I.
The Depression
(a depression is a severe economic decline marked by business failures, unemployment, and low prices).
a. The Worst Years (1930- 32) “The end of the Hoover administration.
b. 12 million unemployed or 25% of the workforce (2003-5.8%)
1. Impact on Individuals
a. Many eviction b/c of inability to pay the rent
b. 5,000 banks closed (people lost their savings)
c. increased acceptance of charity/meals
d. increase # of Hobo’s = travel on trains aimlessly looking for work.
2. Bonus Army
(In the summer of 1932, World War I Vets who were promised a bonus for staying on
during the war were to be paid in 1940, however they need the money now. They built a crude
camp in Washington, D.C. waiting for congress to approve legislation to release $ for their bonus.
President Hoover asks the Police to remove the protestors. A few marchers threw rocks-shots wee
fired and 2 vets fell dead. Douglass MacArthur, Army Chief of Staff carried out the mission.
George Patton commanded 2 infantry regiments, a machine gun detachment, and six tanks down
Pennsylvania ave. By Pattons side was Dwight D. Eisenhower. Protestors fled and chased to the
other side of the Anacostia River. Their shanty town was burned and 100 marchers were injured
and one baby died.
a. This event reveals the lack of regard and the lack of assistance by the assistance by
the Federal govt.
b. This episode was the final blow to Hoover’s political standing.
3. Causes of the Depression:
a. The Stock market Crash of 1929.
Effects: Political
Economic
Social
-Hoover loses re-election
-Business losses + failures
-End of the “Flapper” era
-Dominance of the Dem. Party
-Farm failures + foreclosures
-Increased poverty + homelessness
-New Deal reform laws
-Unemployment
-Depression theme in art+literature
-Increase in Presidential powers
-Losses of personal savings
-Stress in the family
-Lower prices
II
Presidential Policies
(to revive the economy)
1. Herbert Hoover “Trickle Down Theory”
a. Cutting taxes b. Public projects c. est. Reconstruction Finance Corporation (which
provided federal funds to struggling banks, railroads, + insurance co’s to prevent bankruptcies)
c. est. Federal Farm Board- to help farmers, and to prevent falling farm prices.
d. Declaring a Debt Moratorium (a temporary halt on the payments of war debt) The
Europeans could temporarily stop making payments (1931)
2. A World Wide Depression (American Banker Dawes’s plan to stimulate a world wide
economy was interrupted by the Stock Market Crash)
Hoover’s beliefs may have extended the Depression .
1. “Rugegd individualism” he disagreed with
aiding the poor.
2. Less govt. involvement
3. Economic recovery thru the decisions of
Private businesses + individuals.
*Many of his programs would have provided
some relief but were “too little too late”. He did
not sufficiently fund the organizations.
2. Franklin Deleanor Roosevelt (1932 – 1944)
FDR tries to restore American confidence in the economy during his first inaugural address, “ so first of all
let me assert my firm belief that the only thing we need to fear is fear itself”
a. “New Deal” The President + advisors suggest legislation and Congress legislates
programs.
B. Relief
- Bank holiday
-Emergency Banking Act
-Fed. Emer. Relief Act
-Civil Works Admin.
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Recovery
-Agriculture Adjustment Act
-Nat’l Industrial Recovery Act
-Homeowner Loan Corp.
-Work Progress Admin.
Reform
-Security + Exchange Commission
-FDIC
-Social Security Aministration
-Nat’l Labor Relations Board
Eleanor plays an active role in FDR’s campaign + Presidency b/c of his paralysis.
FDR breaks tradition + flew to Chicago to accept the nomination from his delegation
Wins the 1932 Pres. Election ( against Hoover) by a landslide.
C. The “ Hundred Days” - reassured Americans through the radio in “Fireside Chats” w/I the 100
days many laws were enacted that aided the average person.\
1. “100 Days” reforms:
a. closed banks temporarily “Bank Holidays” 1933
b. insured bank deposits ($5,000)
c. paid farmers to reduce production
d. encouraged businesses to est. “fair” prices
e. est. minimum wage + 40 hours work week.
2. FERA (Federal Emergency Relief Act)
a. Harry Hopkins (Care free spender) gave out $5 million in contracts during the 1 st two
hours of his administation ---does all the relief work.
b. Public Works Program – govt. funded projects to build factories
c. CWA (Civil Works Administration – provided jobs for building or improving roads,
parks, airports, + other facilities to the unemployed.
a. 4 million employees
d. CCC (Civilian Conservation Corp. used unmarried men to work restoring +
maintaining forests, beaches, + parks. (They earned $1. a day + lived in camps free
of charge. A. 2.5 million.
3. NIRA (National Industrial Recovery Act – 1933)
a. NRA (National Recovery Administration) - tried to stabilize the economy.
b. Est. work code of ethics, minimum wage, + allowed collective bargaining.
c. PWA (Public Works Admin)
1. Secretary of the Interior Harold Ickes (very stingy)
d. $3.3 billion budget. He built roads, pools, bridges (ex. Triboro Bridge
e. SEC (Agriculture adjustment Administration)
4. SEC (Security Exchange Commission) to regulate the stock market
5. AAA (Agriculture Adjustment Administration) tried to raise farm prices thru subsidies or
govt. financial assistance. Paid farmers not to raise certain crops + animals, lower production, it was hoped,
would raise prices.
6. TVA (Tennessee Valley Authority) helped farmers + created jobs in one of the country’s least
developed regions. The TVA provided cheap electric power to the Tennessee River Valley as well as
building dams and reservoirs to hold water.
Why don’t we have Depressions like the one in the 1930’s?
Because of the changes made since 1929.
1. FDIC – to prevent runs on the banks
2. Curbs – stoockmarket margins raised to 50%
3. Unemployment Insurance + Union Plans – lost job relief
4. Social Security/ Medicare/ Welfare – even if the economy is bad, these people still get paid +
they can still purchase + contribute to the economy.
5. Govt. Statistics
***John Maynard Keynes- English economist “counter cyclical govt. spending”. The government can
“prime the pump” if the economy is bad, the govt. can build roads + bridges to increase employment until
co’s get back on their feet. Bad Times ----govt. spends, Good Times----govt. raises taxes.
III
FDR and The Supreme Court
As a Democratic President, FDR had an easy time passing his “New Deal” legislature in a
Democratic dominated Senate, had a much harder time convincing the conservative Supreme Court under
some conservative judges.
1. Two Acts declared Unconstitutional.
a. National Recovery Administration(NRA) –it was argued that the law wrongly gave
legislative power to the President.
b. Agricultural Adjustment A ct. (AAA)- disallowed the agencies ability to collect
taxes to fund this program.
2. Attempt to “Pack” the Court. – angered by the Supreme Courts decisions, Roosevelt came up
with a scheme to pack the court from 9 to 15 Justices in order to get a more liberal perspective. In
1937 Roosevelts plan was defeated in Congress.