The Great Depressionand

F.D.R’s NEW DEAL

Ms. Hoye AP and REGUS History

Election of 1928

Prohibition and poverty major campaign issues

Republicans take credit for prosperity of ’20s

Herbert Hoover, Republican, elected by landslide– Promise to keep Prohibition– Prosperity of ’20s

• Stock Market Crash• Black Tuesday, Oct. 29, 1929

• Hoover was blamed for not providing “direct relief” to help Americans? WHY?

• US Govt. should not provide “direct relief”

· laissez faire

• Stock Market Crash• Black Tuesday, Oct. 29, 1929

• Hoover was blamed for not providing “direct relief” to help Americans? WHY?

• US Govt. should not provide “direct relief”

· laissez faire

· Rugged individualism: Americans are self-sufficient and would work themselves out this depression through hard work and determination.

· Charitable organizations: Churches, volunteers and people helping one another.

· Rugged individualism: Americans are self-sufficient and would work themselves out this depression through hard work and determination.

· Charitable organizations: Churches, volunteers and people helping one another.

Black_Tuesday

The Stock Market Stock

– Ownership in company– Sold to raise capital

Improvements, expansion

Stock market– Where stock is bought and sold

Bull market– Period of rising stock value– Caused millions to invest heavily

Buying on margin– Small down payment– Pay off balance ‘loan’ when stock sold– Safe as long as stock price rises

Margin call– Calling in ‘loan’ for repayment

Speculation– Buying stock at low price– Hold for short time– Sell for quick profit

Problems with Stock Market

No government regulation

Stock bought not reflect true value– Prices bid up without looking at company’s

earnings and profits

The Crash Margin calls

– Led to stock salesFlooded market

– Caused prices to drop– Panic on Oct 24, 1929– More & more stock put up for sale– Stock priced bottomed out

Tuesday, Oct. 29, 1929– “Black Tuesday”– Stock market crashed– Beginning of Great Depression

· Stock values drop from $87 - $19 billion· Steel production drops 80%· Industrial output drops 50%

· 500,000 homes and farms foreclosed· “Run on the banks”, 5,190 banks failed

· 9 million people lost their savings· 4 million by 1930----12 million by 1932

· 25,355 businesses fail· Work week cut----3 to 1 and lay offs.

· Unemployment 25—40%

domino effect

Collapse of Banking Industry

Banks had invested in stock market Risky loans

– Could not collect money People pulled money out

–‘RUN ON BANKS’ Unstable banks closed

A Wise Economist

Asks A Question

Bank failures crushed the

average American who put faith in the banks to save their money.

When they went to withdraw their

money, it had been lent out so

they lost savings.

Causes of Great Depression

Efficient machinery

Overproduction

Decline in Sales

Unemployment

Gov’t economic policies

High Import Tariffs

High Export Tariffs-no foreign markets

Overproduction-

Surplus goods-

Unemployment

Unchecked Stock Speculation

Increase in stock price

Decrease in stock demand

Stock Market Crash

Oct. 29, 1929

“Black Tuesday”

Unregulated Banking Industry

Risky loans-

Overextended credit

Inability to recover money

Collapse of Banks

“RUN ON BANKS”

Other Factors to Consider

Decline of farming industry Uneven distribution of wealth International economic policies Easy credit purchasing Weak and unregulated banks

Farmers and Dust Decline of the farmer

– Overproduction Drop in farm prices Economic devastation

– Loss of farms

– Overuse of land Fields left bare, exposed to elements 1932 drought Winds caused blowing sand

Farming poverty contributed to nation’s overall economic decline

Hoover’s Relief Efforts Public works

– Gov’t financed building projectsProvided jobs lost in private sectorTo pay for projects—raise taxes or borrow from banks

Reconstruction Finance Committee– Provide funding for banks, railroads, and agricultural

institutionsToo cautious with loans to be effective

Hoovervilles or shantytowns, were migrant towns of people who were out of work and on the move to find work. Usually outside large cities where migrants were trying to find jobs. Named after

President Hoover because he wouldn’t do anything to help the people who were in

need…….HOOVERVILLES

Welcome_to_Hooverville 6.22

BONUS ARMY– Veteran’s march for bonus– Promised $1,000 to be paid in 1945– 1931 legislation, borrow ½ of bonus– 1932 marched on Washington D.C. for full amount

Congress voted down pmt of bonus

Hoover did more to expand role of federal gov’t than any previous president

Hoover Cont’d……

DEBTS • Bonus Army March in the

summer of 1932 over 20,000

veterans from WWI marched on Washington, DC.

• Demanded their Bonus promised to them by the government for

fighting in WWI. • They were out of work and wanted

to feed their families.

• The Dust Bowl was an ecological and human disaster that took place in the southwestern

Great Plains region, including Oklahoma, in the 1930's.

• It was caused by misuse of land and years of sustained drought.

• Millions of hectares of farmland became useless, and hundreds of thousands of people were

forced to leave their homes----many migrated to California.

• As the land dried up, great clouds of dust and sand, carried by the wind, covered everything

and the word "Dust Bowl" was coined.

dust bowl

Dust Bowl 6:06

END Part IUp next: NEW DEAL/FDR

A Time for Change

Election of 1932– Hoover, Republican– Franklin D. Roosevelt, Democrat

Republicans blamed for economic hardships

FDR and his “New Deal” wins

• FDR and Hoover at FDR’s inaugural

• Americans believed FDR could get the country out of the depression and put people back to work……

• 32nd President

• New Deal

• Fireside Chats

• “The only thing we have to fear is fear itself”

• Talent for giving hope and confidence to Americans

Franklin Delano Roosevelt

• Democrats• FDR appealed to the common man because

he was crippled• Eleanor became the eyes and ears for her

husband• Promised to help the

people through the Great Depression by direct governmental

involvement

FDR & ELEANOR

Eleanor Roosevelt visiting a West Virginia

Coal Mine, 1933 (c) Bettmann/Corbis

Eleanor Roosevelt visits West Virginia Coal Mine, 1933

FDR’s Immediate Actions

Restore confidence in banks– Called national bank holiday– Congress passed Emergency Banking Relief Act

Glass-Steagall Act (Banking Act of 1933)Federal examiners survey banks

– Issue licenses to the financially sound

Fireside chat to inform public banks were secure– Following day—deposits outweighed withdrawals

• President Roosevelt began the “fireside chats” on a weekly basis as a way to reassure the American people.

• His comforting voice, calming words, confidence in the country and the American people helped restore faith of the American people in

democracy.

chats

“I pledge to you, pledge myself to a NEW DEAL for the

American People.”

“The only thing we have to fear…is

fear itself.”

Roosevelt’s 100 days was very successful….FDR and

Congress went to work providing for direct relief,

recovery and reform.

From March of 1933 to June of 1933, Roosevelt sent 15 proposals to Congress and

all 15 were adopted

Congress and President tried anything reasonable

to overcome the Great Depression.

100 days

NEW DEAL CARTOON

Govt. programs which provided direct relief to suffering

Americans through govt. spending………· Renew democracy

· Restore confidence in the banking· Stimulate economy · Put people back to work.· Restore self confidence

· Relief: ease suffering of the needy· Recovery: begin economic growth

· Reform: help prevent future economic crises

How? FDR’s 3 R’sHow? FDR’s 3 R’s

Social EngineersBrain Trust

The New Deal 808

FERA / 1933Federal Emergency Relief ActDistributed $500 million of direct aid to unemployed workers such as food, clothing and grants of

money to cities.

alphabet

RELIEF: Ease Suffering of the Needy

WPA / 1933 to 1943

Works Progress AdministrationEmployed 8.5 million

workers in construction and other jobs, but more

importantly provided work in arts, theater, and literary projects.

alphabet

RELIEF: Ease Suffering of the Needy

• Works Progress Administration (WPA), the New Deals main

relief agency. • People employed by the

WPA at its peak was more than 3 million• 2,500 hospitals• 5,900 schools

• 13,000 playgrounds• 125,000 public buildings

wpa

TVA / 1933 Tennessee Valley Authority

•Federal government built a series of dams to prevent flooding and sold

electricity. •First public competition with private

power industries.

alphabet

RECOVERY: Begin Economic Growth

• Develop a poor section of the Southeast U.S.

• Stimulate the economy and produce cheap electricity.

• Control floods, planting new forests.

• Bring this section into the 20th century.

TVA

· 94 percent of property owners and 98 percent of tenants did not have electricity.

· 30 percent of property owners and 41 percent of tenants had no toilet facilities whatsoever

Created federally insured bank deposits ($2500 per investor at first) to prevent bank failures.

alphabet

REFORM: Prevent Another Depression

FDIC / 1933Federal Deposit Insurance Corporation

Regulated stock market and restricted margin buying, and frauds.

alphabet

REFORM: Prevent Another Depression

SEC / 1934 Securities and Exchange

Commission

It provided retirement pensions,

unemployment insurance, aid to blind,

deaf, disabled, and dependent children.

alphabet

REFORM: Prevent Another Depression

SSA / 1935 Social Security

Act

• One of the most important features of the New Deal.

• Established a retirement for persons over 65 funded by a tax on wages paid equally by

employee and employer. • Old age insurance

• Protect Americans who were unable to support

themselves.• Unemployment

compensation• Compensation to disabled

workers and assistance to widows and children

• Created in April 1933.

• Within 4 months, 1300 CCC camps were in operation.

• 300,000 men in 1933 between ages 18 and 25

• Signed up for 6 months and made $30.00 a month.

• 1933 and 1941 over 3,000,000 men served in the CCC .

• Goal: Keep teenage young men off the street and away

from the job market.• Develop job skills and improve

environment

Planted trees, built public parks, drained swamps to fight malaria,

restocked rivers with fish, worked on flood control projects and a range of other work that helped to conserve

the environment.

Planted trees, built public parks, drained swamps to fight malaria,

restocked rivers with fish, worked on flood control projects and a range of other work that helped to conserve

the environment.

Agricultural Adjustment Administration

AAA Relief for farmers

Paid to limit crop and livestock production

Created limited supply– Caused prices to increase

Helped some; caused hardship for tenant farmers

100 days

Criticisms of New Deal· US government and President too powerful

· Violated laissez faire· Supreme Court declared NIRA and AAA unconstitutional

· Deficit spending: Govt. spends $$$ to stimulate the economy and help people even if it means US Govt. goes into debt.

· Welfare state----Created a population of Americans who relied on the US Govt. to live

“Old Reliable” cartoon

“New Deal Remedies”

Successes of New Deal

100 days

AMERICANS IN 1939 WHO WANTED THE NEW DEAL TO CONTINUE WAS 55%….. 37% REGARDED IT AS A BAD INFLUENCE AND

WANTED A NEW PRESIDENT…………...

· Stimulated the economy · Put people back to work….· Improved morale and self-confidence of the people· US Govt’s. role changes and became directly involved in helping people· WWII ended the Great Depression not FDR’s New Deal

•Economic system based on cooperation rather than competition

• Believes in government ownership of business and capital

•Government controls production and distribution of goods.

•Opposite of laissez faire and capitalism

• Supreme Court was striking down New Deal legislation.

• Roosevelt proposed a bill to allow the president to name a

new federal judge for each who did not retire by age 70

and 1/2. • 6 justices over age limit. • Would have increased the number of justices from 9 to 15, giving FDR a majority of his own appointees on the

court. • The court-packing bill was not

passed by Congress.

• Supreme Court was striking down New Deal legislation.

• Roosevelt proposed a bill to allow the president to name a

new federal judge for each who did not retire by age 70

and 1/2. • 6 justices over age limit. • Would have increased the number of justices from 9 to 15, giving FDR a majority of his own appointees on the

court. • The court-packing bill was not

passed by Congress.

Play end of “The NEW DEAL”

Start at 5:00

The End of An Era Democratic Party members shifted from mainly white

Southerners to include African Americans, farmers, laborers, new immigrants, & women

Roosevelt 2nd term has limited successes– Congress begins to block New Deal legislation– Caused economic downturn by cutting gov’t spending– Era ended 1939– Gave Americans stronger sense of security and stability– Cut gov’t spending which caused economic downturn

The_Second_New_Deal