The Great Depression
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Chapter 9
The stock market crash of 1929 was as big a
shock to President Hoover as it was to other
Americans.
Before the crash, the economy seemed strong.
Before 1929, less than 4 percent of American
workers did not have jobs.
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One year later, 9 percent of the workforce was
unemployed.
As sales of their products decreased, American
businesses were forced into layoffs.
A layoff occurs when a company lets workers
go because it cannot afford to pay them.
Layoffs are often temporary.
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The Ford Motor Company, for example, was
forced to cut its number of workers by 44
percent.
By 1931, unemployment increased to 16
percent.
Eight million Americans could not find work.
Many people lost their life savings.
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President Hoover encouraged the American
people to be patient.
He believed the Depression would end with
time.
He said the nation had seen hard times before,
and each time the economy had bounced back.
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President Hoover did not feel the federal
government should have to help the
unemployed.
He believed state and local governments,
private groups, and charities should help
people.
A charity is a group that helps those in need.
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According to Hoover, America was a strong
democracy because Americans took
responsibility for their own lives.
Although Hoover had been president for less
than a year, people blamed him for causing the
Depression.
Bitter "Hoover jokes" became popular.
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Unable to make loan payments to their banks,
many people lost their homes.
In many cities, homeless people built
cardboard and tar paper shacks.
These poorly built shelters gave some
protection from bad weather.
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But people living in them had to do without
heat, lights, or running water.
These slums became known as "Hoovervilles”.
Several factors caused the Depression.
The stock market crash was only one of the
causes.
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Businesses had grown rapidly in the
1920s.
They had produced many products quickly
and often faster than consumers could buy
them.
This overproduction caused big changes in
many companies.
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As production was slowed down, workers
were laid off.
When the economy was good, people spent a
lot of money.
The strong economy encouraged them to buy
more than they could pay for.
Many people had bought things on credit.
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Credit is the practice of buying something and
paying for it later.
Then, when people lost their jobs, they could
not pay their debts.
Banks that "held paper" on unpaid loans went
out of business.
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Many foreign countries still in debt from the
war were unable to buy products from
America.
In some cases, high tariffs were placed on
American goods.
The American economy might have grown
much stronger during the 1920s if these
countries had been able to buy more U.S.
goods.
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How Did the Dust Bowl Affect Farm Owners,
Tenants, and Sharecroppers?
After World War I, farmers struggled with
great financial difficulties.
Prices for their crops continued to go down.
Many farmers were barely able to support their
families.
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In an attempt to grow more crops, many
farmers plowed up the grasslands of the Great
Plains that stretch from Montana to Texas.
In the early 1930s, these western states were hit
by drought.
The lack of rain dried out the soil.
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When the wind swept over the plains, it
created dust storms.
These weather conditions turned them into a
"Dust Bowl" that drove many farmers from
their land.
It was an economic and environmental
disaster.
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How Did Americans lose Confidence?
During the Depression, the American people
lost confidence in themselves and in their
country. People lived in fear of the future.
Businesses were afraid to make new
investments. Workers thought they could lose
their jobs at any time.
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Unemployed workers had little reason to
believe that they would ever find other jobs.
Families stood in breadlines for free food.
Homeless people slept in subways, parks, and
old empty warehouses.
Men who once worked regularly could be seen
selling apples on the street.
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Across the country, Americans became very
concerned about the nation's future.
As the economy declined, many African
Americans lost their jobs to unemployed white
workers.
African American workers, like women
workers, were often "last hired, first fired”.
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Many African Americans were sharecroppers
that farmed the land in the South.
Thousands of sharecroppers lost their jobs as
the farm owners' income declined.
Before the Depression, moving north had been
a major way for Southern African Americans to
find higher-paying jobs.
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As northern factories closed, these jobs were
lost.
Many married women of all races lost their jobs
during the Depression.
Many businesses thought that it was more
important that unemployed married men be
employed than married women.
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The weak economy did not improve as
President Hoover had believed it would.
He made plans to help the economy.
Hoover proposed the following:
• With the Agricultural Marketing Act,
Congress approved $500 million to buy extra,
or surplus, crops from farmers.
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Hoover hoped this act would stabilize farm
prices.
This plan was unsuccessful because the farm
problem was too great.
Farm prices continued to go down.
• The Reconstruction Finance Corporation was
established in 1932.
This corporation loaned emergency money to
banks, railroads, and insurance companies.
Insurance is a plan that protects against loss in
return for regular payments.
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• A federal public works program was
established and $750 million was approved to
create jobs. Some people went to work building
dams, highways, and buildings.
States and local communities were encouraged
to establish similar programs.
• A moratorium was put on payments of war
debts owed to the United States.
This put off payments of debts until later.
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Hoover hoped to ease Europe's financial
problems.
Then, he believed, these countries would be
able to buy more products from the United
States.
How Did President Roosevelt Help the Nation
Recover?
Hoover's suggestions for improving the
economy were not enough for the American
people.
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They wanted a change in the White House.
In the 1932 election, Hoover was defeated in his
attempt for re-election.
In a landslide victory, Democrat Franklin
Delano Roosevelt became the new president.
Roosevelt said he had a "new deal for the
American people."
He promised to act quickly to put the country
back on its feet.
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President Roosevelt took the oath of office on
March 4, 1933.
In a radio message, he told the American
people that the economic crisis would not
destroy the nation.
He said with confidence that "the only thing we
have to fear is fear itself."
Roosevelt promised a "New Deal" for "the
forgotten man at the bottom of the economic
pyramid."
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The plan covered three areas: relief, recovery,
and reform.
Roosevelt knew that many Americans were in
need of immediate help.
He had to find a way to get the economy to
recover from its depression quickly.
He believed that America's economic system
had to be reformed.
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Basic changes were necessary to prevent
another depression in the future.
As a young man, Roosevelt had suffered an
attack of polio.
He had to use a wheelchair or leg braces to
walk after that.
Many thought that Roosevelt's own illness
made him more concerned about the problems
of others.
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Before he became president, Roosevelt said that
he was willing to try different methods to end
the Depression.
"If one plan fails," he said, "admit it frankly and
try another.
But above all, try something."
The nation wanted action.
On March 9, 1933, President Roosevelt acted
boldly.
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In the next 100 days, this Congress passed
many important laws.
Many of these early "New Deal" laws were
based on ideas of progressive politicians before
and during World War I.
Progressives wanted more government
regulation of the economy and social welfare
programs.
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The period called the "Hundred Days" resulted
in the following government actions:
• The national "bank holiday" prohibited
people from rushing to banks and taking all of
their money out.
The government inspected banks before
reopening them.
Banks with problems could not reopen until
the problems were addressed.
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• The Emergency Banking Act made federal
loans available to banks.
• The Federal Emergency Relief
Administration loaned millions of dollars to
state agencies for families who needed food,
clothing, and shelter.
The Civilian Conservation Corps (CCC) hired
people ages of 18 to 25 to plant trees, build
roads, and work on flood control in rural areas.
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• The Agricultural Adjustment Act (AAA) paid
farmers for crops they destroyed.
This would create a shortage of products that
would in turn raise prices.
• The National Recovery Administration
(NRA) was established to help businesses
recover.
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It encouraged cooperation among business,
labor, and government.
It reduced the workweek, established a
minimum wage, and ended child labor.
·The Truth-in-Securities Act controlled selling
stocks and bonds.
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·The Tennessee Valley Authority (TVA)
employed thousands of people to work on
environmental problems in the Tennessee
River Basin.
They constructed dams to control flooding and
soil erosion and to generate hydroelectric
power.
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For the first time, rural families in this area had
electricity.
In time, inexpensive electricity changed the
area and provided stable jobs and a better
home life.
Americans were hopeful that the new
cooperation between businesses, labor, and the
government would bring the Great Depression
to an end.
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The Blue Eagle, the symbol for the NRA, began
appearing in windows of small shops and gates
of large factories.
The NRA stood for the Roosevelt
administration's first 100 days of efforts to end
the Depression.
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During the first stage of the New Deal, the
government focused on giving immediate relief
to those most in need.
These steps helped put the nation back on the
road to economic recovery.
The second stage, called the Second New Deal,
tried to make economic reforms.
These reforms changed the role of the federal
government in the lives of Americans.
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In April1935, Congress passed a $4.8 billion
jobs program.
It created the Works Progress Administration
(WPA) to put every unemployed person to
work. The WPA went on to build schools,
hospitals, playgrounds, museums, and
airports. Actors were hired to put on plays.
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Musicians were paid to give concerts.
Artists were employed to paint murals on the
walls of government buildings.
Artists also produced hundreds of posters.
They announced many new programs and
encouraged people to travel.
Eight million Americans found work with the
WPA.
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The jobs helped restore self-respect and
confidence in American workers.
The restoration of the workforce helped ease
the Depression.
More stores opened.
Factories began to hire workers as demand for
their products increased.
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The Works Progress Administration (WPA)
offered millions of Americans jobs working on
public projects.
Beginning in 1936, nearly $7 billion was spent
on the program.
The program did much to build and repair the
nation's public resources.
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Workers paved or repaired 280,000 miles of
roads.
They built 29,000 bridges and 150 airfields.
They also built 4,383 new schools and repaired
or added on to 30,000 others.
They constructed more than 130 hospitals.
The agency closed in 1943.
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Before the time of the New Deal, the federal
government usually sided with business
during labor disputes.
However the new National Labor Relations
Act, or Wagner Act, gave workers the right to
form unions.
Employers could not stop workers from
forming a union.
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The National Labor Relations Board, a
government agency, made sure the vote
whether to join a union was fair.
For the first time, the United States government
encouraged unions and employers to discuss
wages and working conditions.
Differences could be settled peacefully in a
process of collective bargaining.
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This was a way of negotiating between groups
of workers and their employers.
One of the most important reforms of the New
Deal was the Social Security Act of 1935.
Government programs took responsibility for
Americans who were elderly, unemployed, or
disabled.
Someone who is disabled faces mental or
physical challenges.
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Many of the suggestions for this law were
made by Secretary of Labor Frances Perkins.
She was the first woman to become a member
of a president's Cabinet.
During the Depression, many Americans were
in danger of losing their homes because they
could not make their loan payments.
The Home Owners Loan Corporation,
established in 1933, was designed to help these
people.
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Low-interest, long-term home loans became
available to more than a million American
families. The Federal Housing Administration
(FHA), formed in 1934, encouraged low-cost
home building and repair.
It also offered banks a guarantee of repayment
of loans to lower- and middle-income
Americans. Franklin Roosevelt was elected to
his second term as president in November
1936.
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Alf Landon, the Republican Party candidate,
carried only two states-Maine and Vermont.
It was a historically important election for
Roosevelt and the Democratic Party.
This was the first time in American history that
three groups-organized labor, farmers, and
African Americans-had voted in large numbers
for a Democratic Party presidential candidate.
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For African Americans this was a major
change. Since the late 1860s, African Americans
had generally voted for the Republican
candidates, because they belonged to the party
of Abraham
Lincoln.
Aid from New Deal programs convinced many
African Americans to vote for Roosevelt.
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Roosevelt and his New Deal programs ran into
problems with the Supreme Court.
Most of the members of the Supreme Court
believed some of the New Deal legislation was
unconstitutional.
The Supreme Court declared the National
Recovery Act and the Agricultural Adjustment
Act unconstitutional.
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This declaration angered President Roosevelt.
He believed that the "nine old men" on the
Supreme Court stood in the way of progress.
Six of the justices were over 70 years old.
Roosevelt decided to appoint a new justice for
every justice over the age of 70.
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The six new justices, Roosevelt thought, would
assure that New Deal laws would not be
overturned by the Supreme Court.
Roosevelt's decision was not well accepted.
Members of Congress denounced it as political
"court-packing”.
Many Americans also rejected the plan.
However, as the older justices retired,
Roosevelt appointed younger, more liberal
justices.
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Liberals favor change.
These young justices were some of the most
important justices in American history-Hugo
Black, William 0. Douglas, and Felix
Frankfurter.
How Did Labor Unions Change?
In 1881, the American Federation of Labor
(AFL) had been formed. This labor union was
made up of only skilled workers.
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Unskilled factory workers could not belong.
Therefore, they had no union to represent
them. The skilled workers were organized by
occupation.
Each occupation area formed its own union
within the AFL. The AFL served as a governing
body over all of the smaller unions.
One union leader, John L. Lewis, thought an
industry-wide union was necessary.
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He felt that all workers, including factory
workers, steelworkers, and autoworkers,
should be admitted to one union.
Lewis formed a committee for industrial
organizations within the AFL.
However, the more traditional labor leaders
were against this committee.
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Lewis broke away and established the
Congress of Industrial Organizations (CIO) in
1935.
The CIO united workers from all industries
into one organization.
The new union used the National Labor
Relations Act to increase its membership to 6
million workers by 1945.
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Unlike traditional unions, the CIO welcomed
all workers, skilled and unskilled, including
women, immigrants, and African Americans.
In 1955, the American Federation of Labor and
the Congress of Industrial Organizations
became one organization.
The new union was named the AFL-CIO.
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The Great Depression affected the life of most
Americans.
Many people suffered great hardships.
In the hard times, though, life went on.
People could escape into a theater and watch a
movie for five cents.
The public was eager to see a world different
from its own.
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Hollywood provided that world through
movies. The movies of the 1930s gave the
American public a new world of comedy,
musicals, and drama.
Ginger Rogers and Fred Astaire became
America's favorite dancing couple.
Child star Shirley Temple usually played an
orphan with a big heart and a positive outlook.
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Americans laughed at the crazy comedy of the
Marx brothers and their humorous adventures.
A favorite film among children in 1939 was The
Wizard of Oz.
A song from this film gave viewers hope that
there might be a happier life "Somewhere Over
the Rainbow."
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Another popular movie of 1939 was Gone With
the Wind.
It told the story of Scarlett O'Hara and the
destruction of her family's Georgia plantation
during the Civil War.
It described the American South during
another period of hard times.
At the end of the movie, Scarlett's world had
totally changed; yet she had survived.
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The message of the story seemed to be one that the
nation in the hard times of the 1930s wanted to
hear.
In 1938, Joe Louis, the heavyweight champion of
the world, stepped into the boxing ring.
His opponent was a German boxer named Max
Schmeling.
The German government published harsh words
that they said came from Schmeling: "I would not
take this fight if I did not believe that I, a white
man, can beat a Negro”.
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Schmeling never said these words.
Joe Louis had to prove that an American could
defeat a representative of Germany.
Two minutes and four seconds after it began,
the fight was over.
Louis had won.
On that night, Louis became a national hero.
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In 1936, over 5,000 athletes met in Berlin,
Germany, to participate in the Olympic games.
German leader Adolf Hitler hoped to prove
that white German athletes were better than
any other athletes.
This hope was shattered by the performance of
an African American athlete named Jesse
Owens. Owens won four Olympic gold
medals.
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In 1928, Amelia Earhart had become the first
woman passenger and keeper of the logbook
on a transatlantic flight.
She flew from Newfoundland, Canada, to
Wales in the United Kingdom.
She went on to write a book about her
experiences.
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Then, in 1932, Earhart became the first woman
to fly alone over the Atlantic Ocean.
She made the first solo flight from Hawaii to
the United States in 1935.
She gave talks to promote flying and to give
women encouragement.
In 1937, in an attempt to fly around the world,
Earhart disappeared somewhere over the
Pacific Ocean.