The Great Depression and The New Deal Lecture Review

Unemployment Context:
- At the peak of the crisis, approximately $13 \text{ million}$ Americans were unemployed.
The Economic Boom of the 1920s:
- Manufacturing witnessed a significant upward trend.
- Approximately $60\%$ of the population lived in poverty despite the growth.
- Per capita income grew by $1/3$ .
- Inflation was virtually non-existent during this period.
Technological and Industrial Shifts:
- Advancements in technology and the implementation of the assembly line increased production efficiency.
- Mass consumption became the norm as advertising evolved to meet and create new consumer demand.
Socio-Economic Changes:
- The period was characterized by a huge economic upward swing.
- Credit was utilized for the first time in American history for personal consumption.
- The concept of "buy now, pay later" became prevalent.
- Sports emerged as a big business.
- Henry Ford produced the first affordable personal automobile.

Overproduction and Underconsumption:
- There was a fundamental imbalance where the production of consumer goods exceeded the public's ability to consume them.
1. The Federal Reserve's Credit Expansion:
- People began spending more while saving less.
- The Federal Reserve (FED) attempted to manipulate the economic boom through monetary policy.
2. Stock Market Crash of 1929:
- Described as the "Canary in the coal mine."
- The market experienced a mysterious drop starting in September.
- On October 23, the market received a flood of sell orders.
- $16 \text{ million}$ shares were sold in a single day.
- The crash served as the catalyst for the broader depression.
3. Weak Credit Structure and Financial Institutions:
- Financial institutions were inherently unstable.
- Bank Runs: When a bank runs out of physical cash, depositors panic. Under banking rules, banks could lend out $90\%$ of their deposits, keeping only $10\%$ in reserve. This meant that if more than $10\%$ of people demanded their cash, the bank would fail.

4. America's Role in International Trade:
- Farmers struggled significantly after the war as demand for agricultural products plummeted.
- The Smoot-Hawley Tariff was initially designed to protect American farmers, but other business sectors eventually demanded protection as well.
- 1930 Smoot-Hawley Tariff: Signed by President Herbert Hoover.
- It covered over $25,000$ products.
- The act raised tariff rates on imports to the highest levels in the nation's history.
- This action set in motion a retaliatory tariff war with Europe.
- Economic Impact: United States exports fell drastically from $\$5.5 \text{ billion}$ in 1929 to $\$1.7 \text{ billion}$ in 1932.

Environmental and Social Crises:
- The era was marked by the Great Dust Bowl.
- "Hoovervilles" and shanty towns were constructed by impoverished people and named derisively after the President.
Governmental Response:
- RFC (Reconstruction Finance Corporation): An agency established to provide assistance.
- The Bonus Army: WWI veterans who marched on Washington to demand early payment of their service bonuses.

Presidential Transition:
- Franklin D. Roosevelt (FDR) served from 1933–1945 (notes specify 1933–1936 for the first term focus).
- FDR took office on 03/04/1933.
- The central pillars of his platform were Relief, Recovery, and Reform.
The First 100 Days:
- Bank Holiday: FDR declared a one-week Bank Holiday to stop the cycle of bank runs.
- Alphabet Soup Agencies: A multitude of new agencies were created to address different sectors of the economy.
- Fireside Chats: FDR used radio broadcasts to speak directly to the public, telling them it was safer to keep their money in a reopened bank than "under your mattress."
- Gold Standard: FDR removed the United States from the Gold Standard and instructed the public to sell their gold back to the government.
- Federal Emergency Relief Act: Managed by Harry Hopkins.
Early Successes:
- FDR successfully stopped the tide of bank failures.
- He helped bring about the end of Prohibition.

CCC (Civilian Conservation Corps):
- Provided employment to millions of young men for environmental and conservation projects.
AAA (Agricultural Adjustment Administration):
- The government paid farmers to refrain from farming all of their land to reduce supply and raise prices.
NRA (National Industrial Recovery Act):
- Designed to help industry, labor, and the unemployed.
TVA (Tennessee Valley Authority):
- A major infrastructure and regional development project.

Opposition to New Deal Programs:
- Critics argued that these programs discriminated against certain groups.
- The programs were viewed by some as unlawful government interference with private property.
The "Sick Chicken" Case of 1935:
- Schechter Poultry Corp v. U.S.: A landmark Supreme Court case that challenged the constitutionality of the NRA.
Unemployment Statistics:
- Despite the efforts of the various alphabet soup agencies, unemployment never fell below $13\%$ during this time.
- The average unemployment rate during Roosevelt's time in office was $17\%$ .

Fiscal and Social Developments:
- Revenue Act of 1935: Known as the "Soak the Rich" tax.
- The Black Cabinet: A group of African Americans who served as advisors to the President.
- Political Shift: By 1936, $90\%$ of Black voters had shifted their allegiance to the Democratic Party.
- Frances Perkins: Served as the Secretary of Labor from 1933–1945.
Prominent Critics:
- Dr. Francis Townsend: Proposed the 1935 Townsend Plan, which acted as a precursor to Social Security. The notes describe his pension plan as a potential "Ponzi scheme" (Ponsa skem).
- Father Charles Coughlin: A New Deal critic who influenced public opinion using the radio.
- Huey Long: A critic who advocated for the "Share the Wealth" program.

Essential Question Assignment:
- Length: 1,000 words.
- Format: APA Style.
- Location: On the PBC Website.