Rising stock market symbol of prosperity during 1920s “conspicuous prosperity”

Paper wealth (credit) masked rot in American Economy

Before crash: Unemployment already high due

to mechanization in factories Housing starts feel in 1927 Internationally production up

and demand down

Stocks steadily increased from March 1928 to September 1929

September 3, 1919 the Dow Jones Industrial Average of major stocks reached an all-time high of 381

Black Thursday October 24, 1929 Unprecedented volume of

selling 13 million shares

Stock prices plunged Next day, bankers bought

millions in stocks to stabilize prices Led by J.P. Morgan Jr.

Black Tuesday October 29, 1929 Bottom fell out Investors wanted to sell stock

16 million shares By November average down

to 198, in three years hit all time low of 41 Wealth “vanished”

America survived through other depressions b/c people lived on farms and could provide for themselves

This depression different since America was now urbanized

Uneven distribution of income Wages rose little

compared to productivity and corporate profits

Stock market speculation Get rich by “playing”

market mentality Buying on the margin

Excessive use of credit Belief that boom

would last

Overproduction of goods

Weak farm economy Prosperity of 20s never

reached farmers

Government policies Little business regulation High tariffs

Hurt US farmers and trade

Global economic policies War reparations crushing

Europe’s economy

GNP Dropped from $104 billion

to $56 billion in four years

Nation’s income Declined over 50%

Banks 20% closed

Not that uncommon Rural banks with low funds

the problem 10 million savings

accounts wiped out

Unemployment 1933 = 13 million people 25% of the workforce

Thought prosperity would return Urged Americans to

exercise voluntary action and restraint “best education in the world

for wandering men, women, and children traveling around the world”

Urged businesses not to cut wages, unions not to strike, etc.

Didn’t ask Congress for legislative action until summer of 1930 Believed in self-reliance

1931- called for tax increase Feared budget deficit

Hawley-Smoot Tariff 1930 Schedule of tariff rates Highest in history 31 to 49% on foreign

imports Thought it would protect

U.S. business Europe responded Trade declined for ALL

Debt Moratorium No more payment of

Dawes plan

Federal Farm Board Created 1929, powers

expanded 1931 Authorized to help stabilize

prices To modest to handle

massive overproduction

Reconstruction Finance Corporation (RFC) Created early 1932

(election year) Went against Hoover’s

conservative beliefs Measure to prop up

faltering railroads, life insurance companies, etc.

Gave emergency loans to major economic institutions $1.2 billion

Suicide rate 30% in 1932

Unrest on farms Farmers banded together to stop

banks from foreclosing farms Farm Holiday Association

Bonus march Summer 1932

One of the worst years of depression 1,000 unemployed WWI vets

marched to Washington to demand payment of bonuses Bonuses scheduled to be paid in 1945

Joined by thousands more Violent clash MacArthur called in to “disperse”

crowd 1,000 troops Eisenhower, Patton there

Negative pubic reaction More than 100 casualties 2 babies

Depression’s worst year

Republicans Re-nominated Hoover

Promised to repeal prohibition, keep tariff high, balance budget

Warned Dem. victory would worsen depression

Democrats Nominated NY governor

Franklin D. Roosevelt Barely, lots of criticism

Exuded confidence Pledged a “new deal”

Repeal Prohibition Aid for unemployed

Public works, aid to farmers Cuts in government spending

Only real issue to voters the depression

60% choose Roosevelt ticket

Congress won large democrat majority in both houses

Hoover a “lame-duck” 20th amendment

passed to shorten time between election and inauguration

The Man Only child

Wealthy background Experienced politician

NY legislator U.S. assistant to Navy 1920 Dem. Nominee for

Vice President Suffered from Polio as an

adult Couldn't walk unaided

Strengths Warm personality Gifted speaker Ability to inspire people

Eleanor Most active first lady in

history Social conscience

Wrote newspaper column

Philosophy Three R’s

Relief: for people out of work Recovery: for business and

economy Reform: of U.S. economic

institutions The Brain Trust

Group of advisors from NY Louis Howe

Chief political advisor Professors

Rexford Tugwell Raymond Moley Adolph A. Berle Jr.

Appointments Most diverse in U.S. history African-Americans, Catholics,

Jews, and women Frances Perkins

1st female cabinet member Secretary of labor

Sworn in March 4, 1933

Called congress into a special 100-day long session March 9- June 16 Congress passed every

law

Laws Bank Holiday

1st act of business Banks closed March 6

Nationwide, holiday 1st fireside chat

Banks would reopen after governments reorganized

Emergency Banking Act Permitted healthy banks to

reopen Procedures for failed banks

Repeal of Prohibition Beer-Wine Revenue Act Repealed 18th amend.

Fireside chats Started March 12, 1933 Reassured Americans Explained legislation

Financial recovery Emergency Banking relief Act Federal Deposit Insurance

Corporation Designed to protect savings up to

$5,000 Home Owners Loan Corporation

Refinanced loans, prevented foreclosures

Farm credit Administration Loans to farmers

Relief for the unemployed Federal Emergency Relief

Administration 1st welfare program Grants of federal money to

states and local governments for soup kitchens, other relief $500 million to state and local

agencies

Public Works Administration Money to build roads, bridges,

dams, other pubic works

Civilian Conservation Corps Employed young men on

projects on federal lands (18- 25)

Worked relief with environmental programs

By 1935- 500,000 employed

Tennessee Valley Authority Hydroelectric power program

Industrial recovery National Recovery

Administration 1933 1st National Recovery Act

Government control of production, labor and costs

NRA would enforce it Attempt to guarantee

reasonable profits for business and fair wages and hours for labor

Gave workers right to organize Used by Frances Perkins to ban

child labor

Farm production control Agricultural Adjustment

Administration Encouraged to reduce

production, raise farm prices Paying farmers not to plant

Civil Works Administration Created jobs Hired laborers for

temporary construction projects for government FDR worried about

creating a permanent underclass dependent on welfare

Securities and Exchange Commission 1934 Created to regulate the

stock market and to place limits on speculative practices that led to crash in “29 Placed Joe Kennedy in

charge Would know all the tricks

Federal Housing Administration Gave construction industry

and homeowners a boost by insuring bank loans for building new houses and repairing old ones

Off the Gold Standard Looked at in an effort to

halt deflation (falling prices)

NRA Lots of violations,

complaints 1935 Supreme court

declared unconstitutional in Schechter v. U.S. Regulatory powers

belonged to Congress not President

NRA regulated commerce within states

AAA Did not help farm

laborers/ migrant workers

Found unconstitutional in 1936 Illegal use of the

governments power to tax

Democrats re-elected to congress in 1934 Increased congressional

majorities

New legislation focused on relief and reforms

Relief Works Progress

Administration Spent billions to provide jobs

Work not handouts 1st year employed 3.4 million

Total over 8 million Construction, writing, art Offered youth money to stay

in school

Resettlement Administration 1935 Picked up slack of AAA provided loans to

sharecroppers, tenants and small farmers

established migrant worker camps

Reforms National Labor Relations

(Wagner) Act 1935 replaced NRA guaranteed right to join union

Rural Electrification Administration loans to electric cooperatives

Federal taxes Revenue Act 1935 increased

taxes of wealthy few

Most important of all new deal laws

Drafted by Frances Perkins

Created federal insurance program based on automatic collection of taxes from employees and employers throughout working career

Caused brief recession in 1937

Trust fund would pay monthly payments to retired over age 65

Establishe the principle of federal responsibility for social welfare

Laid foundation

Also receiving benefits under law: Unemployed Disabled Dependent children and

mothers

Economy had improved but still weak and unstable

Democrats Re-nominated F.D.R. Enormously popular among

workers and small farmers “one issue, its myself, and the

people must either be for me or against me”

Republicans Nominated Alf London

Supported by Business Part of American Liberty League

Group of business leaders that opposed F.D.R.

Fiscal conservative

Results Landslide victory for

F.D.R. Greatest asset ability to

restore confidence New coalition of

democratic voters African-Americans VERY important!!

Liberal Critics Socialists, extreme

liberals Clifford Odet -Waiting for

Lefty 1935 Said N.D. did too much for

business and too little for unemployed and working poor

Conservative Critics Thought government had

too much power Relief programs bordered

on Socialist American Liberty League

Al Smith

Demagogues Father Charles Coughlin

Weekly radio broadcasts From Detroit

Wanted to nationalize banks Called F.D.R. the “great

betrayer” and a liar Dr. Francis Townsend

Hero to senior citizens Proposed 2 % federal sales

tax to pay retired $200 a month Required to spend $ within 30

days Huey Long

“Kingfish” Gov. from Louisiana

“Share our wealth” 100% income tax over 1 million

dollars Everyman would be a King

Ran for Presidential nom. Attempted assassination

Most difficult challenge in F.D.R.’s first term Killed NRA and AAA

Plus 9 other measures All conservative judges

Court-Reorganization Thought re-election

meant he could solve court problem

Proposed bill 1937 President be allowed

to appoint additional justice for each justice over age 70.5

Reaction Called “court-packing”

bill Both Republicans and

Democrats upset 1st major congressional

defeat Opened floodgates

Aftermath Negative reaction Court already changing

views before bill 1937 upheld Wagner Act

and Social Security Act

National Industrial Recovery Act 1933 and Wagner Act 1935 Legalized unions Membership

increased

Formation of C.I.O. Committee of

Industrial Organizations 1935 Leader John L. Lewis Broke off from A.F.L. Welcomed all workers

in a particular industry regardless of gender, skill, or race

Strikes Automobiles

GM Plant Michigan 1937 Sit-down strike, organized by

CIO Strike successful United Auto

Workers union organized Not so lucky at Ford plant

Steel 1936 Memorial day 1937 Chicago

Republic Steel Company

Fair Labor Standards Act Minimum wage, max

workweek of 40hrs, child-labor restrictions

New deal slowed down

Recession 1937-1938 Causes

Government policy Social Security reduced

consumer spending Withdrew $2 billion from

circulation Keynesian Economics

Mistake trying to balance budget

Deficit spending needed to initiate economic growth

Worked- late 1938 Unemployment declined,

industrial output increased

Weakened New Deal Economy improved but:

Court-packing left distrust with congress and people

New coalition formed to block new deal legislation

Fears of Nazi Germany

Women Added pressures More women sought work

More government positions Still paid less than men

Dust Bowl Farmers Severe drought early

1930s Region became a dust bowl

“Black rollers” Called “dirty thirties”

Neighbors came together to try and save each others farms Called “penny auctions”

Thousands of “Okies” migrated to California John Steinbeck’s “The Grapes

of Wrath” Also called “exodusters” or

“Arkies”

African Americans Discrimination continued

Unemployment rate higher Often excluded from relief

programs Racial tensions in South

Anti-lynching bill defeated Scottsboro 8

Nine teenage boys accused of rape in Alabama

Framed, all-white jury Improvements

WPA, CCC = jobs Government positions

Fair Employment Practices Committee Executive order 1941 F.D.R. appointed African-

Americans to government positions

Native Americans Granted citizenship and

voting rights in 1924 Indian Reorganization

Act 1934 Repealed Dawes Act of

1887 Returned lands to control

of tribes and supported preservation of native culture Enabled natives to buy

back land John Collier

Commissioner of Bureau of Indian Affairs 1933 Improved life on

reservations Conservation and CCC

projects to employ natives

Mexican Americans Two million in U.S. Suffered from

discrimination Principal source of labor

in 1920s During depression high

unemployment and drought caused dramatic growth in white migrant workers

Thousands returned to Mexico 500,000 Voluntary and forced

Popular Actors Shirley

Temple Clark Gable Carol Lombard Mae West

Comedians Jack Benny George Burns

Literature Grapes of Wrath-

Steinbeck Music

Gershwin- “Porgy and Bess”

Swing dancing, music

What ended the depression?

FDR’s 1st term Annual growth up 9% Unemployment down

from between 25-33% TO 9-14%

2nd term Unemployment up

again Would not go down

until after 1941