❤️❤️ CH 23 The Great Depression and The New Deal

Introduction

The Great Depression was the most extensive and damaging economic crisis in US history.
It followed a decade of prosperity, starting with the stock market crash of 1929.
The economy stalled as borrowing and buying decreased, leading to industry decline and layoffs.
This created a vicious cycle of job losses, decreased consumer spending, and business failures.
At its worst, nearly 25% of Americans were unemployed, and many had to accept part-time employment.
Farmers were especially hit hard, unable to profit from their harvests, leading to food waste amidst widespread hunger.
Savings were depleted, families struggled, and public assistance was overwhelmed.
Mortgage defaults and bank closures increased, further destabilizing the economy.
The crisis led to bank runs, exacerbating the financial panic.
Traditional remedies like tariffs and expressions of confidence proved inadequate.
In the 1932 election, Herbert Hoover promised to uphold the Constitution against radical economic reforms.
Franklin D. Roosevelt campaigned on a "New Deal" and won by a landslide, leading to a significant transformation of the U.S. government.
The New Deal changed how Americans viewed their country, even though its achievements were debated.

The Origins of the Great Depression

The stock market crash of October 24, 1929, saw a huge fall in stock prices.
$10 billion$ in investments (equivalent to approximately $100 billion$ today) was lost within hours.
Panicked investors sold stocks, causing values to plummet.
Bankers attempted to stabilize the market by buying stocks at inflated prices, but this was only a temporary fix.
"Black Tuesday," October 29, marked the beginning of the stock market's long decline.
Stock values decreased sharply; for example, U.S. Steel dropped from 262 to $22, and General Motors fell from 73 to $8 per share.
J. D. Rockefeller lost four-fifths of his fortune.
Only 2.5% of Americans had brokerage accounts, showing that most Americans did not have a direct personal stake in Wall Street.
The crash revealed deeper issues within the U.S. economy, including:
- Rising inequality
- Declining demand
- Rural collapse
- Overextended investors
- Speculative bubbles
The gap between the rich and poor grew in the early 20th century.
Per capita income rose by 10% for all Americans but by 75% for the wealthiest citizens.
Policies favoring the wealthy led to luxury spending and stock market speculation.
The American economy was built on the production and consumption of durable goods, but the market became soaked.
Automobile manufacturing slowed because fewer people could afford or needed to buy cars.
Inventories increased, manufacturers reduced production, and companies fired workers.
Rising efficiency and automation also reduced the demand for workers.
Unemployment remained around 7% throughout the 1920s, suppressing consumer purchasing power.
Farmers faced economic difficulties before the crash.
Farm prices declined in 1920 and 1921 due to increased production and decreased demand.
Soil erosion worsened the problems for western farmers.
Farmers could not repay loans, and banks tightened credit.
President Herbert Hoover reassured the public that “the depression is over” in 1930.
Hoover signed the Smoot-Hawley Tariff of 1930, which increased tariffs, causing international trade to decline from 36 billion to $12 billion between 1929 and 1932. American exports dropped by 78%.
The Federal Reserve increased interest rates and tightened credit, leading to bank runs and failures.
In 1930, 1,352 banks failed, and in 1932, nearly 2,300 banks collapsed.

Herbert Hoover and the Politics of the Depression

Blame for the Depression fell on President Herbert Hoover and the Republican Party.
Hoover believed his presidency would resemble that of Calvin Coolidge, marked by limited government intervention and increased prosperity.
Hoover assumed the economic downturn was temporary, similar to previous boom-bust cycles.
He stated confidence in the economy in November 1929.
Unemployment increased, and new-car registrations significantly dropped.
Hoover relied on volunteerism, urging businesses to maintain investments and employment.
He encouraged state and local charities to aid those in need and established POUR to organize private agencies.
Private charities were overwhelmed; many closed due to lack of funds.
Hoover resisted direct government action due to his belief in limited government.
Senator Robert Wagner criticized Hoover's policy of doing as little as possible.
In 1932, Hoover created the Reconstruction Finance Corporation (RFC) to provide emergency loans to industries.
This action was perceived as radical yet bypassed aiding individuals.
RFC was criticized as a “millionaire’s dole.”

The Lived Experience of the Great Depression

Individuals, families, and communities encountered economic collapse.
Many Americans faced job losses, poverty, and declining wages.
Expenses were cut, credit was used, and meals were skipped.
People borrowed, took in borders, or doubled up in tenements.
Public assistance and charities were overwhelmed.
Essential public services were reduced, city employee salaries were cut, and many were furloughed.
The chronically unemployed lived in “Hoovervilles” and depended on bread lines.
Hunger was common; people fainted from starvation.
The ideal of the “male breadwinner” was challenged as women and children entered the labor force.
Employers favored hiring men over married women.
Women suffered disproportionately and faced a greater threat of sexual violence.
Black Americans faced severe discrimination and high unemployment rates.
In 1932, Black unemployment reached around 50% nationally.

Migration and the Great Depression

Severe droughts in the Great Plains led to the Dust Bowl, exacerbating the Depression.
Poor agricultural practices turned fertile topsoil into dust.
Dust storms choked settlers and livestock.
Farmers migrated west to California in search of work.
Oklahoma lost 18.4% of its population due to outmigration.
Dorothea Lange's "Migrant Mother" became a symbol of the Dust Bowl and westward exodus.
"Okies" faced discrimination in their new communities.
Millions of men traveled the country in search of work.
Families abandoned cities and sought work in rural areas.
State and local officials created barriers to migration.
California, Florida, and Colorado established “border blockades.”
Sympathy for migrants grew after the publication of John Steinbeck’s The Grapes of Wrath.
Congress established the Select Committee to Investigate the Interstate Migration of Destitute Citizens.
The outbreak of World War II led to a need for migrants in war industries.
Americans feared foreign workers who would accept lower wages.
The Hoover administration restricted immigration and increased deportations.
Efforts were made to reduce immigration from Mexico and repatriate Mexican Americans.
From 1930 to 1940, the Mexican-born population in Arizona, California, New Mexico, and Texas fell significantly.
The New Deal halted some of the Hoover administration’s divisive practices, but hostile attitudes intensified.
More people left the United States than entered it during the Depression.

The Bonus Army

In 1932, over fifteen thousand unemployed veterans and their families gathered in Washington, D.C., to petition for immediate payment of cash bonuses.
The bonus symbolized government relief.
The veterans created a “Hooverville” in Anacostia Flats.
The “Bonus Army” protested for their bonuses.
Hoover opposed the bill, and it was voted down by the Senate.
General Douglas MacArthur routed the Bonus Army, resulting in violence and deaths.
Americans were appalled by Hoover’s insensitivity.
Hoover’s ideology could not address the crisis.

Franklin Delano Roosevelt and the "First" New Deal

The early years of the Depression were catastrophic, with unemployment peaking at 25% in 1932.
Americans looked to the government for aid.
The 1932 election was consequential; Franklin Delano Roosevelt defeated Hoover in a landslide.
Roosevelt was influenced by American progressivism and declared that government should respond “not as a matter of charity, but as a matter of social duty."
As governor of New York, he established the Temporary Emergency Relief Administration (TERA) that supplied public work jobs.
Frances Perkins influenced legislation which enhanced workplace safety and reduced usage of child labor.
Roosevelt pledged a “new deal for the American people.”
He proposed jobs programs, public work projects, old-age pensions, and unemployment insurance.
Hoover warned that the New Deal would destroy the American system of life.
Roosevelt secured congressional enactment of laws to address the Depression.
Roosevelt stabilized the banking system, declaring a national “bank holiday”.
He delivered “Fireside Chats” to encourage confidence.
The Glass-Steagall Banking Act instituted federal deposit insurance through the FDIC.
The Civilian Conservation Corps (CCC) employed young men on conservation projects.
The Federal Emergency Relief Administration (FERA) provided cash assistance.
The Tennessee Valley Authority (TVA) built hydroelectric dams.
The Agricultural Adjustment Administration (AAA) aimed to raise farm prices by limiting production, offering cash incentives.
The National Industrial Recovery Act (NIRA) created the NRA that suspended antitrust laws and regulated employment conditions.
Businesses displayed a Blue Eagle to show cooperation.
GDP increased, but unemployment remained high.
The Civil Works Administration (CWA) and Works Progress Administration (WPA) put millions to work.
The Public Works Administration (PWA) provided grants for infrastructure projects.

The New Deal in the South

The South was particularly affected by the Depression, with the lowest per capita income in the nation.
Southern farmers were trapped in the production of cotton and corn.
Southern workers were underpaid and undereducated.
AAA aimed to increase cotton prices, however benefits did not reach those who needed it the most.
The government relied on landowners to distribute money, who instead reinvested profits.
Southern industrial practices attracted attention and NRA encouraged higher wages and suppressed child labor.
The 1938 Fair Labor Standards Act set a national minimum wage.
The National Labor Relations Act, also known as the Wagner Act, guaranteed the rights of most workers to unionize.
The TVA sought to remake the impoverished watershed region of the Tennessee River using electricity, reform, flood control, development, education, and healthcare.
Roosevelt initially courted conservative southern Democrats, but by his second term, he addressed inequalities.
Roosevelt endorsed the report “A Report on Economic Conditions in the South.”

Voices of Protest

Roosevelt’s relief programs were conservative.
Senator Huey Long proposed a Share Our Wealth program to redistribute wealth.
Over twenty-seven thousand Share the Wealth clubs emerged.
Francis Townsend promoted old-age pensions.
Reverend Charles Coughlin criticized Roosevelt with anti-Semitic attacks.
Conservative politicians and business leaders opposed Roosevelt’s regulations.
The Supreme Court declared the NRA unconstitutional.

The “Second” New Deal (1935-1936)

The New Deal enjoyed broad popularity as democrats gained more seats in the House and Senate.
Roosevelt rededicated himself to bolder programs that became known as the Second New Deal.
The Second New Deal included a five-billion dollar appropriation that became the WPA.
The WPA paved more than half-a-million miles of roads, constructed thousands of bridges, and employed millions of Americans.
Roosevelt passed the National Labor Relations Act (Wagner Act) that offered federal legal protection for workers to organize unions.
John L. Lewis formed the Congress of Industrial Organizations (CIO).
The CIO won a victory when General Motors recognized the United Automobile Workers (UAW) and granted a pay increase.
The Fair Labor Standards Act created the modern minimum wage.
The Second New Deal oversaw the restoration of a highly progressive federal income tax, mandated new reporting requirements, refinanced home mortgages and attempted rural reconstruction projects.
The Social Security Act provided for old-age pensions, unemployment insurance, and economic aid.
Social security became the centerpiece of the modern American social welfare state.

Equal Rights and the New Deal

Black Americans faced discrimination, particularly in the Jim Crow South.
The ILD came to the aid of the “Scottsboro Boys,” who symbolized racial prejudice.
Franklin Roosevelt did little to address Black communities' difficulties so he would not put his New Deal coalition at risk.
Many of the programs of the New Deal had made hard times more difficult.
The codes of the NRA set new pay scales which perpetuated inequality.
The AAA displaced Black tenants and sharecroppers.
The Social Security Act excluded domestic workers and farm laborers, which disproportionately affected African Americans.
Women failed to receive the full benefits of New Deal programs.
Eleanor Roosevelt became a major voice for economic and racial justice.
New Deal programs were built on the assumption that men would serve as breadwinners and women as mothers, homemakers, and consumers.

The End of the New Deal (1937-1939)

Roosevelt and his New Deal won record popularity by 1936.
Roosevelt called for legislation allowing him to expand the Court, the "court-packing scheme".
The court-packing scheme damaged the Roosevelt administration and emboldened New Deal opponents.
The misstep of Roosevelt cutting spending in 1937 led to the American economy to plunge, the "Roosevelt Recession of 1937".
Roosevelt struggled to build congressional support for new reforms, and the growing threat of war in Europe stole the public’s attention.
The New Deal slowly receded into the background, outshined by war.

The Legacy of the New Deal

Roosevelt and his Democratic Congresses had presided over a transformation of the American government.
Americans began to see the federal government as a potential ally in their daily struggles.
Memories of the Depression continued to shape the outlook of two generations of Americans.
The New Deal's legacy still remains, and its battle lines still shape American politics.