Chapter 26FRANKLIN D. ROOSEVELT

AND THE NEW DEAL

Uneven Prosperity

• Many Americans deeper in debt by late 1920s

• 1919 to 1921 annual farm income declined from $10 billion to $4 billion

• Rich & poor gap growing

• Income of wealthiest 1% rose 75%

• Rest of the 99% rose 9%

• 80% of families had no savings

Income Distribution, 1929

The Great Crash

• 1928: Soaring stock prices attracted individual, corporate investment

• 1929: Stock market crashed– Businesses laid off workers– Demand for consumer goods declined

BlackBlack ThursdayThursday• PRICES OF STOCKS CRASH IN HEAVY

LIQUIDATIONTOTAL DROP OF BILLIONS

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PAPER LOSS $4,000,000,000

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2,600,000 Shares Sold In The Final Hour In Record Decline

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MANY ACCOUNTS WIPED OUT

Thursday - October 24, 1929 - Stock Market crashes

Friday - October 25, 1929 - The Market Rallies - Catastrophe is avertedMonday – October 28, 1929 - Leaders find economy is soundTuesday – October 29, 1929 - The Market Opens and stock market crashed

Stock Prices

Crash Leads to Great Panic

• After crash, people panicked and withdrew money from banks to repay loans

• But many banks didn’t have their money

• 1933- 11,000 of nations 25,000 banks failed

Great Panic Leads to Great Depression

• 1929-1932- GNP dropped from $104 to $59 billion

• 1932- 90,000 businesses bankrupt

• 1929-1933- Unemployment- 3% to 25%

• Depression across world made it difficult to sell American goods abroad

Unemployment, 1929–1942

Bank Failures, 1929–1933

Effects of the Depression

• Hardship affected all classes

• The middle class lost belief in ever-increasing prosperity

• Thousands of young homeless, jobless

Poverty Strains Society

• No federal system of direct relief

• 2,600 schools shut down– 300,000 students out of school

• 1928-1932- suicide rate rose 30%

• 3 times as many people admitted to mental hospitals as in normal times

• Adults stopped going to doctor and dentist, stopped taking care of themselves

Too Many Homeless

• In cities, many ppl left homeless, sleeping in parks and sewer pipes

• Soup kitchens and bread lines formed across country

• Built shantytowns- little towns consisting of shacks of tar paper, cardboard, or scrap material– Called Hoovervilles to mock the Pres.

“Here were all these people living in old, rusted-out car bodies. There were people living in shacks made of orange crates. One family with a whole lot of kids were living in a piano box.”

-woman commenting on Hooverville in OK

The Dust Bowl

• Environmental crisis in the 1930s in which Great Plains suffered from severe drought and dust storms

• Plowing had removed protective grasses, over production, and draught all contributed

• Caused 1000s to abandon farms

“I saw and approached the hungry and desperate mother, as if drawn by a magnet. I do not remember how I explained my presence or my camera to her, but I do remember she asked me no questions. I made five exposures, working closer and closer from the same direction. I did not ask her name or her history. She told me her age, that she was thirty-two. She said that they had been living on frozen vegetables from the surrounding fields, and birds that the children killed. She had just sold the tires from her car to buy food. There she sat in that lean- to tent with her children huddled around her, and seemed to know that my pictures might help her, and so she helped me. There was a sort of equality about it.”

-Dorothea Lange

Rampant Unemployment

• 1933- Over 12 million unemployed

• By 1932, food prices had fallen so low that farmers began to destroy crops + livestock– too expensive to harvest food or take

livestock to market

Unemployed men vying for jobs at the American Legion Employment Bureau in Los Angeles during the Great Depression.

Hoover and Voluntarism

• Hoover initially sought solution through voluntary action, private charity – “Rugged individualism”– Opposed any federal welfare

• Bonus Army & General MacArthur • Hoover resisted Democratic efforts to give

direct aid to the unemployed– Perceived as indifferent to human suffering

Bonus Army March

Hoover Dam• Boulder Dam- world’s tallest dam

• Provides electricity, regular water supply, and flood control

• Employed many people

The Election of 1932

“So first of all let me assert my firm

belief that the only thing we have to fear is fear itself.”

-First Inaugural Address, FDR, 1933

The Hundred Days

• Banking system saved from collapse

• Fifteen major laws provided relief

• Tennessee Valley Authority was the most ambitious one

The Tennessee Valley Authority

Social Security

• 1935: Social Security Act passed

• Criticisms– Too few people would collect pensions – Unemployment package inadequate

• Established pattern of government aid to poor, aged, handicapped

Labor Legislation

• 1935: Wagner Act – Allowed unions to organize – Outlawed unfair labor practices

• 1938: Fair Labor Standard Act – Maximum hour – Minimum wage – Rural Electrification Administration brought

electricity to 90% of farmers who did not have it in 1930

Impact of the New Deal

• Had a broad influence on the quality of life in the U.S. in the 1930s

• Helped labor unions most

• Helped women, minorities least

The Election of 1936

• FDR’s campaign– Attacked the rich – Promised further reforms – Defeated Republican Alf Landon

• Democrats won lopsided majorities in both houses of Congress

• FDR coalition: South, cities, labor, ethnic groups, African Americans, poor

The Election of 1936

The Supreme Court Fight

• Supreme Court blocked several of FDR’s first-term programs

• 1937: FDR sought right to "pack" Court

• Congressional protest forced retreat

The New Deal and American Life

• New Deal’s limitations– Depression not ended– Economic system not fundamentally

altered – Little done for those without political clout

• Achievements– Social Security, the Wagner Act – Political realignment of the 1930s