The Great Depression

April 4, 2010

"Brother, Can You Spare a Dime,” music by Jay Gorney (1931)

They used to tell me I was building a dream, and so I followed the mob, When there was earth to plow, or guns to bear, I was always there right on the job.

They used to tell me I was building a dream, with peace and glory ahead,Why should I be standing in line, just waiting for bread?

Once I built a railroad, I made it run, made it race against time.Once I built a railroad; now it's done. Brother, can you spare a dime?

Once I built a tower, up to the sun, brick, and rivet, and lime;Once I built a tower, now it's done. Brother, can you spare a dime?

Once in khaki suits, gee we looked swell,Full of that Yankee Doodly Dum, Half a million boots went slogging through Hell,

And I was the kid with the drum! Say, don't you remember, they called me Al; it was Al all the time.

Why don't you remember, I'm your pal? Buddy, can you spare a dime?Once in khaki suits, gee we looked swell,

Full of that Yankee Doodly Dum,Half a million boots went slogging through Hell,And I was the kid with the drum! Say, don't you remember, they called me Al; it was

Al all the time.Say, don't you remember, I'm your pal? Buddy, can you spare a dime?

Promoting Prosperity

• Andrew Mellon, secretary of treasury by President Harding.

• Reduced govt. spending• Cut the federal budget

Secretary of Commerce

• Herbert Hoover attempted to balance government regulation with cooperative individualism.

Secretary of Commerce

• Manufacturers and distributors were asked to form their own trade associations and share info with the govt’s Bureau of Standards.

The Election of 1928

Herbert Hoover• Republican• Former head of Food Admin• Secretary of Commerce• Wanted to ban liquor sales• Republicans took full credit

for the prosperity of the 1920s

• Hoover won in a landslide victory

Alfred E. Smith• Democrat• 4-time governor of NY • 1st Roman Catholic to be

nominated for president• Opposed the ban on liquor

sales• Smear campaign led against

him b/c he was Catholic

The Long Bull Market

• What is the *Stock market* ??

• Established for buying and selling shares of companies.

• Long periods of rising stock prices is known as a bull market.

Bull Market

• Investors bought stocks on *margin*

• Making small cash down payment

• Safe as long as prices continued to rise

• If stock falls the broker has to repay the loan immediately

Bull Market

• Investors drove prices up without looking at a company’s earnings and profits.

• Speculation occurred when investors bet on the market climbing and sold what they could for a quick profit.

Bull Market

**The Great Crash**

• Lack of new investors caused prices to drop and the bull market to end.

• Instead of paying margins off, customers began selling their shares

• Stock market plummeted further.

**The Great Crash**

• **OCT. 29, 1929**• *Black Tuesday*• $10-15 BILLION loss in

value• Did not cause the G.D.,

but it did undermine the economy’s ability to hold out against weaknesses

**The Great Crash**

• Weakened the nation’s banks

• Banks lost their money on investments and speculators defaulted on loans

• Govt. did not insure bank deposits

• Bank Runs

**The Roots of the G.D. **

• Efficient machinery led to overproduction• Uneven distribution of wealth• Top 5% of households earned 30% of the

country’s income. • More than 2/3 of the nation’s families earned

less than $2,500 a year.

**The Roots of the G.D.**

• Low Consumption• Worker’s wages did not increase fast enough• Sales decreased, workers were laid off• *Installment plans* left little money to purchase

other goods• Hawley-Smoot Tariff raised taxes on imports• Interest rate was lowered by the Feds, business

owners thought the economy was still expanding

The Depression Worsens

• 1000s of banks had closed

• Millions unemployed• *Bread lines*• *Soup kitchens*• People unable to pay

their rent were forced out on the street

The Depression Worsens

• Many of the homeless built shantytowns or *Hoovervilles*

• Hobos rode railroad cars in search for a better life

The Depression Worsens

• Remember how farmers lived during the 1920s?

• Left their fields uncultivated

• Drought caused the *Dust Bowl*

• Midwestern and Great Plains farmers lost their farms.

Escaping the Depression

• Americans went to movies ($0.25)• Listened to radio broadcasts – George Burns, Lone Ranger, soap operas

• Walt Disney produced the feature-length animated film

• Snow White and the Seven Dwarfs

The Depression in Art• Thomas Hart Benton and

Grant Wood emphasized traditional American values in their art

• John Steinbeck- The Grapes of Wrath

• William Faulkner- stream of consciousness technique revealed characters’ thoughts before they spoke

• Dorothea Lange- photographer

Promoting Recovery

• “Let me remind you that credit is the lifeblood of business, the lifeblood of prices and jobs.”

• Hoover held conferences to promote recovery

• He received a pledge from industry to keep factories open and stop cutting wages

• The pledge failed

Promoting Recovery

• Hoover increased public works

• BUT! He did not increase governtment spending

• Republicans were blamed for the Depression

• They lost 52 seats in midterm elections

Pumpin’ Money Into the Economy

• Hoover wanted more money to be circulated, but the Fed refused

• Why was this a good thing?• Hoover set up the National Credit Corporation

(NCC) to rescue banks but it was not enough

Pumpin’ Money into the Economy

• Hoover felt the govt. had to provide funding for borrowers. He asked to set up the Reconstruction Finance Corporation (RFC)

• Too cautious with loans

Pumpin’ Money into the Economy• Hoover did not want

federal money to go directly to very poor families

• He thought it was the responsibility of state and local governments

• Congress passed the Emergency Relief and Construction Act for public works and loans to states

In an Angry Mood

• Increase in violence• Looting, rallies, and

hunger marches• Between 1930-1934

almost a million farms were repossessed.

• “Bonus Army”• They stuck around D.C.

when they were denied their money.

African Americans during the G.D.

• Over ½ of A.A. still lived in the South

• Lost their jobs• Scottsboro place– 9 blacks arrested for

vagrancy and disorder, later accused of rape

– 8 sentenced to death

African Americans during the G.D.

• NAACP worked with blacks in the labor

Roosevelt’s Rise to Power

Herbert Hoover• Nominated for a 2nd term

Franklin D. Roosevelt• NY Governor• 1st to deliver an acceptance

speech• New Deal

Roosevelt (not the Teddy bear)

• Married Teddy’s niece, Eleanor.

• Wealthy, educated at Harvard and Columbia Law School

• Began his career in 1910 in the NY Senate

• Appointed assistant secretary of the navy by Woodrow WIlson

Roosevelt’s Rise to Power

• In 1920 he caught polio and relied on Eleanor to keep his name prominent in politics.

• His struggle with polio made people feel like he could understand their hardships.

Roosevelt is Inaugurated• FDR would not be inaugurated until March

1933. • Between Nov. 1932 and March 1933

unemployment & bank runs increased and people began converting their money.

Roosevelt is Inaugurated

• Some feared that FDR would end the gold standard

• 4,000 banks had closed by March 1933.

• Bank holidays

The Hundred Days Begin

• Between March 9 and June 16, 1933

• Congress passed 15 major acts to help economic crisis

• Made up the First New Deal

100 days

• 3 main groups– “New Nationalism”– Wanted govt to run key parts of the economy• Distrusted big business

– “New Freedom” • Restore competition in the economy.

Fixing the Banks and the Stock Market

• Restore confidence in the banking system.

• National bank holiday• Congress in special

session

Fixing the Banks and the Stock Market

• Emergency Banking Relief Act– Survey banks– Issue Treasury Dept

licenses to financially sound banks

– “Fireside Chats” • 1st- he assured bank

security

– The next day deposits outweighed withdrawls

Fixing the Banks and the Stock Market

• Securities Act of 1933– Companies had to provide

info to investors

• Securities and Exchange Commission (SEC)– Regulate stock market and

prevent fraud

• Glass-Steagall Act– Created the FDIC

Fixing the Banks and the Stock Market

Emergency Banking Act (EBA)• Close down insolvent banks • Reopen only the strong

banks

Managing Farms and IndustryAgricultural Adjustment Administration (AAA)

• Paid farmers not to raise crops

• Reduced production• Increased prices

National Industrial Recovery Act (NIRA)

• Suspended antitrust laws• National Recovery

Administration (NRA)

Providing Debt ReliefHome Owners’ Loan Corporation (HOLC)

• Longer amounts of time • Lower payments• Only gave loans to the

employed• Foreclosed on 100,00 • Refinanced 1 out of every 5

mortgages in the US

Farm Credit Administration (FCA)

• Helped farmers refinance their mortgages

• May have slowed overall economic recovery by giving money to inefficient farmers instead of to businesses.

Spending and Relief Programs

Civilian Conservation Corps (CCC)

• Men 18-25• Planting trees• Forest fires• Building reservoirs• Closed in 1942• 3 million men

Spending and Relief Programs

Public Works Administration (PWA)

• 1933• Construction projects

Civil Works Administration (CWA)

• Put workers on the govt’s payroll

• Shut down when FDR was fearful of the amount spent

Challenges to the New Deal

• By 1935 support began to fade for the N.D.• FDR used deficit spending to pay for his

programs. (borrowed money)• American Liberty League= Anti-New Deal

Challenges to the New Deal

• Huey Long- left wing Democrat- wanted to divide money up and give to the poor

• Father Charles Coughlin supported Long

• Dr. Frances Townsend proposed a pension for those over 60 ($200/month)

The Second New Deal

• 1935- Second New Deal• FDR wanted to be re-elected in 1936

Second New Deal

• Works Progress Administration (WPA)– Harry Hopkins– $11 Billion– Artists, musicians,

actors, and writers

National Youth Administration

• $6-40 per month for“work study”

• $10-25 per month for job training

• Included women unlike the CCC

Second New Deal

• Schechter v. US struck down the National Industrial Recovery Act

• FDR ordered Congress to remain in session until all bills were passed

The Rise of Industrial Unions

• National Labor Relations Act (Wagner Act) – Guaranteed workers the right to organize unions

without employer interference. – Set up the National Labor Relations Board

The Rise of Industrial Unions

• National Labor Relations Board (NLRB)– Organized factory

elections by secret ballot

• Committee for Industrial Organization (CIO) – Organized industrial

unions

Social Security Administration (SSA)

• 1935• Elderly, unemployed,

and needy people• Monthly retirement

benefit and unemployment

• Workers paid premiums• Left out farmers and

domestic workers

FDR’s 2nd term

• Frances Perkins– 1st woman cabinet

appoinment

• Court Packing• John Maynard Keynes

– “Keynesian” economics

• 1938, FDR asked congress for $3.75 BILLION for the PWA, WPA, and other programs

The Last New Deal Reforms

• 1937, National Housing Act– Created the US Housing

Authority• Subsidized loans to

builders who bought slums and built low-cost housing

• Farm Security Administration– Gave loans to tenant

farmers to buy farms

The Last New Deal Reforms

• 1938, The Fair Labor Standards Act

• Protection to workers, ended child labor, 40 hour work week

• The New Deal ended by 1939

Legacy of the New Deal

• Limited, but gave Americans a sense of security and stability

• New public attitude towards govt.