The Great Depression and the New Deal Lesson

The Great Depression and the New Deal Lesson 

3 important presidents during the 1920s: 

• Harding – Return to “Normalcy” 

•  Coolidge- Business Chief treated America like a business  

• Hoover – Believed in rugged individualism similar to social dwarfism  

The Stock Market Crash of 1929: 

• Black Tuesday over 16 million stocks were sold 

• The market crashed within months $40 billion was lost 

• Over 5000 banks collapsed in the first 3 years  

Causes: 

• Were overproductions and underconsumption 

• Speculation & buying on margin/credit  

Reactions to the Crash: 

• Hoover stayed committed to lassiez-faire policies but did take some action to remedy the depression 

1. Hawley Smoot Tariff 

2. Reconstruction Finance Corporation  

• Bonus Army- WW1 veterans marched/protested on DC demanding bonus pay before the 1945 due date  

• Hoovervilles- Shantytowns (run down neighborhoods) sprang up as people lost everything and blamed the president who had ironically promised in 1928 that “A chicken in every pot and a car in every garage” meaning he promised that each person would be guaranteed food, transport,etc  

Roosevelt takes the Helm 

• Election 1932- important shift in the black voting from republican to Democrat  

• Inaugural Address- denounced money changers and assured nation “the only thing we have to fear is fear itself” 

• First Hundred Days 

1. Glass-Stegal Act created FDIC and ends epidemic of bank failures 

2. Currency reform – all private gold holding to be exchanged for paper money and US went off “gold standard” 

• Managed Currency- would lead to inflation and allow repayment of debts 

• Fireside Chats - informal radio broadcasts united and assured the public, key to solving bank crisis (Roosevelt did this to convince people that the government taking their gold and transforming it into paper was for the good of the nation) 

• FDRs Inaugural Address in 1933- he blames the Depression  

The New Deal (new agencies enacted by FDR) 

• Relief  

1. CCC- most popular agency 

2. FERA- Created CWA for temporary employment 

3. TVA- built dams to create hydroelectric power, seen as radical 

4. WPA- provided job building infrastructures  

• Recovery 

1. AAA- Paid farmers to grow less to drive prices up 

2. PWA- Headed by Harold, it aimed at recovery and spent thousands on highways and public buildings (highways were built so the military could travel) 

• Reform 

1. Social Security Act 

2. National Labor Relations Act 

• CIO formed for unskilled workers  

The Great Depression and Labor Unions  

• National Labor Relations Act created a powerful new National Labor Relations Board 

• Under the encouragement of the Board, unskilled workers began to unionize 

• 1935- John L Lewis founded the Committee for Industrial Organization for unskilled workers within the ranks of the exclusive AFL 

• CIO used sit-down strikes refusing to leave the GM factory in1936 

• Broke from the AFL in 1938 by that time 4 million members 

• 1938 Fair Labor Standards Act all companies engaged in interstate commerce subject to maximum hours and minimum wage restrictions  

• Excluded agricultural and domestic service jobs which predominantly hired blacks, Mexicans and women 

Social Secruity and New Ideas on Government 

• One of the most complicated and far-reaching laws to ever pass Congress\ 

• To provide security in old age 

• Financed by a payroll tax paid by both employees and employers 

• Pay it forward  

Significant departure from “rugged individualism” and hands off government: The government was recognizing it responsibility for the welfare of its citizens 

Critics of the New Deal 

1. Radical 

Supports sweeping changes to society, includi8ng the economy: 

• Huey Long- created the SHARE OUR WEALTH MOVEMENT- raising taxes on the rich and giving every family $5000 

• Father Charles E Coughlin – turned against FDR when he refused to nationlize the banking system 

• Dr. Francis Townsend – proposed the OLD AGE REVOLVING PENSION- every American over 60 would retire to open up jobs for the younger unemployed. The recipients had to agree to spend the entire $200 check they received within a month 

2. Conservative 

Supports letting the economy stabilize by itself and opposes large governmental efforts to effect change 

• American Liberty League- primarily conservative wealthy business elites opposed government intervention in the economy, called New Deal “socialist” 

Natural Disasters WORSENED the depression. 

The Dust Bowl: 

After years of over farming and drought in 1933, winds swept up the thicks layer of dusty soil and spread dust through thick storms across Missouri, Texas, Kansas, Arkansas and Oklahoma. This forced people like farmers to travel West. 

The Supreme Court Vs the New Deal: 

• The NRA was created to improve conditions for workers while the AAA was intended to help farmers 

• Both the Agricultural Adjustment Act and the National Recovery Administration were ruled unconstitutional by the Supreme Court 

• Congress could not “delegate legislative powers to the executive” 

• The Nra combined short-term relief with long-range recovery and reform 

• Individual industries were to work out fair competition codes setting minimum wage and maximum hours  

• Formally guaranteed the right to organize and bargain collectively through their own chosen reps 

• Yellow dog contracts forbidden 

• The AAA created “subsidized scarcity” paying farmers not to farm 

• Declared unconstitutional in 1936 

The New Deal significantly altered the scope of government involvement in citizens' lives. As a result of the New Deal, the government took a greater role in guaranteeing the well-being of its people. 

In 1940, FDR broke the precedent set by George Washington not to seek election for a 3^rd term. With war looming, FDR ran for (and won) a third term... and won a 4^th too! 

Foreign Affairs 

• 1933- London Economic Conference- to coordinate an international response to the global depression, but FDR didn't want anything to interfere with his own plans for US recovery – collapse strengthen the global trend towards nationalism and every man for himself  

• 1933 - Roosevelt formally recognized the Soviet Union, opening up trade and fostering a friendship to counterbalance the threat of German and Japanese power 

• Good Neighbor Policy- America would not intervene or interfere with Latin American countries. All marines left Haiti in 1934. America also released some control over Cuba and Panama 

• Reciprocal Trade Agreements- lifted some of the tariffs from Hoover leads to more free trade 

• Appeasement in Europe as dictators seiz