Chapter 24Chapter 24Chapter 24Chapter 24

Key TopicsKey Topics

• Causes and Consequences of the Causes and Consequences of the Great DepressionGreat Depression

• The Politics of Hard TimesThe Politics of Hard Times

• FDR and the 2 New DealsFDR and the 2 New Deals

• The Expanding federal sphere in The Expanding federal sphere in the S and Wthe S and W

• Legacies and Limits of New Deal Legacies and Limits of New Deal ReformReform

The End of the Roaring The End of the Roaring TwentiesTwenties

• 1920's had been a 1920's had been a period of good economic period of good economic times times

• Tues. Oct. 29th, 1929Tues. Oct. 29th, 1929 - - NYC Stock market NYC Stock market crashed, causing a crashed, causing a depression that would depression that would last until 1942last until 1942

The Stock MarketThe Stock Market

• Public Purchases stock in hopes of a Public Purchases stock in hopes of a large return on their investmentslarge return on their investments

• The booming 1920's economy, led The booming 1920's economy, led banks to quickly make loans to banks to quickly make loans to investors investors – investors only had to pay for 10% of the investors only had to pay for 10% of the

stock's actual value at time of purchasestock's actual value at time of purchase

– BUYING ON MARGINBUYING ON MARGIN

SpeculationSpeculation

• STOCK SPECULATION - people STOCK SPECULATION - people would buy and sell stocks quickly would buy and sell stocks quickly to make a quick buckto make a quick buck– Led stock value increase (Ex: G.E Led stock value increase (Ex: G.E

stock $130 stock $130 $396/share) $396/share)• quick turnover didn't help quick turnover didn't help

companies companies they needed long they needed long term investments so they could pay term investments so they could pay bills (stock value was like an bills (stock value was like an illusion)illusion)

• Unscrupulous traders would buy Unscrupulous traders would buy and sell shares intentionally to and sell shares intentionally to inflate a given co.'s stock valueinflate a given co.'s stock value

• Gave a false sense of Gave a false sense of security/confidence in the American security/confidence in the American marketmarket

The Stock Market CrashThe Stock Market Crash

• In Oct. 1929, investors’ confidence In Oct. 1929, investors’ confidence dropped, leading to a market dropped, leading to a market collapsecollapse

• All tried to sell at once and bottom All tried to sell at once and bottom fell out of market = panic selling… fell out of market = panic selling… (many bankruptcies as banks called (many bankruptcies as banks called in loans)in loans)

• Only a tiny minority of people traded Only a tiny minority of people traded on the stock exchange, but they on the stock exchange, but they possessed vast wealth, and the possessed vast wealth, and the crash had a ripple effect on the crash had a ripple effect on the economyeconomy

The Ripple EffectThe Ripple Effect

• For the poor.......For the poor.......– mass consumption was already low mass consumption was already low

(poor could afford to buy little)(poor could afford to buy little)– unemployment rose unemployment rose no gov't no gov't

assistance at firstassistance at first

UnemploymentUnemployment

Purchasing PowerPurchasing Power ProductivityProductivity

Major ProblemsMajor Problems• 1. Over Production1. Over Production• 2. Uneven Distribution of Wealth2. Uneven Distribution of Wealth

– The The middle class middle class - they were not wealthy; they had - they were not wealthy; they had jobs b/c of the industrialization & consumerization jobs b/c of the industrialization & consumerization of the American market placeof the American market place

• depended on their salaries and when productivity depended on their salaries and when productivity declined they lost their jobsdeclined they lost their jobs

• cut back on their purchasescut back on their purchases• decline in consumption among the middle class decline in consumption among the middle class

influenced the whole countryinfluenced the whole country

Hoover’s ResponseHoover’s Response

• The gov't should play an The gov't should play an active role in the economyactive role in the economy

• VOLUNTARY NON - VOLUNTARY NON - COERCIVE COOPERATION COERCIVE COOPERATION – tax breaks in return for private tax breaks in return for private

sector economic investmentsector economic investment

• HOOVER MORATORIUM – HOOVER MORATORIUM – – put a temporary stop to war put a temporary stop to war

debt & reparations paymentsdebt & reparations payments– Euro. countries were to Euro. countries were to

purchase American goods purchase American goods instead to stimulate American instead to stimulate American economyeconomy

– Tariff WarsTariff Wars

Americans React to HooverAmericans React to Hoover

• Hoover was increasingly unpopular, but Hoover was increasingly unpopular, but he continued to try... he continued to try... he persuaded he persuaded Congress to establish the Congress to establish the RECONSTRUCTION FINANCE RECONSTRUCTION FINANCE CORPORATIONCORPORATION

• emergency loans to banksemergency loans to banks• Too little too late…Too little too late…

– Hoover wouldn't involve himself in any Hoover wouldn't involve himself in any programs of direct gov'tal aid to individuals -programs of direct gov'tal aid to individuals -didn't want to erode Americans sense of didn't want to erode Americans sense of "RUGGED INDIVIDUALISM“"RUGGED INDIVIDUALISM“

• Protest MovementsProtest Movements– Milk DumpingMilk Dumping– Bonus ArmyBonus Army– HoovervillesHoovervilles

1932 Election1932 Election

FDR and the First New DealFDR and the First New Deal

• A A revolution revolution in American society in American society - changed completely the way the gov't - changed completely the way the gov't

functionsfunctions

• First phase: economic reform –First phase: economic reform –– unlike Hoover, FDR believed gov't unlike Hoover, FDR believed gov't

legislation/involvement was crucial to legislation/involvement was crucial to stimulate the economy stimulate the economy

• Step 1 - dealt w/ the banking crisis Step 1 - dealt w/ the banking crisis – BANKING HOLIDAYBANKING HOLIDAY

The First New DealThe First New Deal

• Step 2 - stock market reformStep 2 - stock market reform– Security Exchange CommissionSecurity Exchange Commission

• Step 3 - to put more $ in Step 3 - to put more $ in circulationcirculation– went off the GOLD STANDARDwent off the GOLD STANDARD

• circulation, wages and prices circulation, wages and prices increasedincreased

• Created Inflation, causing dollar value Created Inflation, causing dollar value to lower- gave gov't spending power to lower- gave gov't spending power (Keynesian economics)(Keynesian economics)

100s Days and ABC’s100s Days and ABC’s

• NATIONAL INDUSTRIAL RECOVERY ACT NATIONAL INDUSTRIAL RECOVERY ACT (NIRA)(NIRA)

• NATIONAL RECOVERY ADMIN (NRA)NATIONAL RECOVERY ADMIN (NRA)• Response: LIBERTY LEAGUE – Response: LIBERTY LEAGUE –

– the Supreme Ct. overturned the NIRA & NRA, the Supreme Ct. overturned the NIRA & NRA, claiming that fed. gov't was exceeding its claiming that fed. gov't was exceeding its authority (by interfering in state authority (by interfering in state jurisdiction)jurisdiction)

• Other Orgs…Other Orgs…– CCC, FERA, AAA, TVA, PWACCC, FERA, AAA, TVA, PWA– Priming the PumpPriming the Pump

The “New” New DealThe “New” New Deal

• Unemployment still a problemUnemployment still a problem• SOCIAL REFORM ASPECT-SOCIAL REFORM ASPECT-

– immediate economic relief & reform addressed, New immediate economic relief & reform addressed, New Deal turned to Social Welfare Deal turned to Social Welfare

• Social Security Act (1935)-Social Security Act (1935)-– feared by opponents as "feared by opponents as "creeping socialismcreeping socialism"- this "- this

act typifies the WELFARE STATE - unemployment act typifies the WELFARE STATE - unemployment insurance, old age pensionsinsurance, old age pensions

– Problem: it took some $ out of circulation (payroll Problem: it took some $ out of circulation (payroll deductions) at a time when purchasing power was deductions) at a time when purchasing power was already low- also, it only covered the unemployedalready low- also, it only covered the unemployed

Social Aspects Cont.Social Aspects Cont.

• National Labor Relations Act National Labor Relations Act – legitimized unions and labor tactics legitimized unions and labor tactics

– it outlawed BLACKLISTS & other anti-union it outlawed BLACKLISTS & other anti-union practicespractices

Election of 1936Election of 1936

• FDR won easily (v Repub. Alf FDR won easily (v Repub. Alf Landon - Kansas governor) Landon - Kansas governor) – victory gave FDR a mandate to victory gave FDR a mandate to

continue his New Deal policies continue his New Deal policies

• First objective: to reorganize First objective: to reorganize the Supreme Courtthe Supreme Court– they disallowed some New Deal they disallowed some New Deal

legislation legislation – Court PackingCourt Packing– New AppointmentsNew Appointments

International IssuesInternational Issues

• In the late 1930's – new questions aroseIn the late 1930's – new questions arose– FDR concerned w/ int'l issuesFDR concerned w/ int'l issues– in 1939 he proposed no new major domestic in 1939 he proposed no new major domestic

reform measures (1st time in his pres.)reform measures (1st time in his pres.)• ELECTION OF 1940 - FDR broke with ELECTION OF 1940 - FDR broke with

tradition & ran a 3rd time tradition & ran a 3rd time – FDR v. Wendell Wilkie - the big issue here was FDR v. Wendell Wilkie - the big issue here was

American support of the Allies (G.B.), now American support of the Allies (G.B.), now embroiled in WWII v. Nazi Ger.embroiled in WWII v. Nazi Ger.

– both U.S. pol. parties wanted to support G.B. but both U.S. pol. parties wanted to support G.B. but to remain neutral - in fact a CONSENSUS had to remain neutral - in fact a CONSENSUS had developed b/n the Dems. and Repubs. developed b/n the Dems. and Repubs.

– both parties approved of (most) New Deal both parties approved of (most) New Deal legislation & wanted an isolationist foreign policy- legislation & wanted an isolationist foreign policy- FDR won in 1940 (and again in 1944)FDR won in 1940 (and again in 1944)

The Impact of the New DealThe Impact of the New Deal

• A A 3rd revolution3rd revolution in American culture and politics in American culture and politics– more gov't involvement but w/in the context of traditional more gov't involvement but w/in the context of traditional

U.S. democracy (not socialist…) U.S. democracy (not socialist…) • New Deal helped in stimulating the U.S. economy, but New Deal helped in stimulating the U.S. economy, but

only WWII would solve any lingering problemsonly WWII would solve any lingering problems unemployed found jobs in munitions factories and the unemployed found jobs in munitions factories and the

military as the U.S. became the military as the U.S. became the ARSENAL OF ARSENAL OF DEMOCRACY DEMOCRACY

• New Deal saw expansion of U.S. gov't in :New Deal saw expansion of U.S. gov't in :1) eco. - constant gov't intervention/deficit 1) eco. - constant gov't intervention/deficit

spending spending 2) social reform - welfare state - after this point 2) social reform - welfare state - after this point

the U.S. gov't was expected to play a role in any the U.S. gov't was expected to play a role in any economic crisis economic crisis

• So FDR fundamentally reformed (not transformed) So FDR fundamentally reformed (not transformed) American society.American society.

• In the South and West…In the South and West…

• How did the New Deal reshape How did the New Deal reshape western communities and politics?western communities and politics?– What specific programs had the What specific programs had the

greatest impact on the region?greatest impact on the region?

The Impact of the New DealThe Impact of the New Deal

The Dust BowlThe Dust Bowl

• What were the reasons for this What were the reasons for this ecological disaster?ecological disaster?

Depression-Era CultureDepression-Era Culture

• To what extent were the grim To what extent were the grim realities of the Depression reflected realities of the Depression reflected in popular culture?in popular culture?

• To what degree were they absent?To what degree were they absent?