Chapter 22: Managing the Great Depression, Forging the New Deal

Numbers of the Great Depression

The economy collapsed in America according to any reasonable measure.

• GDP went from 103 to 58 million

• Consumption down 18%

• Construction down 78%

• Private Investment down 88%

• ~9000 banks closed

• ~100,000 businesses failed

• Corporate profits down from 10 to 1 billion

• Unemployment climbed to 25%

• 15 million people out of work by 1933

International Effects of the Great Depression

While it was centered in the US, the Great Depression had global effects as well. Germany preceded in economic downturn due to war debts in 1929, but once it started in the US, it quickly crossed borders into Latin America and the ocean into Europe.

Issues in Recovery

The international gold standard inhibited ability to bounce back from the Depression. Was vulnerable to downturns in the economy as nations could not simply introduce more money into the economy on a whim

Hoover’s Response to Depression

Hoover and his Republican Congress implemented traditional beliefs that it was upon the individual to deal with the consequences of economic hardship and that wealth or lack thereof was simply deserved. He told Americans to just work harder. he also cut federal taxes to encourage private spending.

His adherence to the Gold Standard lengthened the crisis, refusing to follow Britain and Germany in abandoning it. He feared it would weaken the dollar, but instead reduced the economy’s ability to recover.

Overall was too stubborn and clung too long to his ineffective beliefs, making him unpopular in the eye of the public. He did actually act, but too little too late and not enough to truly address the crisis.

Smoot-Hawley Tariff

A tarrif implemented in 1930 that sparked retaliatory tarriffs and decreasing foreign trade in a time with already weak economic standing. Undermined American interestes.

Reconstruction Finance Corporation

The most active of Hoover’s initiatives, providing loans to businesses, railroads, and banks. Was still not aggressive enough, as with most of his policies

New Vocabulary

• Hoovervilles - shantytowns named after the unpopular president

• Hoover blankets - The practice of using newspapers as blankets.

• Farmer’s holiday - Joined Farmer’s Holiday Association to protest falling commodity prices that were harming their liveliehood, doing a resistance by cutting off supplies and barricading roads

Results of Layoffs

Especially in industrial jobs, layoffs lead to massive strikes that often turned violent, leading to conflicts between striking workers and national guard of states such as the case of Kentucky coalminers striking over 10% paycut in 1931. In 1932, a worker confrontation between workers of Ford and security forces lead to deaths and injuries on both sides

The Bonus Army

A large group of jobless WW1 veterans that went to Washington DC to demand payment of pensions pencilled for 1945 as they were struggling in the moment. Unsucessfully lobbied congress along with gathering, Hoover eventually deployed troops, losing even more popularity

Election of 1932

Republicans renominated Hoover and Democrats nominated governor of NY Franklin Roosevelt, cousin of Teddy. He was partially paralyzed from Polio but won handily, taking office in March of 1933, which was about rock bottom for the nation.

Franklin Roosevelt

Quickly grew an affinity with ordinary americans who called him FDR. He hosted radio fireside chats to connect with his constituents, responding to the letters flooding in. Expanded presidential powers, following a trend of previous presidents

Hundred Days

A time where Roosevelt and a cooperative congress passed 15 bills to fight the Depression. Addressed bank failure, agricultural overproduction, slump in manufacturing, and massive unemployment.

Bank Reform

Seeing crisis in failing banks and more threatening to do so, Roosevelt called a Bank Holiday and talked with congress, eventually giving banks a plan to reopen if they had sufficient cash reserves. FDR reassured Americans and lifted their confidence in banks. Less failed, more people deposited money.

Glass Steagal Act insured deposits and prevented banks from making risky investments with ordinary customers money.

Diverted from gold standard and lowered interest rates.

Agricultural Reform

Agricultural was stuck overproducing in comparison to undermanufacturing. The government passed the Agricultural Adjustment Act (AAA), giving cash to farmers that cut production on seven products (wheat, cotton, corn, hogs, rice, tobacco, and dairy products). Worked to stabilize farm economy but disproportionately helped large farmers rather than sharecroppers and tenant farmers.

This disproportionately harmed black farmers because the white large farmers refused to distribute payments, forcing nearly 200k black families off of the land

Industrial Reform

Set up the National Recovery Administration which in turn created governing bodies for individual industries. They regulated wages, quotas, and prices. Was voluntary but hoped cooperation would fix economy

Home Effects of Depression

Feared unemployment and enviction. Roosevelt petitioned congress to pass relief despite budget concerns, they did so, establishing Federal Emergency Relief Administration which provided funds to state programs

Putting the Public to Work

Didn’t want people to rely on welfare so they created jobs. Create PWA (construction jobs building dams) and CWA (provided jobs doing infrastructure construction). CCC did conservation work, bolstering national infrastructure and parks.

Housing Fears

Many Americans stood to lose their home when the 20s housing bubble burst. 500k people lost their homes from 1930 to 1932. Congress created Homeowners Loan Corporation which helped over 1 million to keep homes. This with Federal Housing Administration and Housing Act of 1937

21st amendment

Prohibition repealed to create jobs and stop crime.

Stock Reform

SEC created, Securities Exchange Commission to regulate market. Power over how stocks were bought and sold and prevent insider trading. The Banking Act gave president control over board of governors, putting the reserve in washingtonian hands instead of private bankers

Critics of the New Deal

Economic Conservatives did not like the New Deal. FDR was a class traitor, decried it as socialist and reckless spending. Formed American Liberty League, democratic and republican business conservatives.

National Association of Manufacturers opposed new deal with radios and campaigns with media, forging bonds with conservatice politicians.

Schechter v. United States

ruled the National Industrial Recovery Act unconstitutional, breaking a pillar of the new deal as they said the federal government could not regulate intra state trade.

Supreme Court also struck down Agricultural Adjustment Act, the Railroad Retirement Act, and Frazier-Lemke Act (debt-relief law)

Francis Townsend

Leftward critic who promoted elderly pension plans to circulate jobs and support the elderly, sided with ordinary citizen over big business

Huey Long

Direct political threat to FDR, wanted to Share Wealth, take any money over 1 million dollars and redistributing to workers, very popular very pro people and anti corporation but was assassinated before making any more waves.

Father Charles E. Coughlin

Did radio shows criticizing the New Deal as Communist, instead calling for populist free silver. Called to nationalize banks. Politicians tried to stay on his side as he was very influential as a religious figure. Turned to anti-semitism and fascism by end of decade.

Second New Deal

FDR moves left in face of criticism, openly criticizing the uber wealthy. Countered populism by adopting it into his programs

Creating a Welfare State

Part of that Second New Deal, emphasized creation of a social safety net for citizens. Involved the new Social Security Act which created a pension system, unemployment wages, payments to widowed mothers and the disabled. Social Security was one of the most popular government programs in history.

Labor Support

National Industrial Recovery Act guaranteed right of workers to organize into unions, prompting waves of strikes and worker demands. The Act was voided by the Court, and new legislation was written in the Wagner Act to once again establish that right. Banned union suppression and established National Labor Relations Board (NLRB) to protect worker’s rights to organize and bargain.

New Deal liberalism

Rebranded liberalism from supporting free market policies and weak government, posing against conservatives and really making a welfare state to provide basic welfare the liberal dream.

1936 Election

FDR was not the most enthusiastic about relief programs but still sponsored the Works Progress Administration, creating jobs in many fields, from labor to arts. Reached 1/3 of nations unemployed. Democratic party enjoyed wide support due to his programs, maintaining white southerners as well.

Republicans nominated Alfred Landon, knowing they couldn’t oppose the New Deal on grounds of idealism, instead criticizing inefficiency and expense. Compared Roosevelt to a dictator but lost in a landslide.

Continuation of the Depression

The New Deal was good but not perfect, unemployment stayed high and family income and purchasing power had not returned to pre-depression levels. Even further, Roosevelt faced a sharp recession, undermining his economic confidence

Fighting the Court

After 1935 Court shot down some New Deal Legislation, FDR tried to add new members based on age of current members. Congress rejected the attempt to “blatantly pack the court”

He won with Wagner and Social Security Acts though, getting them declared as constitutional.

Even further, he was able to appoint two judges naturally, allowing the constitution to be viewed as ever changing

Roosevelt Recession

Dealt a heavy blow to the new deal. People assumed everything was better, tried to return to normal. Federal budget cut, WPA lays off workers, Federal reserve lifts interest rates. Things broke again, Roosevelt tried to undo, following Keynesian Economics that government spending could smooth economy.

Fair Labor Standards Act

Banned Child Labor! Yay! Standardized 40 hour work week, overtime pay, and minimum wage. Last New Deal Legislative Achievement. End of era of change and reform, FDR not revolutionary.

Growing Government

The welfare state required a growth of federal government and sizeable bureaucracy. Federal employees +80% to equal 1 million. Expenditures dramatically increased along with deficits of the country.

Expanding who’s included in Democracy

Song by John La Touche and Earl Robinson defined the expanding definitions of who is american and who gets to reap the benefits, lifting off, other ethnicities and all careers. New Deal pressed into broad social inclusion

Rising Labor

Due to New Deal Attitude union membership up to 23% of not farmers, organizing across industries no matter the job/skill under the Congress of Industrial Organizations. The AFL and others still preferred these like separate craft unions. This new life forged a long alliance with Democrats.

Gains were real but had limited reach, unions never employed most of Americans, and antiunion groups were still prominent

Gender and the New Deal

The New Deal did not specifically aim to help women bc male breadwinners were still overly valued so women specific needs and concerns remained unaddressed even if general welfare improved.

FDR did bring more women into government service into positions like cabinet (perkins) or as ambassadors/ on court of appeals. These appointees carved pathways for more women to join the federal workforce

Women were still secondary priorities, often legislated with lower wages and viewed that they should be at home.

Eleanor Roosevelt

Wife of FDR who was the concious of the New Deal, often on the front lines of Americans in crisis, pushing to protect the disadvantaged. Worked tirelessly in and out of the whitehouse for women, labor and education

African Americans and the New Deal

Were still discriminated against but as the New Deal policies aided them directly they swung Democratic by 1936. Roosevelt also put black people in federal office and put them in advisory positions for New Deal legislation.

Meaningfully aided black folks, getting them jobs with the WPA and protecting black tenant farmers from exploitation

Mary McLeod Bethune

One of these “black cabinet” appointees who focused on employment and education. She joined the New Deal in 1936, believing in FDR’s mission and vision. She saw the role as a step to bolster racial equality by showing black people in high positions

Racism in the New Deal

Despite being relatively progressive, FDR still had to be reserved to maintain his white southern voting block which meant programs reflected era racism. CCC camps were segregated, NRA rules did not protect black workers from discrimination, Social Security and Wagner Acts excluded agricultural jobs held by black workers.

Roosevelt also refused to make lynching a federal crime despite state and local indifference over these murders. FDR feared retaliation from white southern democrats.

Scotsboro Case

Two white women accused 9 black boys of rape, sparking nationwide controversy, eight given the death sentence. Supreme court overturned sentences but still imprisoned for a long time, white communists were some of the only white organizations to support them.

Indian Policy

Long been disadvantaged and powerless in US politics. John Collier was a Roosevelt appointee to head the Bureau of Indian Affairs who was aware of indian struggles and the ineffective policies. Helped write legislation commonly known as the indian new deal. Promoted self government and allowed natives to regain religious freedom and some self sovereignity.

Still imperfect solution that left some tribes at a loss operating under a new bureaucracy. Continual interference from government.

Migration into the US

Thrived especially on the west coast where Mexican and Asian workers worked on corporate farms. Flooded into Los Angeles. Under FDR about ½ million mexicans deported despite somes citizenship status. Still, New Deal benefited many Mexicans and they leaned democrat as they were hired by wpa and ccc

Japanese Discrimination

Frequently discriminted against in law, couldn’t own land in California which had to be circumvented by owning land in their American children’s name. Depression cut prices and they were turned from jobs, 1 in 5 returned to japan

Chinese Americans

Less prosperous than Japanese counterparts, barred from industrial and professional jobs. Worked in small businesses and received little aid as they were ineligible for citiizenship.

Filipino Immigrants

Not effected by ban on Asian immigration. Worked on corporate farms. Slowed as depression increased and eventually was limited to 50 people per year.

Reshaping the Environment

The New Deal also focused it's efforts on conservation, following the footsteps of Teddy Roosevelt. FDR focused on caring for the land to make it serve human needs. Stressed science managing land. Guided response to enviromental issues esp with water

The Dust Bowl

With not just the economic disaster, farmers in Oklahoma, Texas, New Mexico, Colorado, Arkansas, and Kansas were hit with a severe drought. Farmers were at odds as they screwed with the regions ecology farming. Dusty surface eroded by wind causing dust storms. People were forced to leave and they were called “Okies”

Fixing the Dust Bowl

Roosevelt saw the effect that poor land practices had in crippling the region, creating government agencies to mitigate the crisis. Soil Conservation Service educated in proper soil practices and U.S. Forest Service planted trees to break the wind.

Tennessee Valley Authority (TVA)

Biggest enviromental aspect of New Deal. Addressed floods, electricity and development. provided power and jobs in a weak economic region. Was key to keeping farmers afloat (FDR’s ideal)

Rural Electrification Administration (REA)

Designed to give power to farmers by making nonprofits that offered loans to install power lines. Eased familial burdens and brought some joy to people. Broke down some barrier between Urban et Rural

Enviromental Development Out West

The parks in the region gained valuable new infrastructure. The PWA built the Boulder (Hoover) Dam which provided electricity for western cities. The Grand Coulee Dam was the largest project. Built on Colombia River largest electricity-producing structure in the world. Resorvoir provided water for irrigation and crops.

The New Deal and the Arts

Great Depression increased social concious among artists. New Deal elevated art through federal funding, employing thousands of artists. FWP, also collected oral histories, including narratives by former slaves

Lasting Impact of the New Deal

FDR created an unprecedented welfare state to care for citizens.Taxes went to Social Security, regulated economy became norm and laid groundwork for LBJ. Criticized on both ends but was a good draw for democratic voters