The Great Depression and F.D.R’s NEW DEAL Ms. Hoye AP and REG US 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 Rugged individualism: Americans are self-sufficient and would workthemselves out this depression through hard work and determination. Charitable organizations: Churches, volunteers and people helpingone another.
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 sales Flooded 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
domino effectStock 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%
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 wentto withdraw their money, it had been lent out so they lost savings.
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 Dropin farm prices Economic devastation – Loss of farms – Overuse of land Fieldsleft 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 projects Provided jobs lost in private sector To pay for projects—raise taxes or borrow from banks Reconstruction Finance Committee – Provide funding for banks, railroads, and agricultural institutions Too cautious with loans to be effective
Hoovervilles or shantytowns, were migrant towns ofpeople 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
Hoover Cont’d…… 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 Hooverdid more to expand role of federal gov’t than any previous president
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 1930s. •It was caused by misuse of land and years of sustained drought. •Millions of hectares of farmland becameuseless, 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.
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 outof the depression and put people back to work……
Franklin Delano Roosevelt• 32nd President• New Deal• Fireside Chats• “The only thing we have to fear is fear itself”• Talent for giving hope and confidence to Americans
•Democrats •FDR appealed to the common man because he was crippled •Eleanor became the eyes and ears for her husband •Promised to help thepeople through the Great Depression by direct governmental involvement FDR & ELEANOR
Eleanor Roosevelt visits West Virginia Coal Mine, 1933Eleanor Roosevelt visiting a West Virginia Coal Mine, 1933(c) Bettmann/Corbis
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
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.”•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.
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 Great100 days Depression.
NEW DEAL CARTOONGovt. programs which provided directrelief to suffering Americans through govt. spending………Renew democracyRestore confidence in the bankingStimulate economy Social EngineersPut people back to work. Brain TrustRestore self confidence How? FDR’s 3 R’s Relief: ease suffering of the needy Recovery: begin economic growth Reform: help prevent future economic crises
alphabetRELIEF: Ease Suffering of the Needy FERA / 1933 Federal Emergency Relief Act Distributed $500 million of direct aid to unemployedworkers such as food, clothingand grants of money to cities.
alphabetRELIEF: Ease Suffering of the NeedyWPA / 1933 to 1943Works ProgressAdministration Employed 8.5 millionworkers in constructionand other jobs, but more importantly provided work in arts, theater,and literary projects.
wpa •Works Progress Administration (WPA), the New Deals main relief agency. •People employed by the WPA at its peakwas more than 3 million •2,500 hospitals •5,900 schools •13,000 playgrounds •125,000 public buildings
RECOVERY: Begin Economic Growth 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
TVA •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.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
REFORM: Prevent Another Depression FDIC / 1933Federal Deposit Insurance Corporation Created federally insured bank deposits ($2500 per investor at first) to prevent bank failures. alphabet
REFORM: Prevent Another Depression SEC / 1934 Securities and Exchange Commission Regulated stock market and restricted margin buying, and frauds. alphabet
REFORM: Prevent Another Depression SSA / 1935 Social Security Act It providedretirement pensions, unemployment insurance, aid toblind, deaf, disabled, and dependent children. alphabet
•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 wereunable 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 over3,000,000 men served in the CCC .•Goal: Keep teenage youngmen 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 onflood 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
Criticisms of New Deal US government and President toopowerful Violated laissez faire Supreme Court declared NIRA andAAA unconstitutional Deficit spending: Govt. spends $$$ tostimulate the economy and help peopleeven if it means US Govt. goes intodebt. Welfare state----Created a populationof Americans who relied on the USGovt. to live 100 days
Successes of New Deal 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 economyPut people back to work….Improved morale and self-confidence of the people US Govt’s. role changes and became directly involved in helpingpeopleWWII ended the Great Depression not FDR’s New Deal 100 days
•Economic system based on cooperation rather than competition • Believes in governmentownership 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 toallow the president to namea new federal judge for eachwho did not retire by age 70 and 1/2. •6 justices over age limit. •Would have increased thenumber of justices from 9 to15, giving FDR a majority of his own appointees on the court.•The court-packing bill was not passed by Congress.
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