold short as the market fell.

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Causes….II. The Depression Begins. It’s

caused by a variety of factors….and it’s the worst in our historyA. The combination of: dangerous investing practices, few Gov’t regs on finance (stocks, banks, tc), decline of the strong consumer market of the 1920’s, lots of wealth in a few hands.

Causes1. FARMING: A decade long

agricultural recession, especially on the Plains, adds to the nation’s woes. ◦Price supports were attempted

(McNary-Hagen Bill) but vetoed twice by Coolidge

2. INDUSTRIES: RR , textiles faced competition; mining, lumber declined after WWI; consumer goods began to decline; housing peaked 1925.

Causes…3. Consumers have less $$ to spend

– high prices, stagnant wages, unbalanced distribution of income, overbuying

4. Living on Credit – Buy now, pay later; debt climbs without increase in income to pay for it

5. Uneven distribution of income – spent less because income was not keeping up with prices 

Effects…B. By 1930, Unemployment and

homelessness soar…especially in the cities. 1000’s of factories close. The numbers of people affected by the depression is enormous. 1930 4 million out of work by 1932 12 million were unemployed (reaches 25%)

Effects…C. The nation’s banks reflect the worsening

economy. Their failures are visible and frightening1. Bank "Runs" occur as people rush to withdraw savings from even healthy banks…causing them to also fail; 1300 in 1930; more close by 1932. People lose their savings accounts- People fear putting $ in banks. Without deposits, nation’s bank system is near collapse by ‘32.

Effects…2. Foreclosures reach record

levels as people begin to default on their home loans. Banks seized people’s farms, homes, and businesses. “Hoovervilles” of the homeless spring up.

3. People blamed themselves for their own misfortune

Solutions??C. Hoover is more aggressive in

tackling the Depression than any previous president, but his actions are mostly voluntary/underfunded (He will not allow the gov’t to go into debt.)1. Hoover’s beliefs limit his perceived options. He feels gov’t’s role is not to help the individual, this is seen by many Americans as cold-hearted and inflexible.

Solutions??2. Hoover does take some

aggressive legislative actions to try to help the economy, some are…a. Agricultural Marketing Act. Aimed at assisting struggling farmers, its budget isnot large enough to provide help to all those who need it. b. Public works programs

Solutions??c. RFC. (Recon. Finance Corp) is organized to loan gov't funds to industry and Banks, RRs, and insurance companies. It too is under funded; $500 million then to $3 billion

d. Home Financing Corporation – mortgages more available;

Bonus ArmyE. By 1931/32, Hoover's political status

(and the Republicans!) is destroyed by the Depression. 1. The Bonus Army incident in 1932 seals Hoover's political fate. 17,000 WWI vets march on DC, demand early payment of a promised retirement bonus. a. The US Army uses tanks/tear gas to subdue the marchers (under MacArthur). 2 Bonus marchers die. Hoover is blamed, and he is very unpopular by 1932

Election of 1932III. Election of 1932 focuses on one

issue: the Great Depression. A. Republicans stuck with the very unpopular, but proud Hoover. He wants a 2nd chance to fix it1. The hands-off policies Republicans stressed in the 1920’s are now thought by the public to be risky and foolish. Fair or not, people are angry with Hoover & the Republican Party

Election of 1932B. Dems nominate the reform

governor of NY Franklin Roosevelt. (FDR)1. He runs on his "New Deal" to end the Depression…an alternative to Hoover’s status quo

C. FDR wins easily. He has massive popular support, and a Democratic Congress to OK his ideas.

New DealIV. Roosevelt & the “New Deal”.

Like TR, he exploits the vast power of the federal government.

He feels government actions/spending can get the nation out of the Depression;

3 Rs – Relief, Reform, Recovery

New DealA. “The 100 Days” A huge package

of relief bills is passed very quickly (FDR sensed the public’s

need for quick action). Many of these quickly created “alphabet agencies” use concept of “Pump Priming” - get money back in the hands of businesses and people. Examples include…

New Deal Programs1. Banks: FDR has to restore public faith (and

willingness to deposit $) in banks. He uses of bank “holidays” (closing the banks to prevent more withdrawals). He also uses the Federal Reserve System to back up failing private banks.

2. FDIC. Insured bank deposits. Aimed at restoring people’s faith in US banks

3. SEC. This regulated the Stock Market, goal being to prevent future “crashes” and restore people’s willingness to invest.

New Deal Programs4. FERA: Direct relief funding to cities

and state budgets lacking enough local tax dollars.

5. AAA. Agricultural Adjustment Act. Sought to control overproduction and stabilize prices. Bought up surplus crops, reduced land under cultivation. a. Later declared unconstitutional; government cannot subsidize farmers for limiting production

New Deal Programs6. NIRA. It’s goal? Keep prices stable, control

production, reduce joblessness. The NRA was established to set up to control costly competition. The gov’t pushes this volunteer program with a huge propaganda campaign by the gov’t, “We do our part”A section guaranteed a worker’s right to organize

7. CCC. Civilian Conservation Corps. Provided jobs for unemployed urban males in rural work camps. (2.5 million). Maybe the most popular ND program.

New Deal Programs8. TVA. Tennessee Valley Authority.

Built hydroelectric dams in rural South. Brings

benefit of cheap electric power to Appalachia. It creates jobs and regional improvement.

9. CWA, PWA – got people back to work

Public OpinionB. The 100 Days legislation spends huge

amounts of federal money, and gives the US people the impression that FDR was acting decisively to end the Depression.

1. FDR skillfully uses the power of media to publicize the success of these agencies and convince the US people that his actions are working and necessary. ◦a. “Fireside Chats” on the radio are very effective

in explaining the New Deal to the people.

Opposition to New DealC. Various groups oppose FDR and his

New Deal, they do so for varied reasons.

1. The Supreme Court finds several agencies (the AAA and NRA for example) unconstitutional. a. FDR begins, by 1935, to see the Supreme Court as a frustrating opponent to his actions.

Opposition to New Deal2. Conservative Republicans. They fear

the money he is spending and his enormous popularity, They claim his actions are too radical and perhaps even Socialistic! DOING TOO MUCHBut the depth of the Depression makes Conservative viewpoints are unpopular, Repubs lose even more votes 1934 mid-terms. FDR has veto-proof control of Congress by 1934.

Opposition to New Deal3. Enemies on the Left are more of a danger to FDR.

They claim he’s DOING TOO LITTLE. They will appeal to the millions of Americans left poor by the Depression. a. The Communist Party increases membership to 75,000 by 1938. (7,500 in 1930). b. Dr. Francis Townsend proposes gov't pensions to elderly, if they spend it right awayc. Gov. Huey Long of LA promoted a "Share the Wealth" plan. Tax the rich, give to poorA major political threat to FDR, he is assassinated in 1935. d. Father Coughlin. Radio priest. Message: Jews - the real villains of the Depression.

Second New Deal4. By 1935, Opposition from the Left & stubborn

economy pushes FDR to increase gov’t efforts

C. The “Second New Deal” attacks the direct immediate needs of the people, not businesses.

1. The WPA: an enormous program that gave out huge #’s of gov’t jobs to the unemployeda. At less than private wages it employed millions in a stunning variety of vocations. ◦ 1. Hospitals, schools, post offices built (SAHS). Plays

produced, music written, films made◦ 2. NYA – National Youth Association

Second New Deal2. The Social Security Act of 1935 is the

most influential legislative act in US History. a. It provided old age pensions, employment insurance, disability payments. b. It was (and is) a set of gov’t support “safety nets” paid for by a tax on worker wages.

3. The REA. Rural Electrification Program. Brought juice to millions of rural farmers.

Second New Deal4. Labor. FDR was pro-labor. Unions supported

him, and strikes hurt chances of recovery.a. He supports the Wagner Act; it outlaws unfair anti-union practices, guarantees labor's right to organize and bargain collectively. One of the most influential labor acts in US historyb. Union membership soars in the 1930's. But some in labor takes advantage of situation1. The CIO forms. An aggressive union, urging tactics like sit-down strikes. John L. Lewis leads. A series of high profile strikes hit the US in 1930’s

Those not a part of New DealD. Two groups are left out of both “New

Deals.” Many oppose helping those not seen “important” 1. Blacks. FDR fears helping Blacks will cost him crucial Southern votes, so many of the New Deal agencies are restricted from Black participation.◦ a. Blacks did gain by the symbolic efforts

of Eleanor Roosevelt. (Marion Anderson, DAR)

Those not a part of New Deal2. Women did not make gains in

the 1930's. Several were appointed to high gov't positions (like Frances Perkins: Sec of Labor), but the Depression will reinforce the notion of women in the household…not in workplace/political office.

FDR Second TermE. FDR’s Second Term 1936-

1940. He wins a stunning landslide victory over Alf Landon in 1936. He has a clear popular mandate to continue his agression to solve the continuing Depression

FDR Second Term1. He decides to tackle the problem of the

Supreme Court, which has turned down several of his “New Deal” programs as unconstitutional. a. He attempts to "Pack the Court" by increasing the size of the court from 9-15. This’ll give him control over the court (the only branch he does not control!)b. This attempt fails, and costs FDR significant support. It's the most unpopular thing he did.

FDR Second Term2. 1937-38. The Nation’s economy tumbles back

into Recession. Many gains made by the “New Deals” are lost as unemployment soars and businesses fail. a. By 1938, many in America are doubting FDR’s ability to solve the 9 year long Depression.b. FDR, although still popular, is becoming politically vulnerable by 1938-39. 1. The Republican Party slowly begins to gain politically.

c. They point out the huge costs and questionable effectiveness of his programs.

Social ImpactV. Social Characteristics of the Era. The

Depression social impact was varied. Families with consistent income felt stressed in a bystander manner…jobless families were often devastated. A. America’s divorce/suicide rates will rise. Family size will drop. Families sometimes had to give new-born children up for adoption. Increased #’s of teenagers leave the home to help out. 1. Hard times were an impact on US families, but most survive the era intact and proud.

Social ImpactB. Throughout the Depression, families continued

to make the effort to enjoy life. 1. Travel. The US "Hits the Road" in the 1930's. Despite the Depression, car ownership increases during most of the era….even the poor tried to hold onto the car. Travel was a cheap option. a. Road construction increases as the gov’t funds massive construction projects to create jobs b. Americans become “tourists” as areas like Florida and Southwest become more accessible by car and passenger train.

Social Impact2. Leisure. Most Americans had to “make

do” with a limited entertainment budget a. Talking movies become common by the 1930's. 60-90 million attend each week ($.25)Many movie themes are escapist…make people feel good for a few hours. - Shirley Temple, a child star is the #1 box office star of the decade. b. Inexpensive activities like camping, hiking, ice/roller skating/board games are popular.

Social ImpactC. Dust Bowl –

1. Okies moved from mid-west to CA

2. The Grapes of Wrath3. CCC helped to plant grass

and trees

D. West – dams, like Hoover Dam, allowed for expansion