CHAPTER 33CHAPTER 33

Causes of the Great Causes of the Great DepressionDepression

Buying on timeBuying on time

Good as long as consumers buyGood as long as consumers buy Bad if credit tightensBad if credit tightens

Farm ProblemsFarm Problems

Over production Over production New technologyNew technology Loss of MarketsLoss of Markets No way of controlling productionNo way of controlling production

Unequal distribution of wealthUnequal distribution of wealth

1929 36,000 wealthiest incomes = 12 mill 1929 36,000 wealthiest incomes = 12 mill of those who made 1500 or lessof those who made 1500 or less

If the wealthy don’t pick up the spend and If the wealthy don’t pick up the spend and invest -- the little folk can’t pick up the invest -- the little folk can’t pick up the slack.slack.

Over expansion of production and Over expansion of production and consumers lacking sufficient income to consumers lacking sufficient income to purchase total output.purchase total output.

Bankers making unsound loansBankers making unsound loans

On landOn land In the stock marketIn the stock market

International trade International trade declinedecline

Stock market boom and bust Stock market boom and bust Fueled by margin loans – increased demand = Fueled by margin loans – increased demand =

increased priceincreased price Fear could bring disasterFear could bring disaster Black Thursday Oct. 24 prices begin to fallBlack Thursday Oct. 24 prices begin to fall J.P. Morgan & Co tries to prop up price by J.P. Morgan & Co tries to prop up price by

pumping in 30 millionpumping in 30 million Prices began to rise and stablizePrices began to rise and stablize Black Tuesday Oct 29 stockmarket fell bankers Black Tuesday Oct 29 stockmarket fell bankers

who were over extended could do nothingwho were over extended could do nothing

Effects of the DepressionEffects of the Depression

Run on the BanksRun on the Banks Hoover gets the blameHoover gets the blame Poor lived in paper shacks called Poor lived in paper shacks called

Hoovervilles covered themselves in news Hoovervilles covered themselves in news papers callled Hoover blanketspapers callled Hoover blankets

Hoover solutionsHoover solutions

At first against Government handoutsAt first against Government handouts Begins to assist railroads, banks, rural Begins to assist railroads, banks, rural

credit corporations and that would trickle credit corporations and that would trickle downdown

Against direct handouts to the people Against direct handouts to the people

Begins what becomes the New Begins what becomes the New DealDeal

Hoover damHoover dam Reconstruction Finance Corp. RFCReconstruction Finance Corp. RFC

A government lending bank - lent money to A government lending bank - lent money to big businessbig business

Strong New Dealish flavor -- pump Strong New Dealish flavor -- pump primingpriming

Helps labor with Norris La Guardia. Helps labor with Norris La Guardia. Anti Injunction Act 1932Anti Injunction Act 1932

Outlaws yellow dog contracts (anti union)Outlaws yellow dog contracts (anti union)

Bonus MarchBonus March

Vets march on Washington to receive Vets march on Washington to receive early payments on bonusearly payments on bonus

Hoover removes them by forceHoover removes them by force

Election of 1932Election of 1932

Republicans nominate HooverRepublicans nominate Hoover Democrats nominate Franklin D. Democrats nominate Franklin D.

RooseveltRoosevelt Roosevelt winsRoosevelt wins

Roosevelt and the DepressionRoosevelt and the Depression

http://www.americanrhetoric.com/speeches/fdrfirstinaugural.html

Declares a bank holidayDeclares a bank holiday

Emergency Banking Act was passed by Emergency Banking Act was passed by Congress -approved the closing of the Congress -approved the closing of the banksbanks

4/5ths found ok and allowed to reopen4/5ths found ok and allowed to reopen Congress will pass the Glass Steagal Act Congress will pass the Glass Steagal Act

which creates FDICwhich creates FDIC Uses Fireside Chats to restore confidenceUses Fireside Chats to restore confidence

The New DealThe New Deal

Roosevelt chooses a “brain trust” of great Roosevelt chooses a “brain trust” of great thinkers to come up with programsthinkers to come up with programs

Calls his programs the New DealCalls his programs the New Deal Uses the first hundred days of his Uses the first hundred days of his

administration to push it throughadministration to push it through

The three R’s of the New DealThe three R’s of the New Deal

Relief Relief RecoveryRecovery ReformReform

Some of the solutions to the Some of the solutions to the depression came from the theories depression came from the theories

of John M. Keynesof John M. Keynes

English Economist English Economist Prime the PumpPrime the Pump Government should spend in a deficit to Government should spend in a deficit to

boost the economyboost the economy

New Deal ProgramsNew Deal Programs

CCCCCCCivilian Conservation Corp -- most popularCivilian Conservation Corp -- most popular

18 to 25 year olds 18 to 25 year olds Conserve natural resources, clean up Conserve natural resources, clean up

national forests and parks, fight fires, build national forests and parks, fight fires, build trails etc.trails etc.

Some of the money made was to be sent Some of the money made was to be sent home.home.

TVATVATennessee Valley Authority – most radicalTennessee Valley Authority – most radical

Built dams on the Tenn. River to protect Built dams on the Tenn. River to protect against floods and produce electricity.against floods and produce electricity.

Two WW I plants would use electricity to Two WW I plants would use electricity to make fertilizer to help the farmers.make fertilizer to help the farmers.

Prohibition Repealed by Prohibition Repealed by the 21st Amendmentthe 21st Amendment

FHAFHAFederal Housing AdministrationFederal Housing Administration

Helps to refinance mortgages and provide Helps to refinance mortgages and provide money for loansmoney for loans

Provides insurance to lenders on Provides insurance to lenders on foreclosed mortgagesforeclosed mortgages

AAAAAAAgricultural Adjustment ActAgricultural Adjustment Act

Reduce surpluses in farm productsReduce surpluses in farm products Pay farmers not to grow cropsPay farmers not to grow crops Pay for the program by taxing industries Pay for the program by taxing industries

that take the raw products and sell them that take the raw products and sell them into finished goodsinto finished goods (mill wheat into flour)(mill wheat into flour)

NRANRANational Recovery Act – most complexNational Recovery Act – most complex

Codes of fair dealing – aimed to keep Codes of fair dealing – aimed to keep prices and wages up and do away with prices and wages up and do away with competition.competition.

Encouraged people to buy from these Encouraged people to buy from these companies by using the Blue Eagle.companies by using the Blue Eagle.

PWAPWAPublic Works AdministrationPublic Works Administration

3 billion dollars were given for government 3 billion dollars were given for government building projectsbuilding projects

Put people to work on hospitals, schools, Put people to work on hospitals, schools, post offices and other public buildingspost offices and other public buildings

CWACWACivil Works AdministrationCivil Works Administration

400 million dollars400 million dollars Spend little on bricks and more on wagesSpend little on bricks and more on wages Smaller projects – roads, parks, Smaller projects – roads, parks,

playgroundsplaygrounds Employed teachers in cities and rural Employed teachers in cities and rural

areasareas Very expensive and soon endedVery expensive and soon ended

WPAWPAWorks Progress AdministrationWorks Progress Administration

11 billion dollars11 billion dollars Put all kind of people to work writers, Put all kind of people to work writers,

musicians, artists, actors, etc.musicians, artists, actors, etc. Considered a boondoggleConsidered a boondoggle

Social SecuritySocial Security

Old age pensionsOld age pensions Paid for by employers and employeesPaid for by employers and employees

Fair Labor Standards ActFair Labor Standards Actand the Wagner Actand the Wagner Act

Set the minimum wage at 25 cents per Set the minimum wage at 25 cents per hourhour

The Wagner Act allowed workers to The Wagner Act allowed workers to Organize and collectively bargain.Organize and collectively bargain.

Dust BowlDust Bowl

UnionsUnions John L. Lewis head of the United Mine WorkersJohn L. Lewis head of the United Mine Workers

Organizes a union of unskilled laborers within the AF Organizes a union of unskilled laborers within the AF of L called the Committee for Industrial Organizationof L called the Committee for Industrial Organization

The AF of L suspended the CIO unions because they The AF of L suspended the CIO unions because they were unskilled and involved Blackswere unskilled and involved Blacks

In 1938 the Congress of Industrial Organizations was In 1938 the Congress of Industrial Organizations was formed with John L. Lewis at its head.formed with John L. Lewis at its head.

A Day for DemagoguesA Day for Demagogues

Father Charles CoghlinFather Charles Coghlin Huey P. Long Huey P. Long

Share the wealth program $5000 to every Share the wealth program $5000 to every family paid for by the rich.family paid for by the rich.

Dr. Francis TownsendDr. Francis Townsend Every senior 60 years or older would receive Every senior 60 years or older would receive

$200 a month provided that they spent it in a $200 a month provided that they spent it in a month. (would break the government)month. (would break the government)

Roosevelt the PresidentRoosevelt the President

Very confident Very confident he could not walkhe could not walk Won four elections 1932, 36, 40, and 44Won four elections 1932, 36, 40, and 44

Roosevelt and the Supreme CourtRoosevelt and the Supreme Court

Old men from past administrationsOld men from past administrations Declares AAA and NRA unconstitutionalDeclares AAA and NRA unconstitutional Roosevelt in his second term attempts to put 6 Roosevelt in his second term attempts to put 6

more judges on the court more judges on the court One judge for each Judge over seventy that One judge for each Judge over seventy that

would not retirewould not retire Congress rejects it as court packingCongress rejects it as court packing Very popular president but he does not get us Very popular president but he does not get us

out of the depression – he does ease the pain.out of the depression – he does ease the pain. WW II will pull us out of the depressionWW II will pull us out of the depression

CriticsCritics

Seen as socialist – communistSeen as socialist – communist Deficit 19 to 40 billion dollarsDeficit 19 to 40 billion dollars Hand-out state undermines the values of Hand-out state undermines the values of

thrift and initiative – no self reliancethrift and initiative – no self reliance Private enterprise stifled by planned Private enterprise stifled by planned

economyeconomy Failed to control the core of the Failed to control the core of the

depression -- just Band-Aids and aspirindepression -- just Band-Aids and aspirin