the great depression, roosevelt, and the new deal brinkley ch. 23 and 24

The Great Depression, Roosevelt, and the New Deal Brinkley Ch. 23 and 24

General State of the Economy Leadership: Harding, Coolidge, Hoover, Roosevelt World War I placed the US in the role of a Creditor Nation European Allies owed US $10.5 Billion Dawes Circular Debt loans to Germany for repayment of war reparations Funding demonstrated international interdependence Kellogg-Briand Pact (1927): illegalizes wars of aggression

General State of Economy Federal Government more involved in Economy Think trust busting of T. Roosevelt Tax Cuts for rich and corporations (Revenue Act of 1926) Output of factories on the rise Industrialism Consumerism, Planned Obsolescence Stock market acceleration

Hardings Administration Corruption Isolationism The Washington Conference and the Far East Teapot Dome Scandal Oil reserves in Wyoming and California Bribery at the national level highlighted Reflected poorly on the entire administration

Coolidges Characteristics Silent Cal- not particularly chatty Restores faith in President Congress runs the country The Business of America is Business Andrew Mellon, Sec. of Treasury: Tax Revenue Act of 1926: free the wealthy from taxation so they can develop resources and create jobs through wise investing

Hoovers Political Philosophy Rags to Riches story: born in Iowa in poverty, became a mining millionaire Elected President in 1928 after serving Harding and Coolidge as Treasury Secretary Efficiency and Scientific Solutions to problems Missionary of the Capitalist system Equality of Opportunity and Individualism Laissez-faire economics Business and government working cooperatively to abolish poverty

The Economy Spirals Downward Pre-Depression Red Flags decrease in construction increase in unsold inventories Cut backs and lay-offs (rise in unemployment/mechanization) Decrease in farm prices Stock market speculation increases (margin buying) 10:1 = highest safe price, ready to fall 1929, 16:1= average stock ratio Isolationism from Europe prevented them from being able to repay debts

THE CRASH All through October 1929, as the smart money was quietly selling off shares of stock, market prices steadily declined. On October 24 the volume of shares sold reached 13 million and stock prices nosedived. Banks began calling in payment for loans they had issued to cover stock purchases. Borrowers scrambled to try to sell the shares they had bought with borrowed money, so that they could repay their bank. The massive sales drove stock prices down further. On October 29, Black Tuesday, the market lost 1/3 its overall value. The market would not rise even a point for the next 4 years.

The Results of the Depression Destruction of stored capital Wages drop more than 50% on average Unemployment Rises Imports drop sharply Investment in new capital plans cease 1/5 Banks Close and $ is lost Farmers lose their land Middle class loses savings People cant repay credit buys Hoover-villes (shanty towns) Breadlines and Soup kitchens

Hoovers Response Saw collapse as a natural event in the market Saw himself as a cheerleader: Prosperity is just around the corner Saw the solution in cooperative, voluntary actions by businessmen: reduce profits- keep men on payroll Donate to charity, so they can provide for the poor

Congress and the RFC Reconstruction Finance Corporation (1931-32) Govt aid to failing banks, RRs, Insurance Companies, etc. $1.5 billion to help them stay open Strategic blunder Congress appropriates $750 million for public-works projects (dams, bridges, streets repair, etc.) to raise employment

Hoovers Fall Neither the RFC or the public works programs were successful Criticized for being an enemy of the working man Safeguarding the free-enterprise system Protecting US from socialism/communism Democrat Reaction: Depression is a political lever Increase income tax on wealthy and corporations

FDRs Background Personal Background (find 3 facts for yourself [HW]) Inauguration sets the tone: The only thing we have to fear is fear itself Problems facing FDR Massive unemployment (25% of the population) Banking system in chaos City Welfare Programs are out of $$$

Roosevelts Philosophy Progressive Sense of the American Community Sympathized with Suffering/Fireside Chats NOT a radical or a socialist Distrusted selfish individualism Willing to experiment

The New Deal TWO PHASES: Phase One: 1933-1935 Problem: OVERPRODUCTION Solution: Reduce output by Centralized Direction Phase Two: 1935-1938 Problem: UNDERCONSUMPTION Solution: Provide Jobs (increase purchasing power)

The New Deal FDR gathered a gifted cabinet Sen. Cordell Hull (Dem, TN) Henry Wallace Harold L. Ickes Frances Perkins (first female in Presidential Cabinet) Unofficially, he gathered business advisors known as the brain trust

The New Deal No firm plan at the time of Inauguration Much was ad hoc made up on the spot FDR was flexible, willing to experiment or retool when things werent working A Keynesian approach to the economic issues

FDR and the Banking Crisis Week 1: Asks and receives (from Congress) broader executive powers than any other President (even Lincoln) had taken Launches 4 day Bank Holiday- an investigation of the Banks Use of the term Holiday made the action palatable to Americans Halts all trading in Gold (stops people from withdrawing $$$ and putting it in other places)

3-Pronged Approach to Banks Solid Banks (Good) What investments did they make? These were re-opened Bankrupt Banks (Bad) Imprudent investments = loss of $$$ Beyond repair; closed or liquidated to pay off investors Questionable Banks (Borderline) Loaned them $$$ using Hoovers RFC

The First 100 Days AKA The First New Deal Business and National Recovery Administration (NRA) Businesses allowed to set prices and production limits Unions could collectively bargain over hours/wages Owners/Mgmt HAVE TO acknowledge unions Workers won specified max. hours and min. wages

CLOSE-UP: The NRA RESULTS of NRA Creation of approx. 2 million jobs Extended protection of Workers Problems of the NRA Progressives are unhappy (monopolies) Small businesses are sometimes squeezed out Enforcement difficulties Schecter v. US, 1935: declared NRA unconstitutional Highly conservative SCOTUS delivers blow to FDR

The First 100 Days The Agriculture Adjustment Administration (AAA) Agricultures problem construed as OVERPRODUCTION AAA called for Federal Controls over Production How much & What is produced Producers of basic commodities (grain, wheat, dairy, cotton) received federal payments (subsidies) for limiting production

CLOSE-UP: The AAA Basic Goals of the AAA: Raise income by limiting production Refinance farm mortgages (through land banks) Problems with the AAA: Accusations of Socialism Agricultures most destitute were left out Tenants and Sharecroppers **In order to get land, you must own land**

The First 100 Days Regional Planning: The Tennessee Valley Authority (TVA) Building dams (Pickwick) and bridges Provided electricity to rural South Reclamation (reclaiming land)= productive use of previously unused land

CLOSE-UP: The TVA Different from other New Deal Programs Established with a board made up of private citizens, not politicians Created Jobs (specifically in Construction)

The First 100 Days Relief Programs Civilian Conservation Corps (CCC) Used for conservation of natural resources (timber, soil, water) AKA the Rangers Federal Emergency Relief Administration (FERA: 1933- 38) Relieved hardships caused by poverty and draught Taken over by WPA in 1938 Civil Work Administration (CWA) Hired actors to give free shows Librarians to Organize Books

The First 100 Days First New Deal began the recovery, but didnt complete it Unemployment dropped to about 25%, still extremely high (had been 3.2% in 1929) Bank deposits grew by about $6 billion, stabilizing the bank industry GNP rose to over $91 billion, from a 1932 low of $74 billion

Roosevelt and Shifting Ideas Roosevelt was the Power Center First Great Media President (FIRESIDE CHATS) Communicated w/ people as a real person Done through radio, allowing him to bypass the press Guarded his power jealously (did not delegate authority) Informal one man rule

CRITICISM OF THE NEW DEAL By 1935, FDR was criticized by Republicans for having done too much, and by Democrats for having done too little. Conservatives founded the American Liberty League in 1934, to generate anti-New Deal advertisements. Tried to field anti-FDR candidates, unsuccessfully From the Socialist Wing: Huey Long and the Share Our Wealth Program Govt confiscates income above a certain level Redistributes it to less fortunate Popular in extremely poor, Southern states (like LA) Never passed by Congress

CRITICISM OF THE NEW DEAL FDR HATES deficit spending Criticized for too much cooperation with Business (NRA) Keynesian Principles Huge govt spending for jobs ($$ from taxes, borrowed, etc) Increased purchasing power Put banks under public control RESULT: Works Progress Administration (WPA) Appropriation of $5 billion for work relief Govt funneled more than $11 billion through the WPA for small-scale projects Provide jobs and beautify America at the same time MEMPHIS ZOO was a WPA project

The Second Hundred Days AKA The Second New Deal Social Security was the lynchpin of the Second New Deal. It was not a work relief program, but a tax/pension program that guaranteed a living income for senior citizens whose adult children could not support them

SOCIAL SECURITY Social Security was criticized by the American League as being communistic, but the political capital FDR gained by helping the country look after grandma was undeniable. Social Security quickly became an expectation in the minds of Americans

EFFECTS OF THE NEW DEAL The New Deal established a welfare society DEFINITION: a society in which the government expects to, and is expected to, provide a safety net below the welfare of the citizens. Government will always take up any slack in individual safety and well- being when the economy fails.

REALIGNMENT IN 1936 1936 was a re-aligning election, bringing new voters into the Democrat party: Midwest farmers in large numbers, helped by the AAA Unions, and large numbers of urban factory workers Black people, who had traditionally voted Republican

ROOSEVELTS ATTACK ON SCOTUS FDR attempts to pack the court Fill the court with his supporters 1937 Judicial Reorganization Bill Defeated by Congress Seen as an overstep of Presidential authority/violation of separation of powers between branches But the Court began to look more gently on FDRs programs The Congressional challenge to the court scheme had make FDR more aware of his boundaries.

THE NEW DEAL FDR slowed government spending in 1937 in response to partial recovery, and the fragile successes collapsed. 2 nd recession began in 1937. FDR proposed new WPA spending in 1938 and the recovery sputtered to life again.

THE NEW DEAL Other Second New Deal programs to know: Farm Security Administration lent money to farmers to buy land and equipment A second AAA to prop up farm prices FLSA, which established a minimum wage

THE NEW DEAL FDR signed the Fair Employment Practices Act guaranteeing consideration to minority businesses in obtaining government contracts John Collier of Bureau of Indian Affairs pressured an end to the Dawes Act and restored tribal ownership of Indian lands

THE NEW DEAL Mexican-Americans benefited least The USA ended its lax enforcement of cross-border migration, heavy during the 20s, as jobs became scarce. Mexican-Americans in large numbers moved back to Mexico; M/A population dropped by 40% during the 1930s

THE NEW DEAL Women in all but the pink-collar jobs were left largely out of New Deal programs. Protective legislation was more popular for women than equality of opportunity legislation; they protected women out of practices such as overtime, which might actually have earned them more pay.

THE NEW DEAL NRA codes were complicated, causing critics to call the New Deal the National Run-Around Recovery not happening fast enough to suit many factory workers Thus labor union membership actually increased, especially after NLRA was passed.

THE NEW DEAL CIO was founded in 1935 by John L. Lewis, to organize unskilled industrial workers on a scale similar to AFL. CIO organized by industry, not by skill: all auto workers of whatever level, all electrical workers, all teamsters, all steel workers, etc. Strong challenge to AFL strength

THE NEW DEAL CIO pioneered the sit down strike General Motors recognized the CIO as workers official bargaining agent in 1937, a huge victory for CIO CIO membership tripled that year By 1940, CIO membership outnumbered AFL (the two merged in mid-1950s)

THE NEW DEAL in RETROSPECT THE CONSERVATIVE VIEW (1950s) Did not like the New Deal Thought it was a dangerous revolution Allowed for too much govt control and Executive Power

THE NEW DEAL in RETROSPECT THE NEW LEFT or LIBERAL VIEW (1960s) Too tame; way job New Deal was not enough H-A-R

THE NEW DEAL in RETROSPECT MILLENIAL VIEW (2000s) Crucially important transformation in government Greatly enlarged the role of the Federal Government Instilled in Americans a sense of security that the government would act in times of crisis

POPULAR CULTURE during THE NEW DEAL All about ESCAPISM Let people forget their troubles Little Rascals (the Originals), Bob Hope, Bing Crosby, The Marx Brothers, Musical comedies SWING MUSIC and BIG BANDS (well come back to this) Movies were cheap and popular Saturday serials (Buck Rogers, Flash Gordon) Comic books (Dick Tracy, Superman) Literature: Faulkner, Hemingway, Steinbeck

the great depression, roosevelt, and the new deal brinkley ch. 23 and 24

Documents

poverty slide

market prices

shares of stock

entire administration

wise investing slide

wars of aggression slide

stock purchases

economy spirals