The Great Depression and
the New Deal
1929-1939
1:00 & 7:00
Brother, Can You Spare a dime?
They used to tell me I was building a dream
And so I followed the mob
When there was earth to plow or guns to bear
I was always there, right on the job
Full of that Yankee Doodly Dum
Half a million boots went slogging through Hell
And I was the kid with the drum
They used to tell me I was building a dream
With peace and glory ahead
Why should I be standing in line
Just waiting for bread?
Say, don't you remember? They called me 'Al'
It was 'Al' all the time
Why don't you remember? I'm your pal
Say buddy, can you spare a dime?
Once I built a railroad, I made it run
Made it race against time
Once I built a railroad, now it's done
Brother, can you spare a dime?
Once in khaki suits, ah, gee, we looked swell
Full of that Yankee Doodly Dum
Half a million boots went slogging through Hell
And I was the kid with the drum
Once I built a tower up to the sun
Brick and rivet and lime
Once I built a tower, now it's done
Brother, can you spare a dime?
Oh, say, don't you remember? They called me 'Al'
It was 'Al' all the time
Say, don't you remember? I'm your pal
Brother, can you spare a dime?
Once in khaki suits, gee, we looked swell
The Plague of Plenty
• Over Production and
High Inventories
• Static Wages and
Salaries
• Over Expansion of
Credit
• Mal-distribution of
Wealth
• Tariff Policy
A “bank run”
Depression Data
• Between 1929 and 1933:
100,000 businesses fail
• Corporate profits reduced
from $10 billion to $1 billion
• The GNP drops 50%
• Stock Prices collapse
– GE: from 396 to 34
– USS 261 to 21
• 2,000,000 men hit the road
looking for work
• Median income drops 50%
“Hooverville”
Depression Data
• Median income drops
50%
• Construction fell to 1/6
• 7000 banks fail; people
lose life savings
• 200,000 evictions in New
York in 1930
• By 1932, 13 million were
out of work, 25%
• 40% unemployment in
Detroit
• Farm prices drop 60%
Looking for work
Causes of the Depression
• Activity
Socio-Psychological Impact
•
Long term unemployment
•
Drop in birth rates
•
Increase in divorce rates
•
Massive foreclosures & homelessness
•
Malnutrition and poor health
•
Psychological & emotional damage
•
Dust Bowl-Westward migration:
“okies” & “arkies”
Dust Storm in Oklahoma
Socio-Psychological Impact
“I saw and approached the hungry
and desperate mother, as if drawn by
a magnet. I do not remember how I
explained my presence or my camera
to her, but I do remember she asked
me no questions. I made five
exposures, working closer and closer
from the same direction. I did not ask
her name or her history. She told me
her age, that she was thirty-two. She
said that they had been living on
frozen vegetables from the
surrounding fields, and birds that the
children killed. She had just sold the
tires from her car to buy food.”
Migrant Mother
The Dust Bowl
• The “Okie” Experience and The Grapes of Wrath
• Document Analysis
• Themes for Grapes of Wrath:
– Necessity of federal intervention in local affairs
– Technological changes in agriculture
– Plight of migrant laborers
– Gap between the affluent and the poor
– Responsibility for social problems
– Causes and patterns of American mobility
Herbert Hoover
• Bright, hardworking,
honest, talented,
organized, an orphan,
and later mining
engineer
• Believed in “rugged
individualism”
• Efficient, cold,
progressive, detached,
conventional
Herbert Hoover
Hoover
Did not believe in direct relief
to the unemployed
Reconstruction Finance Corp:
provide loans to business
and aid to state & local
govts to hire unemployed
Agricultural Marketing Act:
assist farmers by buying
surpluses
Hawley-Smoot Tariff: highest
in U.S. History; stopped
international trade
Franklin D. Roosevelt
TR’s cousin
Wealthy family
Ebullient , pragmatic,
common touch
Governor of New York
Contracted polio;
paralyzed from waist
down
Idolized Teddy Roosevelt
FDR
1932 Election
Inaugural Speech
“This great Nation will
endure as it has endured,
will revive and will
prosper. So, first of all, let
me assert my firm belief
that the only thing we
have to fear is fear itself—
nameless, unreasoning,
unjustified terror which
paralyzes needed efforts
to convert retreat into
advance.”
March 4, 1933
New Deal: Philosophy
• Act—and act now!
• “prime the pump”:
Federal government
stimulates the economy
• inflationary policies: raise
prices
• give direct aid to
individuals
• pre-empt radical
solutions: both right and
left
• Above all, be pragmatic!
“fireside” chat
Shoring Up the Financial State
• Emergency Banking Relief Act (March 9) allowed Treasury to
reopen solvent banks & reorganize insolvent ones
• Federal Securities Act (May 27) mandated full disclosure on
all new securities
• Home Owners’ Loan Corp. (June 13) created to refinance
home mortgages
• Glass-Steagall Act (June 16):
– Separated commercial & investment banking
– Federal Deposit Insurance Corp. created to insure bank
deposits up to $5,000.00
• Securities Exchange Commission created in 1934 to monitor
Wall Street
Creating Jobs for the Unemployed
• Civilian Conservation Corps (March 31, 1933) put young,
unmarried men to work planting trees & creating parks
– Almost 3 million men, aged 18-25, participated
– 2,650 segregated, military-style camps
– Paid nominal $30 a month, but point was to keep them out of the labor
force and bread lines
• Federal Emergency Relief Administration (May 12, 1933) gave
grants to states to fund relief efforts
– Run by Harry Hopkins
– Set up some works programs
• Public Works Administration (June 12, 1933) hired private
contractors for large infrastructure projects
– Run by Secretary of the Interior Harold Ickes
– Spent $3.3 billion on public projects
– Used private contractors who hired union members & did not
discriminate
Helping the Farmers
• Agricultural Adjustment
Administration (May 12,
1933)
– Run by George Peek
– Set crop quotas & prices
based on 1909-14 levels
– Worked through state & local
officials, so benefits went to
middle & upper class
– Declared unconstitutional by
Supreme Court in U.S. v.
Butler (1936)
• Emergency Farm Mortgage
Act (May 12, 1933) allowed
refinancing of farm
mortgages
“dumping” milk
The Tennessee Valley Authority
May 18, 1933
• Built dams and provided
cheap electricity
• Government bought
nitrates for military use
• Flood control,
electrification, crop
management
• Caused vast pollution
• Rural Electrification
Administration created in
1935 to bring electricity to
rural areas
TVA
National Recovery Administration
June 16, 1933
• N.R.A. meant to be
centerpiece of New Deal –
based on T.R.’s New
Nationalism
– Run by Gen. Hugh Johnson
– Joint committees of labor,
management & government
created fair practice codes
– Section 7(a) guaranteed
union recognition
– Declared unconstitutional by
Supreme Court in Schecter
Poultry Co. v. U.S. (1935)
“Blue Eagle”
Critics on the Right
• Conservative Democrats formed the American
Liberty League – opposed New Deal as corrupt
patronage politics
• Hoover & Republicans labeled the New Deal
“socialist” & warned of loss of personal liberty
• Supreme Court invalidated legislation:
– Schecter Poultry Co. v. U.S. - declared NRA restricted
intrastate commerce & delegated legislative power to
executive branch
– U.S. v. Butler - invalidated AAA as attempt to use taxing
power to unconstitutionally regulate agriculture
Critics on the Left
• Father Charles Coughlin created the National Union
for Social Justice
– Claimed New Deal really benefited wealthy, not poor
– charged that an international conspiracy of Jewish
financiers was behind Roosevelt
• Dr. Francis Townshend suggested a revolving
pension scheme for the elderly
• Sen. Huey Long (the Kingfish) wrote Every Man a
King & created Share Our Wealth Clubs
– Called for seizing incomes above $1 million &
redistributing to all families
– Planned to run for president in 1936
0:00
The Second New Deal, 1935:
• Works Progress Administration
– Run by Harry Hopkins
– Spent $4.8 billion
– Employed 8.5 million
– put people to work using their existing talents
• Wagner National Labor Relations Act
– Guaranteed unions right to organize &
bargain collectively
– Est. National Labor Relations Board to
supervise elections & mediate disputes
W.P.A. Projects
Federal Artists Project
Federal Writers Project
The Second New Deal (cont.):
Social Security Act (1935)
– Provides pensions to elderly
– financed by flat payroll tax
– Aid to Dependent Children
(later AFDC) was 1st federal
direct welfare program
– Unemployment benefits
– Disability payments
– restaurant workers, farm
workers, hospitality workers
exempted
The Three “R”s
Relief
Recovery
Reform
• Direct aid to individuals
& families
• Jump-start the
economy
• Reform the economic
structure
1936 Election
“Court-packing”
• Judiciary Reorganization
Bill
– Increase Supreme Court
Justices to 15
– Mandatory retirement at
70
• Grab for dictatorial
power?
1932 Supreme Court
1937 Recession
Federal Deficit
New Deal
The Third New Deal, 1937-38:
• United States Housing Authority (1937)
– Long-term loans to local agencies & subsidized rents
– Redlining continued segregation
• Farm Security Administration (1937) gave loans to tenant
farmers
• Second A.A.A. (1938) required a 2/3 vote in plebiscites to set
quotas
• Food, Drug & Cosmetics Act (1938) forbade false or
misleading ads – regulated by FTC
• Fair Labor Standards Act (1938) set min. wage & max. 44hour work week, overtime pay, banned child labor
New Deal Reforms Activity
Summary
How effective was the New Deal in dealing with the
following socio-economic challenges of the Great
Depression?
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Unemployment
Depressed farm prices
Banks
Stock market
Starvation & Housing
Low national morale