March 07, 2009

Stock market boomed throughout the 1920s.

And consumer borrowing, fueled by advertising, consumerism, and a belief in the future, also boomed.

March 07, 2009

The Great Depression · Tuesday, October 29, 1929 ("Black Tuesday") *Less than 8 months after Hoover won election in landslide *DJIA Lost 50% of its value in a month --started a 3-year plunge, lost almost 90% in three years

March 07, 2009

Causes of the Great Depression · Stock market speculation -buying stocks not based on future value of earnings, but based on expectation share price would rise regardless of earnings -buying on margin (borrowing up to 90% of the money invested) · Income inequality -top 5% richest Americans earned 33% of all income · Overuse and availability of consumer credit -Installment buying fueled by advertising, consumerism, belief good times would keep going · Weak farming economy -Overproduction, high debt, low farm prices -Severe weather, long drought · Global economic problems -Germany sufferign under war reparations -France and England owed U.S. from war loans -Dawes plan broke down after - after Black Thursday, US. banks stopped loans to Germany -High U.S. tariffs resulted in retaliation, retarding global economic growth · Government policies -High tariffs -Relatively light regulation on businesses, banks, lending, margin buying

March 07, 2009

Effects of the Great Depression · Dates: -Started in 1929, -Bottomed out in 1932 (clear only in hindsight) -Full recovery only in 1939 · Gross National Product (GNP) plunged 40% in 4 years (1929-1933)

· Unemployment (ex-farmers) peaked at 25% in 1932-33 · 20% of banks failed

· Impact felt across classes, geographies, industries

March 07, 2009

What Hoover Tried · Sometimes unfairly portrayed as laissez-faire President unwilling to intervene in economy (not accurate) -Rejected pure "laissez-faire" policies of Treasury Secretary Mellon -Advocated "volunteerism" - voluntary cooperation between industry, government, individuals to solve problems -Concerned direct government aid to individuals would sap American self-reliance, individual achievement -Hoover initially thought prosperity would soon return (not alone) · Mexican Repatriation (1929-1937) -Fear Mexicans were taking American jobs -400-500,000 Mexicans forced to return to Mexico under force, threat of force, or intimidation -Mexicans had been excluded from Quota Act of 1924 · Hawley-Smoot Tariff (1930) -Big tax increases on foreign imports -Designed to: *Protect U.S. businesses from foreign competition *Raise money for U.S. Government -In reaction, Europeans established retaliatory tariffs *Reduced trade for all nations, global economies worsened ·

March 07, 2009

· Hoover Debt Moratorium (1931) -Dawes plan fell apart after Black Tuesday -European banks failing, in crisis -Hoover proposed one-year moratorium on Germany reparation, European debts to United States -France refused to go along, formal agreement to suspend debts never agreed upon, debt defaults led to more bank failures By 1931, depth and length of Depression led Hoover to try more drastic interventionist measures · Federal Farm Board -Enlarged existing program to help farmers stabilize prices, but too modest to make difference · Reconstruction Finance Corporation (RFC) -Government agency created to prop up failing RRs, banks, insurance companies, etc. -Emergency loans to stabilize key businesses, stability would "trickle down" to smaller businesses, individuals -Democrats didn't support, thought it would enrich a few large businesses and not help end the Depression

March 07, 2009

Protests during Hoover's Term · Farm Holiday Association -Attempt by farmers to "go on strike" and keep 1932 crops from reaching market in attempt to raise prices -Some violence, largely unsuccessful · Bonus Army ("Bonus Expeditionary Force" or "Bonus March") -WWI veterans had been promised bonuses payable in 1945 (with interest) -43,000 marched on Washington D.C. to force early payment of bonuses *Included wives and families -Camped in "Hoovervilles" in Anaconda Flats, VA, current site of Pentagon -Bill to pay bonsues passed House, stalled in Senate, Hoover did not support paying early -Ordered Gen. MacArthur, Major George Patton to evacuate Bonus Army -Overzealous army exceeded authority, shot and killed two Bonus marchers -Came to represent Hoover's political clumsiness, severity of Depression, economic tensions

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Election of 1932 · Hoover v. Franklin Delano Roosevelt -New York Governor · FDR won in electoral landslide, Hoover won only six states · FDR's platform: -"New Deal" for American people -Repeal of Prohibition -Direct aid to unemployed -Cuts in Government spending · Democrats also won large majorities in House and Senate · Hoover offered to work with President-elect between November 1932 and March 1933 -FDR refused, not wanting to be associated with any Republican ideas -20th Amendment ("lame-duck" Amendment) changed inauguration date from March to January to minimize problem in future (1933)

March 07, 2009

FDR · 5th cousin to TR, married TR's niece Eleanor Roosevelt · Suffered debilitating polio attack in 1921, would never walk unaided again -Extent of disability not publicly known during his lifetime · Former Governor of NY, Asst Secy of Navy · Expanded size of federal government · Greatly enlarged power of Presidency relative to Congress, Courts · Eleanor Roosevelt one of the strongest first ladies ever -Wrote columns, made speeches, traveled, advocated for minorities -Some but not all historians believe Eleanor Roosevelt was gay, and that her marriage to FDR was a marriage of convenience (FDR had a long-term affair with one of Eleanor's aids)

March 07, 2009

Question: WWII memorial on the Washington Mall depicts FDR in a wheelchair, although it was his clear wish not to be shown this way. Many advocoates for people with disabilities assert it is important to show him as he really was... what do you think?

March 07, 2009

The New Deal · The Three "R"s of the New Deal -Relief for people out of work -Recovery for businesses, economy -Reform of economic institutions · FDR relied on a Brain Trust of professors and economic advisors -Diverse group (African-Americans, Catholics, Jews, women) *First woman in cabinet = Frances Perkins (Labor) -Louis Howe, Rexford Tugwell, Raymond Moley, Adolph A. Berle, Jr. · The First 100 Days -FDR called Congress into special 100-day session immediately upon being inaugurated -Congress passed every FDR request into law during the 100 days! -Many Presidents now routinely discuss their first "100 days" now.

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Fireside Chats · FDR used informal radio speeches to address the nation, gain popular support for his plans · Enormously popular, FDR effectively used his warm personality, political skill · Gave fireside chats from time-to-time, not on regular schedule, 30 over the course of 11 years

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Bank Holiday · Banks failing in early 1933 at alarming pace (5000 in 1933) · FDR took office March 4, 1933 · FDR ordered banks closed March 6, 1933 · Emergency Banking Act passed March 9, 1933 -Created "de facto" deposit guarantees · 1st "Fireside Chat" March 12, 1933 -Explained bank crisis, EBA, why banks now safe · Banks re-opened March 13, 1933 -More than 1/2 hoarded cash returned to banks -Bank stocks bid back up when stock market reopened March 15, 1933 Repeal of Prohibition · Campaign Promise · Prohibition repealed, repeal ratified by the states in October 1933 · Beer-Wine Revenue Act designed to raise money for federal treasury

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Financial Recovery Programs · Emergency Banking Relief Act (covered above) · Federal Deposit Insurance Corporation (FDIC) -Guaranteed individual bank deposits · Home Owners Loan Corporation (HOLC) -Refinancing of small homes to prevent foreclosures · Farm Credit Administration -Low-interest farm loans and mortgages to prevent farm foreclosures Unemployment Relief · Federal Emergency Relief Administration (FERA) -Grants to state and local governments to provide direct relief (e.g. soup kitchens) -Harry Hopkins (close friend and adviser of FDR) · Public Works Administration -Money for state and local governments to build roads, bridges, dams, etc. -Created thousands of jobs · Civilian Conservation Corps (CCC) -Employed young men on federal lands · Tennessee Valley Authority (TVA) -Experiment in regional development, public planning -Directly hired thousands in one of nation's poorest regions -Built electric power plans, dams, flood control -Sold electricity to residents at lower rates

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New Deal Buildings Hall County Courthouse, Gainesville, GA

Atlanta Police Station and Jail

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Industrial Recovery Programs · National Industrial Recovery Administration (NIRA) -Hugh Johnson -Attempt to guarantee reasonable business profits and fair wages -Suspended antitrust laws -Set codes within an industry for wages, hours, production levels, prices -Guaranteed workers right to organize -Lasted 2 years with limited success -Declared unconstitutional in Schechter v. United States (1935) *Violated Separation of Powers (delegated legislative authority to President) *Overstepped commerce clause authority · Agricultural Adjustment Administration (AAA) -Designed to set farm production limits, raise farm prices by lowering production -Offered to pay farmers for every acre plowed under -Also declared unconstitutional in 1935

March 07, 2009

Other programs of the "First New Deal" enacted after the first 100 days: · "First New Deal" -Mostly Short Term Recovery Programs -1933 and 1934 · Civil Works Administration -Hired laborers for temporary construction jobs · Securities and Exchange Commission -Regulate stock market -Restrict speculative practices (like buying on margin) · Federal housing Administration (FHA) -Insured bank loans for building new houses, repairing old ones · Gold Standard Abandoned -Dollars no longer redeemable in gold -Attempt to halt deflation (lowering of prices)

March 07, 2009

The Second New Deal · Focused on relief and reform (vs. recover of First N.D.) · Midterm elections in 1934 added to Democratic majorities · Relief Programs -Works Progress Administration (WPA) *Much large in scale than First New Deal programs *Spent billions to employee people formerly on relief *Paid 2x relief rate but less than going wage *Workers built public works projects (building, bridges, roads, etc.) *Unemployed artists paid to paint murals, write plays, etc. *National Youth Administration part of WPA, helped employee students and young people -Resettlement Administration *Provided loans to sharecroppers, tenants, small farmers

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WPA Murals

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Second New Deal Reforms · National Labor Relations Act (Wagner Act) -Guaranteed right to join union -Guaranteed union's right to collectively bargain on behalf of members -Outlawed unfair labor practices -Created National Labor Relations Board (NLRB) to enforce the law, protect workers' rights · Rural Electrification Administration (REA) -Provided loans for rural electricity cooperatives · Federal Taxes -Significantly increased income taxes on wealthy -Increased gift taxes, capital gains

March 07, 2009

The Social Security Act (1935) · Federal insurance program funded by payroll taxes from employers and employees · Retirement payments to those over 65 (now 67) · Also protected workers who disabled, dependents FDR was easily re-elected in 1936, carrying every state except Maine and Vermont and winning ~60% of the popular vote. -Republicans ran Alf Landon, progressive governor of KS -Business generally against Roosevelt, but he was very popular with rank-and-file

March 07, 2009

Opposition to the New Deal · Liberal Critics -Socialists, Extreme liberal Democrats thought FDR did too much for business, not enough for *unemployed *working poor *ethnic minorities *women *elderly · Conservative Critics -Thought the New Deal gave the Federal Government too much power -WPA and Wagner Act "bordered on Socialism, or even Communism" -Business owners worried about: *Increased regulation *Pro-union legislation *Deficit spending -American Liberty League formed by Republicans and Convservative Democrats to stop the New Deal from "subverting" U.S. economic and political system · Demagogues -Extreme populists seeking to exploit fear and uncertainty by offering simplistic solutions -Father Francis Charles E. Coughlin *Catholic Radio Priest (weekly addresses) *Advocating nationalizing banks, inflating currency *Anti-semitic, fascist *Eventually reigned in by Catholic Church -Dr. Francis E. Townsend *2% federal sales tqx to fund retirement incomes *Townsend's popularity contributed to FDR's support for Social Security (more modest plan) -Huey Long "The Kingfish" (LA) *"Share Our Wealth" program = guaranteed income of $5,000 funded by taxing the wealthy *Announced intention to run for President in 1935, assassinated during campaign

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March 07, 2009

The Supreme Court · Struck down two "First New Deal" programs in 1935 (AAA & NIRA) as violating separation of powers (gave President legislative power) · Roosevelt interpreted his landslide reelection in 1936 of mandate to continue New Deal Judiciary Reorganization Act of 1937 · The "Court Packing" Bill · Size of Supreme Court not mentioned in Constitution, set by Congress · FDR proposed in 1937 (never passed) · President could appoint an additional Supreme Court Justice for every justice who was 70.5 years old -Would have allowed FDR to appoint up to six new justices, presumably "packing" the court with his supporters -President's plan was very unpopular, even with many Democrats *First major legislative defeat for FDR -Plan was never passed, but Supreme Court started warming towards New Deal Legislation, approving several programs in 1937 *Social Security, Wagner Act, passed Supreme Court scrutiny -Justices started to retire, FDR would appoint 8 before he died in 1944, so issue became moot. · Traditionally, history books discussed Justice Owens as "switching his position" on New Deal under threat of Court Packing ("The switch in time that saved nine.") but most historians now reject this interpretation...

March 07, 2009

Unions in the 1930s · Union membership tripled to 10 million (1/4 workers) by 1940, with support from pro-union Wagner Act *Had slumped badly during 1920s · American Federation of Labor (AFL) -Umbrella organization with lots of member unions -Mostly skilled workers -Largely hostile to women, minorities · Congress of Industrial Organizations (CIO) -Broke off from AFL, became chief rival in 1930s -Focused largely on unskilled workers in automobile, steel, and textile industries -More open to women, minorities

March 07, 2009

Strikes in the 1930s · Unions now protected by federal legislation, but many employers resisted · Strikes became fairly common · General Motors - Flint, MI (1937) -Sit-down strike -President, Governor, refused to send troops -GM ended up recognizing United Auto Workers (UAW) · Steel Companies recognized CIO unions after a strike at Republic Steel and recognition by the giant U.S. Steel Company

March 07, 2009

Fair Labor Standards Act (1938) · Last major New Deal Legislation · Major victory for labor · Established: -Minimum Age -40 hour work week *Time-and-a-half for overtime -Restrictions on child labor (<16) · Supreme Court approved in U.S. v. Darby Lumber Co. (1941) -Had earlier struck down child-labor protections

March 07, 2009

Life During the Depression · Many people developed "depression mentality" - financial insecurity that always remained · Women -More women worked as a % of the workforce -Often accused of taking jobs from men (although they didn't get heavy factory jobs and men usually wouldn't take "women's jobs") -Subject to discrimination -New deal legislation didn't protect women from pay discrimination · Farmers -Severe early 1930s drought ruined Great Plains crops -Great Plains became a Dust Bowl, poor farming practices and high winds swept away top soil, turned farms to dust -"Okies" relocated to California, looking for better life -John Steinbeck, "Grapes of Wrath" (1939) *1940 Film starring Henry Fonda

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African Americans · Often last hired, first fired · Unemployment rate higher than White rate · Excluded from some state and local relief efforts · Bad economy drove racial tensions -Lynchings common in South · FDR gave little support, feared loss of white Southerners · Poor Blacks got some low-paying jobs through WPA and CCC · Eleanor Roosevelt gave moral support - when AA opera singer Marian Anderson was refused use of Constitution Hall, Eleanor arranged for her to give a concert at the Lincoln Memorial · FDR did appoint about 100 Blacks to mid-level positions in federal deparments · Under pressure from Civil Rights leaders, FDR et up the Fair Employment Practices Committee in 1941 (by Executive Order) to assist minorities in gaining defense industry jobs

March 07, 2009

American Indians · Wheeler-Howard Act of 1934 reversed Dawes Act, returning land to tribes and preserving American Indian tribal cultures · John Collier, Commission of Indian Affairs was a long-time American Indian advocate Mexican Americans · Had been source of cheap farm labor in 1920s · At least 400,000 forced back to Mexico in the 1960s Mexican Repatriation - via force or intimidation