Ch 32 and Ch 33
THE GREAT DEPRESSION AND
THE NEW DEAL
1929 Stock Market Crash
 October 24, Black Thursday, a record 12,894,650
shares were traded. Investment companies and
leading bankers attempted to stabilize the
market by buying up great blocks of stock,
producing a moderate rally on Friday.
 On October 29, 1929, Black Tuesday hit Wall
Street as investors traded some 16 million shares
on the New York Stock Exchange in a single day.
Billions of dollars were lost, wiping out
thousands of investors.
The Great Crash
Bank Panic
US Gross Domestic Product
Economic figures:
unemployment-24.9% in 193315 million without work
Bank Failures-more than 5000
by 1933-savings accounts
wiped out
The Human Impact
The Dust Bowl-key facts
 An 150,000-square-mile area, encompassing
the Oklahoma and Texas panhandles and
neighboring sections of Kansas, Colorado,
and New Mexico
The Dust Bowl
 Due to drought, farming practices, the soil
lacked the stronger root system of grass, so
the winds easily picked up the loose topsoil
and swirled it into dense dust clouds, called
“black blizzards.”
Causes of the Great
Depression
 Uneven distribution of wealth-Top 1% had total
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income of bottom 42%
Overproduction of key industries and farmers
Easy credit led to Increasing levels of consumer debt
Monetary policy caused deflation
International Policies on debt weakened Europe and
Banks
Tariff policies hurt world trade
Stock market speculation and margin buying-RCA
multiplied by nearly 5 times
Stock market crash caused panic
Herbert Hoover
 Sec of Commerce under Coolidge
 Great Humanitarian-organized food relief in
Belgium
 Philosophy of Rugged individualism
Hoover-Measures to fight the
GD
 1. Called on business leaders to not lay off workers
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or cut wages
2. 1930-Hawley-Smoot Tariff Act
2. Called for public works programs to spend
millions of dollars-”Hoover Dam”
3. Expansion of the Federal Farm Board (FFB) to
help raise prices by buying excess crops
4. 1932- The Reconstruction Finance
Corporation (RFC) which provided financial support
to state and local governments and made loans to
banks, railroads, mortgage associations
Hoovervilles
Bonus Army Invades Wash DC
 1924, Congress voted to give a bonus to WW1
vets - $1.25 for each day served overseas,
$1.00 for each day served in the States. The
catch was that payment would not be made
until 1945.
The Bonus Army-1932
 Some 15,000 veterans, many unemployed
and destitute, descended on Washington,
D.C. to demand immediate payment of their
bonus. Congress rejected
 A month later, on July 28, Attorney General
Mitchell ordered the evacuation of the
veterans President Hoover ordered the army
to clear out the veterans. Used Tear Gas and
bayonets, thousands of casualties
 General Douglas MacArthur in command.
Major Dwight D. Eisenhower served as his
liaison with Washington police and Major
George Patton led the cavalry.
 Eisenhower later wrote, "the whole scene was
pitiful. The veterans were ragged, ill-fed, and
felt themselves badly abused. To suddenly
see the whole encampment going up in
flames just added to the pity."
1932 Election
 GOP-Herbert Hoover re-nominated
 Democrats-Franklin Delano Roosevelt-Governor
of New York
Experimented with progressive policies in NY state
Called for direct relief to help poor and
unemployed
Called for a “New Deal” for the American people
FDR key facts
 Wealthy upstate NY family
 1905-Married Eleanor Roosevelt
 Former Assistant sec of the Navy
 VP candidate in 1920
 Suffered Polio in 1921-paralyzed from waist
down-wheelchair
 Difficult recovery and therapy to recover
 1928-Governor of New York
Results!
Landslide!
FDR
 March 4, 1933-FDR Inaugurated as president-
“The only thing we have to fear is fear itself
 Hoover still president until March 4, 1933-
Lame Duck Period for Hoover
 Economy continued to decline until
Inauguration Day-poor relations between
Hoover and FDR
 25% Unemployment when FDR took office
The first 100 Days-(March 9June 16, 1933)
 National Banking holiday from March 6-
March 10
 Congress passes Emergency Banking Relief
Act-March 9, 1933
 Special Session of Congress to deal with crisis
The 3 “Rs” of the New Deal
 Called for 3 Rs-Relief, Recovery, and Reform-
Progressive legislation
 Relief-direct aid to people who were
suffering
 Recovery-Programs that created jobs
 Reform-Long range changes to prevent
another depression
Alphabet Soup
Glass-Steagall Banking
Reform Act
 Established FDIC
 Insured deposits up to $5000
 Took the nation off the gold standard-
ordered all private holding of gold to be
surrendered to the treasury in exchange for
paper currency-caused more dollars into
circulation and inflation
CCC-Civilian Conservation
Corps
 employed 3 million men doing conservation
projects
FERA-Federal Emergency
Relief Administration
 run by Harry Hopkins-gave 3 billion to states
to give direct relief to unemployed. Also set
up Civil Works Administration-run by
Hopkins, employed people in boondoggle
jobs
AAA-Agricultural Adjustment
Act
 paid farmers to reduce surpluses of ag
products by placing a tax on processors,
extremely controversial and declared
unconstitutional in 1936, 2nd AAA passed in
1938
NRA-National Recovery
Administration
 Complex new deal program regulation
business, industry, and labor-set prices, est.
codes of fair competition, floor for wages,
maximum hours of work, declared
unconstitutional in 1935 by SCOTUS in the
Schechter “sick chicken” case
PWA-Public Works
Administration
 run by Harold Ickes, 4 billion spent on 34000
projects, also set up relief programs
TVA-Tennessee Valley
Authority
 Huge government project to dam up the
Tennessee river with a series of dams and
create hydroelectric power plants that would
revitalize the Tennessee Valley Area
Reelection of FDR in 1936
Results?
 Modest recovery by 1936
 1937-“Roosevelt recession”-unemployment
back to 19%
 New payroll taxes and income taxes
 Uncertainty caused by government policies
 Cutback in government spending over desire
for balanced budget
2nd New Deal-1934-1936
 Social Security Act (1935)-system of
unemployment and old age insurance as well
as payment to disabled and orphans-paid for
by payroll tax
WPA(1935)-Works Progress
Administration created jobs by spending $11 billion on public
buildings, bridges, and roads, also the Federal
Art Project
National Labor Relations
Act-(1935) (Wagner Act) right for unions to organize and collectively
bargain as well as set up National Labor
Relations Board
Fair Labor Standards
Act(1938)
 set up first national minimum wage and
maximum 40 hour work week
New Deal Opposition
 Right (Conservatives) New Deal doing too
much and represents an unconstitutional
p0wer grab. New deal moves us towards
Socialism
 Left -New Deal not doing enough!!! The new
deal is too tepid…FDR should move to
nationalize industries for the good of the
common man.
The Liberty League
Wealthy
industrialists,
business leaders, and
the rich that opposed
the size and scope of
Federal government
intrusion in the
economy, called FDR
a “traitor” to his class
Governor Al Smith
and former President
Hoover called for “a
holy Crusade for
Liberty”
The Supreme Court of the US
1936-Schechter
Poultry v United
States Court
rules that NRA
Unconstitutional
1936-US v Butler
Court rules that
the AAA is
unconstitutional
The Court Packing Scheme
 For every judge over 70 who did not retire FDR
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could appoint a new judge
Maximum number could be 15 justices
Congress and the country outraged-defeats plan
FDR accused of trying to be a dictator-suffers first
big political defeat
Court upholds minimum wage, Wagner act, and
SS act
FDR outlasts judges who start to retire, replaced
by new Deal judges
Dr Francis Townsend
 Called for the federal government to provide
$200 a month to all citizens over the age of 60
funded by a national sales tax
Father Charles Coughlin
 radio priest listened to by millions that called
for nationalization of major industries and
eventually ranted on anti-Semitic topics and
attacked FDR
Senator Huey Long
 Senator Huey Long- charismatic governor of
LA and Senator that called for a “Share the
Wealth” program that raised income and
inheritance taxes on the wealthy and
guaranteed a minimum income for all
American families-(assassinated in 1935)
Legacy of the New deal
 Modest recovery by 1936
 1937-“Roosevelt recession”-unemployment back to
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19%
New payroll taxes and income taxes
Uncertainty caused by government policies
Cutback in government spending over desire for
balanced budget
April 1937-FDR adopts policies of john Maynard
Keynes
Keynesianism-use of government deficit spending
and fiscal policy to stimulate growth
Legacy continued
 1938-loss of momentum as GOP made gains in Congress-shift to
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focus on international affairs
National debt skyrocketed because of government spending
Tremendous growth in the size and scope of federal government
bureaucracy
Criticism of “creeping socialism” and class warfare by big
business
Criticism of dictatorship of FDR-attacks on SCOTUS
Defenders argued that it saved capitalism and American
democracy at a time when both were under assault
Powerful presidential leadership in a critical time to raise morale
and lift spirits
GD finally ended by lend lease act and WW2