unit twelve u.s. history. causes of the great depression tariff tension uneven distribution of...
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Causes of the Great Depression Tariff tension Uneven distribution of
wealth/income Failure to understand
international economic issues/trends/policies
Overproduction of consumer goods
Overspeculation/
Investment “playing the market”
Buying on margin (10% down payment)
Excessive use of credit Weak farm economy
Effects of the Great Depression
Banks closed Stock market prices
dropped Serious economic
downturn Unemployment
Poverty and homeless increased
Mortgages foreclosures/evictions
Hoover’s Reaction Assumed the crisis would be brief Urged businesses to cut wages Unions not to strike Urged private charities to increase their
efforts for the needy and jobless. Hesitated to bring government into it,
feared Americans would lose self-reliance Believed public relief should come from the
state and local governments and not the federal government
The worst mistake of his presidency
Hawley-Smoot Tariff 1930 Highest tariff in American history - increased tax
rate on foreign imports to protect American markets from foreign competition.
In retaliation, European nations enacted higher tariffs of their own against U.S. goods.
The effect—trade was reduced for all nations deepening the depression at the national and international levels.
TOO LITTLE, TOO LATE Debt moratorium - suspended collection of
payments on international debts Federal Farm Board - assistance to
indebted farmers Reconstruction Finance Corporation -
emergency loans to struggling businesses –railroads, banks, life insurance companies, and other financial institutions.
The benefits would then “trickle down” to smaller businesses and ultimately bring recovery
The Election of 1932
Republicans nominated Hoover
Believing a Democratic victory would worsen the Depression
Democrats nominated NY governor Franklin D. Roosevelt.
FDR pledged:
1. A “new deal” for the American people
2. The repeal of Prohibition
3. Aid for the unemployed
4. Cuts in government spending
Election Results
RESULTS 60% of the voters opted for a change and elected FDR
Socialists and many Republicans even supported FDR
Both houses in Congress also gained Democratic majorities
Lame duck president/Lame duck amendment (Twentieth Amendment)
FDR: A Profile
Only child to a wealthy NY family
Admired Teddy Roosevelt NY state legislator, U.S.
assistant secretary of the navy
VP candidate (James Cox) vs. Harding 1920 landslide
Contracted polio in 1921 Warm personality, gifted
speaker, & able to work with and inspire people
Became NY Governor in 1928
Instituted a number of welfare and relief programs to help the jobless.
Married to his cousin, Expanded the size of the
government Enlarged the powers of
the presidency. Stayed in office 12 years
elected 4 times One of the most
influential world leaders of the 20th century
New Deal Philosophy
Relief for the people out of work
Recovery for businesses and the economy
Reform of American institutions
Brain Trust
Advisors from his NY days University professors Great diversity in his administration: record
number of African Americans, Catholics, Jews, and women. (Secretary of Labor, Frances Perkins, 1st woman to serve in a president’s cabinet
Black Cabinet -Mary McLeod Bethune (close to Eleanor Roosevelt)
1st Hundred Days
Hundred day long special session in Congress
Congress passed into law every request of the president enacting more legislation than any single Congress in history
The new laws and agencies were commonly referred to by their initials: WPA, AAA, CCC, NRA
Immediate Action
Bank Holiday -closed banks to reorganize and regain stability
Repeal of Prohibition Beer-Wine Revenue Act/Twenty-first Amendment
Fireside Chats used radio to communicate directly to the American people
Financial recovery reform
The Emergency Banking Relief Act—bank holiday
The Federal Deposit Insurance Corporation -FDIC insure deposits up to $5000
The Home Owners Loan Corporation -refinancing for small homes
The Farm Credit Administration- low interest farm loans and mortgages
Relief for the unemployed
Federal Emergency Relief Agency - grants to state and local governments to aid the jobless and homeless
Public Works Administration - money for building roads, bridges, dams, and other public works (source of thousands of jobs)
Civilian Conservation Corps employed young men on federal lands
The Tennessee Valley Authority —built dams, operated electric power plants, controlled flooding and erosion, and manufactured fertilizer in on the nation’s poorest regions
Industrial Recovery
National Recovery Administration - set codes for wages, hours of work, levels of production, and prices of finished goods.
Workers were allowed to organize and bargain collectively
Schechter v. U.S. Supreme Court declared the NRA unconstitutional
Farm Relief
Agricultural Adjustment Administration AAA
Encouraged farmers to reduce production and thereby boost prices by offering to pay government subsidies (financial assistance) for every acre they plowed under.
Other programs
Civil Works Administration – hired laborers for temporary construction projects
Securities and Exchange Commission- regulated the stock market
Federal Housing Administration- construction industry and homeowners boosted by insuring bank loans for building new houses and repairing old ones
Took the U.S. off of the gold standard: $35 per ounce of gold but paper dollars were not redeemer in gold)
Eleanor Roosevelt
Most active first lady in history
Newspaper column Speeches Traveling Great respect for her
husband/marriage was strained
Served as the president’s social conscience and influenced him to support minorities and the less fortunate Compassionate
Eyes and ears
Second New Deal
The first two years focused on RECOVERY, the new batch of legislation focused on RELIEF and REFORM
Second New Deal
Relief Works Progress Administration- spent billions
of dollars 1935-1940 creating jobs—constructing new bridges, roads, airports, and public buildings.
-Unemployed artists, writers, and actors were paid to paint murals, write histories, and perform in plays
Resettlement Administration- provided loans to
sharecroppers, tenants, and small farmers, and set up camps for migrant workers
Reforms
National Labor Relations (Wagner) Act 1935- guaranteed workers right to join a union and a union’s right to bargain collectively. Created the National Labor Relations Board NLRB to enforce the law and make sure workers’ rights were protected
Rural Electrification Administration REA- offered loans for electrical cooperatives to supply power in rural areas
Federal Taxes - increased the tax of the wealthy few.
SOCIAL SECURITY ACT 1935 Affected the lives of nearly all Americans Federal insurance program based upon the
automatic collection of taxes from employees and employers throughout people’s working careers.
Retirees over the age of 65 received monthly payments
Unemployment compensations Blind or disabled
Dependent children and mothers
Election of 1936
FDR –Democratic candidate
Republican candidate Alf Landon –
progressive minded but critical of government spending
FDR won in a landslide
New coalition Solid South Ethnic whites in the
cities Midwestern farmers Labor unions Now African
Americans in northern cities
Opponents of the New Deal
Liberal Critics
Conservative
Demagogues (political agitators)
Father Charles E. Coughlin –inflated currency/nationalizing banks
Dr. Francis E. Townsend - $200 month Senior Citizens
Huey Long – “Share Our Wealth” $5000 for every American family
Most Serious Challenge
SUPREME COURT Ruled NRA and AAA
unconstitutional Mandate- popular
support- 1936 election Court-Packing Plan:
Replace Justices over 70.5 (6)
Both Democrats and Republicans were outraged
Supreme Court eventually softened to New Deal
FDR made several appointments
Rise of the Union New Deal was friendly
to organized labor National Labor
Recovery Act 1933 and the Wagner Act 1935
Union membership grew from 3 million in the early 1930s to over 10 million by 1941
AFL dominated skilled labor
CIO emerged welcoming all laborers
(targeted the automobile, steel, and textile industries)
Fair Labor Standards Act
A minimum wage (e.g. 40 cents an hour) A maximum work week of 40 hours and
time and a half for overtime Child labor restrictions on those under 16
-law was ruled unconstitutional in 1916 but reversed in 1941 and Fair Labor Standards Act was upheld by the Supreme Court)
Roosevelt Recession 1937
Economic Downturn WHY? Social
Security tax reduced consumer spending; FDR was also attempting to balance the budget & reduced government spending
John Maynard Keynes Encouraged deficit
spending - the government needed to spend in order to initiate economic growth “priming the pump” to increase investment and create jobs.
Keynesian Economics
FDR adopted this policy Still the Depression continued Republicans and conservatives were elected
in 1938 and blocked New Deal legislation, and aggressive actions of the Nazis drew attention to foreign affairs weakening the New Deal
Americans and the Depression
Depression mentally-insecure
Women – work-minded
African American
Democratic party
(Eleanor and Marion Anderson vs. DAR)
Executive Order 8802 (FEPC)
A. Phillip Randolph
Brotherhood of the Sleeping Car Porters
March on Washington Indian Reorganization
Act 1937 (Tribal) Mexican Americans
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