A worldwide economic downturn that began in 1929 and
lasted until about 1939. It was the longest and most
severe depression ever experienced by the industrialized
Western world, sparking fundamental changes in
economic institutions, macroeconomic policy, and
Brother can you spare a dime?
Optimism thrived during the prosperity of the 1920‘s, but it was a prosperity flawed
by, among other things, overextension of credit and inadequate worker purchasing
power. When economic well-being gave way to recession in 1929 and ultimately
depression, the shock discredited constitutional government in those nations lacking
a strong liberal tradition and already bedeviled by frustrated nationalists. Leaders
complained in Germany, Italy, and Japan that their nations did not have fair access
to raw materials, markets, and capital investment areas, all of which were necessary
for their economic health. They argued that their nations were the victims of
economic warfare—with its protective tariffs, managed currencies, and cutthroat
competition—and that they had been left behind in the race for economic selfsufficiency and a favorable balance of trade. They made it plain that they would
fight, if necessary, for a better economic status.
Because they felt that democracy had failed, the people of those countries looked
with increasing favor on antidemocratic elements that glorified war as the means of
national salvation. In Italy, Mussolini‘s cries that Italians needed both colonies and
glory struck a responsive chord. In Germany, Hitler‘s National Socialists gained
power in 1933. Meanwhile Japanese militarists won a preponderant influence in the
inner circle of their government. America lost a lot of its freedoms to a socialist
method of government and strong arm tactics to confiscate the nation‘s gold and
OBJ #1- Cause & Spark of the Depression
A. Causes of the Depression
1. Overproduction, too much stuff (Factories and Farms)
a. Factory Workers begin to get laid-off
- Workers cannot buy goods, even more goods are overproduced
b. Farmers Can‟t Survive
- -low prices (can‘t pay loans / make a living)
c. Supply & Demand- Prices Drop
2. Bank Failures
a. Banks close and loose $$$
b. People default on loans (Can‘t pay back)
c. Banks cannot cover their deposits, because it was lent out to bad creditors
**5,000 banks close between 1929-1932**
d. People lose entire LIFE SAVINGS
Factories making too
growing too much
BANKS have NO $$
PEOPLE LOST SAVINGS & JOBS
Economy has to reset through
deflation or new markets have to
The government steps in to
Banks close because
they have no money:
Loans have not been
paid back, can‘t give
people their savings
Factories fire workers
(They aren‘t needed)
Farm prices fall
(Farmers can‘t make $$)
Farmers & Factory Workers
can‘t pay back loans to
no money to
B. SPARK!!! Of the Depression
Stock Market Crash, Black Tuesday, 29 Oct 1929
a. Summer 1929, Investors begin to sell stocks
b. Supply & Demand– Massive Sell-Off and prices begin to tank
a. Buying on Margin (Borrowing $$)
- Buy stock by just paying a small portion of what the stock
worth—sometimes as low as
ex.- 100 shares at $10= $1000 only pay $300
still owe $700
- Problem: stocks crash, margins are called in, you loose
money and can‘t payback your stock broker
- stock broker can‘t pay back bank
- there is no such thing as a free lunch because the
was not going to print more money and
devalue the purchasing
power of the dollar
1. OBJ. #2 – Affects of the Depression
Jobless / Homeless
1930-1932 – Unemployment goes from 4 to 12 million—25%
People are desperate!!!!
Blame for President Hoover
1. Said it is NOT the government‟s job to help the poor. There
was no such thing as government welfare until the
government started meddling
Said churches, philanthropists, and other groups should help
PROBLEM: The Hoover administration started to help and
prolonged the recession. Hoover‟s programs were expanded by
FDR and the recession turned into the Great Depression
People named poor places after Hoover
Hooverville- Shanty towns
Hoovermobile- cars pulled by mule
Hobos- look for jobs traveling the rails
Hooverblankets- newspapers used as blankets by homeless
1. Bonus Army
1. WWI veterans who were promised a
monetary bonus in 1945
1. Veterans wanted it NOW (1932)
1. Veterans go to Washington and ―camp out‖
2. Hoover sends in the Army (Eisenhower,
MacArthur), used tear gas, machine guns,
and burned the camp down of our own war
1. Escaping the Depression
1. Radio- Comedies, Soap Operas
2. Movies- Shirley Temple, Child Actors
1. Snow White (first full-length animation)
2. Wizard of Oz
1. Small girl escaping the Dust Bowl
1. Steinbeck, Grapes of Wrath
1. About a family of ‗Okies‘ escaping the Dust
Bowl and how horribly they were treated
• Bank Closings
• Stock Market Crash
• Life Savings Lost
What are some causes and spar
What are some affects?
1. What countries said that they were in
2. Give a cause of the Great depression and
3. Give an affect of the Great Depression
4. Who was blamed for the Great Depression?
5. What did the Bonus Army want?
The Dust Bowl is a popular name for the approximately 150,000- sq./mi. (388,500sq./km) area that includes the Oklahoma and Texas panhandles and adjacent parts
of Colorado, New Mexico, and Kansas. The area is characterized by light soil, a
low annual rainfall of 15 in. (380 mm), and high winds.
The first white settlers used the region for livestock grazing. Early in the 20th
century, however, farmers began to plow up the natural grass cover and planted
winter wheat. The area suffered from severe drought between 1934 and 1937, and
without the complex root system of the grasses to anchor it, much of the soil was
picked up by the winds. The resulting dust storms and sandstorms were so severe
that roads and houses were buried, and clouds from the storms were observed
hundreds of miles away. More than half the population left the area. The federal
government replanted grass, planted trees, and introduced scientific agricultural
methods, and as a result farming became possible again. The Dust Bowl endured
other, less severe droughts in the 1950s and ‗60s. The migration and hardships of
the Dust Bowl farmers are described in John Steinbeck‘s novel The Grapes of
1. Natural Disaster ―The Dust Bowl‖
1. Great Plains suffers a huge drought (1931)
New technology—tractors and steel plows tear-up the prairie
grasses that was holding onto soil, drought turns open soil
into a sand box
2. Huge dust storms cover ‗Great Plains‘
1. Can‘t pay banks—banks take farms
2. Many Great Plains farmers move to California
Try to get jobs on large farms
Treated poorly in California
‗Oakies‘ & ‗Arkies‘ not wanted in the West
Real GNP fell by 30% between the years 1929 and 1933.
Unemployment at its worst was 25%
Corporate profits were negative in 1931, 1932, and 1933.
Hoover‘s incessant meddling with the economy with government interventions turned the recession
of 1929 into the Great Depression.
Hoover implored big business to keep wages high (which they did) while prices were falling
causing mass unemployment.
Federal Farm Board subsidized farmers and bought their crops above world market prices to hold
the crops off the market for prices to rise. Canada and Argentina filled the world void and America
was stuck with the crops. There were too many farmers!
Smoot-Hawley Tariff increased the price of exports by 59% and foreign countries retaliated against
us, especially the automobile industry.
Andrew Mellon, Secretary of the Treasury, did an about-face and championed a massive tax
increase from 25% to 63%. Vast spending on public-works in 4 years out spent the previous 30
1. What states does the Dust Bowl consist of?
2. How did the Dust Bowl occur?
3. What novel, later movie, was written about
the Dust Bowl?
4. What was the highest unemployment
5. What did Secretary of Treasury Mellon do
with the income tax rate?
1. The New Deal
1. President Roosevelt elected (1932)
2. NY Progressive (governor)
1. Brain Trust—Used professors and government experts (some of whom were
socialists) to develop programs to fight the depression
2. Promised ―New Deal‖ for Americans (based on his cousin‘s Square Deal
3. Progressive experiment and change to fight Depression through
Keynesian economics (spend your way out of debt)
A. Fixing Banks!!!
1. Declared a banking crisis
a. Closed ALL banks/ 4 day “Bank Holiday”
b. Emergency Banking Relief Act- Passed by Congress, allowed only
sound banks to reopen, the rest remained closed
2. Fireside Chat- told Americans by radio that the good banks were safer
than putting their savings in a mattress
(30 more ‗chats‘ that Americans listened to during his presidency)
FDR mandates his landslide election as an end to prohibition and
help to Americans at every facet of life and business.
The New Deal provided government relief (relief is the depression era term for
―welfare‖) for the unemployed through the Civilian Corps, which employed workers
to do conservation work, through the Federal Emergency Relief Administration,
which employed 4 million people in make-work jobs.
Homeowners benefited from the creation of the Home Owners Loan Corporation,
which provided loans to people in danger of having their mortgages foreclosed, and
the Federal Housing Administration, which provided funds for building and repairing
The Agricultural Adjustment Act made direct payments to farmers to decrease
production. Government paid farmers to do nothing.
Business was artificially strengthened by the National Recovery Act, which
established industry codes to regulate policy on wages, prices, hours, and other
items. The construction industry got a boost from the Public Works Administration.
Labor unions benefited from Section 7a of the National Industrial Recovery Act
(NIRA), which guaranteed them the right to organize and bargain collectively.
President Franklin D.
Roosevelt signs the TVA
Act on May 18, 1933.
surrounded by various
members of Congress
from the TVA region,
and at his left shoulder
Norris of Nebraska,
after whom Norris Dam
General projects were undertaken in the name of conservation.
The Tennessee Valley Authority (TVA) was a New Deal program created to develop
the Tennessee Valley through projects to control floods, improve navigation, irrigate
land, and generate electricity.
The TVA built scores of dams that created a waterway between
Knoxville, Tennessee and Paducah, Kentucky, improved land management, and
brought electricity of millions of homes.
The TVA was criticized as a governmental interference in free enterprise.
Other New Deal conservation measures included the building of the
Hoover, Bonneville, and Grand Coulee dams and the planting of trees to curb
erosion in the Dust Bowl.
Browns Ferry Nuclear Plant in Athens,
Alabama, has three boiling reactors, each
with a generating capacity of more than
1,100 megawatts. In the summer of 1999,
TVA‘s nuclear plants set new records for
efficient operation and helped the
corporation meet an all-time peak demand
of 28,295 megawatts on 30 July.
C. A NEW DEAL
1. People were skeptical, Roosevelt sends bills to Congress
2. NEW DEAL BEGINS- 3 Goals:
a. Relief for Unemployed
b. Plans for Recovery
c. Reforms to Prevent more Depressions
3. Major New Deal Programs
*CCC- Civilian Conservation Corp
*PWA- Public Works Administration
*TVA- Tennessee Valley Authority
b. Recovery Plans
*NRA- National Recovery Act
Civilian Conservation Corps (CCC)
Federal Emergency Relief Administration (FERA)
Civil Works Administration (CWA)
Federal Securities Act*- May 1933
Federal Trade Commission* (FTC)
Security & Exchange Commission (SEC)
Home Owner‘s Loan Corporation (HOLC)
Federal Housing Administration* (FHA)
Agricultural Adjustment Act (AAA)
6,000 men employed to build a
SECOND NEW DEAL
Social Security Act*- Aug 1935
Emergency Relief Administration Act- Apr 1935
Works Progress Administration (WPA)
National Youth Administration (NYA)- Jun 1935
Rural Electrification Administration (REA)
Anti-relief protest sign, near Davenport, Iowa,
Resettlement Administration (RA)
National Labor Relations Act (Wagner Act)
Bituminous Coal Conservation Act
Farm Security Act- 1938
D. Results- Did NOT end the Depression, prolonged it!
1. Most of the Supreme Court, businessmen,
Constitutionalists disliked New Deal
2. Gave country false confidence
a. Ended banking crisis (banking welfare)
b. Helped with public sector jobs
c. Infrastructure (buildings, schools, bridges, electricity, artwork)
These were the
the Nazis were
What kind of economics did the New Deal use?
What was the name of the group of professors and
government officials Roosevelt used to create the New Deal?
What was the depression era term for ―welfare?‖
Name one of the many government agencies that the New
Deal created and what it did.
What were the three goals of the New Deal?
Most critics of the New Deal said that the government was giving away
too much money. The New Deal was also criticized by such individuals
as Senator Huey P. Long, Dr. Francis Townsend, and Father Charles
Coughlin for not spending enough money to help the needy.
The Social Security Act established benefits for:
Retired workers paid out of a fund to which both employers and employees would
Health and child welfare program
The unemployed from a payroll tax on employers
Aid to widows, dependent children, blind people, and people with handicaps was funded
by equal federal and states grants
The WPA was established under the Emergency Relief Administration to
provide immediate jobs to the unemployed. The National Youth
Administration was established to provide jobs for high school and
The National Recovery Act, the Agricultural Adjustment Act, and the Coal
V. OBJ. #5 - Critics of the New Deal
A. BIG BUSINESS!!!! (Gov‟t doing too much!)
1. Gov‟t can‟t tell us what to do (unconstitutional)
B. FDR, not doing enough:
1. “Share Our Wealth”, Huey Long Gov. Louisiana
a. Heavy Tax on the wealthy
b. Give everyone- Home, Car, $$
c. Assassinated in 1935
2. Father Coughlin, “Radio Priest”
a. Mad at FDR for not being tough enough on big business
b. Hates communist, Unions, Jews (Hitler?)
3. Francis Townsend
a. Give pensions to anyone 60+, would get jobs to
The Long family of Louisiana dominated the political life of that state for more than
50 years. The founder of the political dynasty was Huey Pierce Long, Jr., b.
Winnfield, LA, 30 Aug 1893, d. 10 Sep 1935. After studying law at Tulane University
and gaining admission to the bar (1915), Long served on the state‘s public service
commission, making a reputation as a foe of corporate interests. A Democrat, he
served as governor from 1928 to 1932. Long sponsored reforms that endeared him
to the rural poor. He provided free textbooks for schoolchildren, built roads and
bridges, and repealed the poll tax. Ruthless, cynical, and ambitious, Long ruled
Louisiana in a dictatorial fashion and created a powerful political machine. In
1932, he left the governorship to serve in the U.S. Senate, where he gained a large
following outside Louisiana by his advocacy of the ―share-our-wealth‖ plan. By
imposing high taxes on the rich, he promised to provide every family with a $5,000
homestead allowance and a guaranteed annual income of at least $2,000. By
1935, Long was a vitriolic critic of the New Deal and was considered a possible
third-party candidate for the presidency in 1936. On 8 Sep 1935, however, he was
shot by an assassin; he died two days later.
C. Supreme Court Reacts
1. 11 New Deal Plans ruled unconstitutional
2. Roosevelt Reacts: „Court Packing Scheme‟
a. Wants Court raised from 9 to 15
-President chooses new judges
-New judges would favor New Deal
3. Friends & enemies very upset!!!
a. FDR wants TOOO much POWER
b. Congress with all friends won‘t pass
law for FDR
4. FDR wins narrowly- By 1938 New Judges
a. 1 Justice switches, 1 Justice retires
1. Roosevelt had problems with the ―Nine Old Men‖ of the Supreme Court
and his governmental reforms due to their constitutional interpretations.
1. Roosevelt devised a ―court-packing plan‖ as a proposal that the President has the
power to appoint a new Supreme Court justice for each one that did not retire at age
seventy, up to a limit of fifteen. When the Paulist Catholic radio station of poor Father
James Gillis in Chicago criticized the scheme, FDR directed the FCC to take their
The plan was rejected by Congress and cost him public support.
FDR eventually replaced seven justices through resignations, retirements, and death
throughout his unprecedented four terms.
2. The last of the New Deal
1. New Deal measures passed in 1937 and 1938 included creation of the Farm Security
administration, creation of the United States Housing Authority, the second Agricultural
Adjustment Act, and the Fair Labor Standards Act.
2. Wickard v. Filburn (1942) relegated home-grown personal use crops to federal
regulation as interstate commerce.
3. The prelude to World War II and other world affairs began to take up more of the
government‘s attention. The war production was not geared to ordinary people‘s
needs. 40% of the labor force was military or war production. Tax monies from the
60% went to support the 40%, a great loss of material wealth. Unemployment was
reduced through 11 million men drafted into the military.
Maryland. May 1943.
―A drinking fountain.‖
Rexford Tugwell, an important FDR New Deal figure, admitted, ―We didn‘t admit it at
the time, but practically the whole New Deal was extrapolated from programs that
Under FDR, the average unemployment was a staggering 18% from 1933 to 1940.
The National Industrial Recovery Act (NIRA) was a contradiction. It demanded high
wages and minimum prices. Stimulating high unemployment and negating the rule
of competition in a market economy and high prices.
While millions of Americans were hungry and destitute, FDR through the Soviet
duped Secretary of Agriculture, Henry Wallace, ordered the slaughter of 6 million
pigs and the destruction of 10 million acres of cotton. The Agricultural Adjustment
Act (AAA) made food more expensive and paid farmers to produce nothing at all. If
the market price is not high enough, the farmer sells to the government and the
government stores massive surpluses waiting for prices to rise.
New Deal labor law and Social Security taxes added to the cost of wages and
caused another 1.2 million unemployed in 1938. The Wagner Act of 1935 boosted
unions and impoverished society. A study* in 2002 calculated labor
unions have cost us $50 trillion in lack of innovation and inefficiency in the past
Public-sector (government) jobs ―created with taxes‖ by the New Deal displaced
or destroyed private sector jobs which would have created real income.
FDR‘s public-works projects were rife with corruption. Distribution of projects
around the country were unethical especially in the South where the poorest
Americans resided and the least assistance from the WPA was received.
Economic scholars found a correlation in FDR‘s electoral needs and the
spending of federal dollars. Western states received more because the South
had given him 67% of their vote and was secure. WPA employees were
pressured to vote, contribute a portion of their salary, and support FDR and his
candidates through a Senate investigation committee.
*National Legal and Policy Center and the John M. Olin Institute for Employment Practice and Policy
1. How many New Deal programs were ruled
2. What was the socialist program that Huey P. Long
3. What was the government program started by
FDR that prolonged the Great Depression?
4. Name some critics of the New Deal.
1. Did the New Deal end the Great Depression?