Unit 5: Chapter 10 – 1930’s & the Great Depression
Great Depression (Chap. 10 / Unit 4)
I. Crash of 1929: Oct. 29 “Black Tuesday”
A. Panicked investors dumped their stocks at any price
1. Slide in the market continued for months then years = hit bottom July, 1932
2. Crash of the market marked the beginning of the Depression
B. Causes of the Great Depression:
1. Weakness of the new era economy
a. unequal distribution of wealth and income – more than ½ of the nation’s people living at
or below subsistence level = not enough purchasing power to maintain economy
2. Oligopolies dominated American industries
a. led to “administered prices” – prices kept artificially high (not determined by supply &
demand)
b. by not responding to purchasing power = system helped bring on economic collapse
3. Weaknesses in specific industries
a. Agriculture suffered from over production, declining prices, heavy debt
b. Poorly managed and regulated banks
4. International economic difficulties
a. Shut out from U.S. markets by high tariffs
b. European depended on American investments to manage their debts and reparation
payments from WWI – Crash of 29’ dried up flow of American dollars to Europe
c. Great Depression spread global
d. Conditions worsened in U.S. due to declining trade
5. Government policies
a. failure to enforce antitrust laws had encouraged oligopolies and high prices
b. failure to regulate banking or stock market permitted financial recklessness
c. Absence of effective agricultural policy & high tariffs reduced markets
II. The Depression Spreads
A. Shut downs and cut backs in industrial production by the early 1930’s
1. High unemployment due to layoffs and shut downs = by 1932 - 1/4th of labor force
unemployed
2. “vicious cycle” – shrinking wages and unemployment cut into purchasing power; causing
business to slash production again and lay off workers, thereby further reducing purchasing
power
3. Farming – commodity prices fell by 55% stifling farm income = farmers unable to pay their
mortgages were evicted
4. Hoovervilles: shanty towns built by homeless people in urban centers
a. soup kitchens / “primitive communism”
B. Gender attitudes about work
1. Women were concentrated in low paid service, sales, and clerical jobs
2. Traditional attitudes reinforced opposition to female employment
a. opposition to married women = furthered suffering of families
3. Few men sought work in fields associated with women
C. Families in the Depression
1. Divorce declined (too expensive) but desertion increased & marriages were postponed
2. Birthrates fell
3. Men of the household humiliated and despondent when laid off from work = female headed
households increased
4. Women sewed own clothing, raised and canned their own food, took on extra work at home
5. Parents sacrificed their own well-being for their children (starvation and sickness)
D. Minorities and the Depression “last hired, first fired”
1. Fewer resources and opportunities – racial minorities were less able than other groups to
absorb the economic pain
2. Black unemployment twice the rate of white people – often denied help from government
3. Hispanic Americans – had to complete for agricultural jobs, barred from public works &
highway
construction jobs in Southwestern states, deported by the government in the 1930’s
E. Popular protest
1. “bloodless battle of Pleasantville” – 100 women held city council hostage demanding
assistance
2. Communist organized the jobless
3. violent clashes in Baltimore and the Midwest
III. President Herbert Hoover & the Depression
A. Believed in voluntarism – private action was preferable to federal intervention
1. Secured business leaders pledges to maintain employment & wage levels – but most business
owners repudiated these pledges
2. Created the President’s Organization for Unemployment Relief = help raise private funds for
voluntary relief agencies
a. He believed that charities and local authorities should help the unemployed, and that
federal relief would expand government power and undermine the recipients character
3. He vetoed Congressional attempts to aid the unemployed (1/4 of population unemployed by
1932) – opposing deficit spending
4. As the Depression worsened = Hoover persuaded Congress to cut taxes to boost consumers’
buying power & he increased the public works budget (personal income dropped by more
than half)
a. RFC: Reconstruction Finance Corporation (est. Jan. 1932) lent federal funds to banks,
insurance companies, and railroads – so recovery could “trickle down” to ordinary
people.
IV. Repudiating Hoover: Election of 1932
A. Bonus Army: unemployed veterans of WWI who gathered in Washington demanding payment of
service bonuses not due until 1945.
1. Hoover refused to meet with them & Congress rejected their plan
2. Gen. Douglas MacArthur – exceeded Hoover’s order’s to remove them, using tanks and
cavalry to forcibly remove them
3. The event confirmed Hoover’s public image as harsh and insensitive.
B. Election of 1932: Democratic candidate Franklin D. Roosevelt defeated Hoover & Democrats
gained control of Congress as the majority party.
1. FDR – “pledged a new deal for the American people”
V. Launching the New Deal
A. The First New Deal
1. 1ST hundred days of the New Deal: Congress passed many important laws (graph pg. 666)
2. Roosevelt’s program reflected a mix of ideas: FDR’s, diverse group of advisors (academic
experts “brain trust”), politicians, and social workers, principles from the Progressive
movement, precedents from the Great War mobilization, plans from the Hoover admin.
3. Emergency banking Act: extended government assistance to sound banks and reorganized
the weak ones
4. Fireside chat: FDR’s nightly radio addresses to the nation to reassure the public and restore
confidence in the banks
5. FDIC (Federal Deposit Insurance Corporation) – established to guarantee bank deposits up to
$2,500
6. SEC (Securities and Exchange Commission) – created to regulate the stock market
B. Creating Jobs
1. FERA: Federal Emergency Relief Administration – furnished funds to state and local agencies
Spending $3 billion to develop new programs to provide work for the unemployed
a. CWA: Civil Works Administration – hired laborers to build roads, teachers to staff rural
schools, singers to give public appearances
b. PWA: Public Works Administration – provided works relief and stimulated the economy
by building schools, hospitals, courthouses, airports, dams, and bridges
c. CCC: Civilian Conservation Corps – employed 2.5 million to work on reforestation, flood
control projects, build roads & bridges in national forest and parks, restore Civil War
battle fields, and fight forest fires
C. Helping Farmers
1. AAA: Agricultural Adjustment Administration – est. to combat the depression in agriculture
caused by crop surpluses and low prices
a. Subsidized farmers who agreed to restrict production to boost farm prices to parity
b. Restricting production in hard times caused public outrage
c. Agricultural conditions improved – prices rose, but the AAA harmed poor farmers while
aiding larger commercial growers.
d. Supreme Court declared the AAA unconstitutional in 1936, but new laws est. the farm
subsidy program for decades to come
e. Increased mechanization and scientific agriculture kept production high and farmers
dependent on gov’t intervention
D. Flight of the Blue Eagle
1. New Deal attempted to revive American industry with the National Industrial Recovery Act
a. NRA: National Recovery Administration – sought to stop the slide of prices, wages, and
employment by suspending antitrust laws & authorizing industrial trade associations to
draft codes setting production quotas, price policies, wages, and working conditions, and
other business practices.
b. Director of the NRA: Hugh Johnson – persuaded business leaders to cooperate in drafting
codes & the public to patronize participating companies indicated by the Blue Eagle
insignia
c. Corporate leaders used the NRA to advance their own goals and to discriminate against
small producers, consumers, and labor
d. Supreme Court declare the NRA unconstitutional in 1935
E. Critics Right & Left
1. Conservatives: complained the expansion of government activity and its regulatory role
weakened the autonomy of American business
2. Left: some radicals argued the New Deal had forgotten the forgotten man
a. Worker strikes demanded rights
b. Employers moved to crush strikes – using complaisant police and private strike breakers
3. Popular discontent was mobilized by 4 prominent individuals:
a. Representative William Lemke of North Dakota: agrarian radical leader who objected
the New Deal’s limited response to farmers (AAA – restriction of production)
1) Sought government financial aid for farmers
b. Francis Townsend (Ca. physician) – called for government pension to all Americans voer
the age of 60
c. Father Charles Coughlin – weakly radio show demanding social justice and financial
reform
d. Senator Huey P. Long – wanted more comprehensive social welfare policies
1) Share Our-Wealth Society: plan to end poverty and unemployment through
confiscatory taxes on the rich to provide every family with as decent income, health
coverage, education, and old-age pensions
VI. Consolidating the New Deal
A. The Second New Deal, 1935 (weeding out the over privileged and lifting up the underprivileged)
1. New laws protected labor’s rights to organize & bargain collectively
a. Wagner National Labor Relations Act, dubbed “labor’s Magna Carta”
1. protected labor’s rights to organize and bargain collectively
2.
3.
4.
5.
2. forbade employers to adopt unfair labor practices
b. National Labor Relations Board (NLRB): est. to enforce provisions of the Act
Social Security Act: provided unemployment compensation, old age pensions, and aid for
Dependent mothers , children, and the blind
a. Financed through a regressive (flat) payroll tax on employers & employees
b. The law excluded more than a fourth of all workers and did not include health insurance
Banking Act of 1935: increased authority of the federal Reserve Board over the nation’s
currency
a. provided a graduated income tax and increased estate and corporate taxes
“Dust Bowl” 1932 dust storms blew away top soil destroying agriculture in the mid west
a. Resettlement Administration established for land reform and to help poor farmers
b. plan exceeded its resources – Congress moved to save the land by creating the Soil
Conservation Service in 1935
Emergency Relief Appropriation Act, 1935: 5$ billion spent to create jobs
a. Works Progress Administration (WPA): created 9 million jobs
1. mostly involved manual labor in construction projects
2. also employed writers, artists, musicians, and actors = est. precedent for federal
support of the arts
b. National Youth Administration (NYA): gave part time jobs to students, keeping them in
school
B. Election of 1936
1. Roosevelt’s coalition:
a. Southern Democrats – agricultural programs (AAA) secured their support
b. Nation’s workers – favored FDR’s labor legislation (Wagner Act)
c. Urban ethnic groups – benefited from welfare programs and received unprecedented
recognition
2. Landslide victory: 61% of the popular vote / 523 to 8 electoral votes
VII. The New Deal and American Life
A. Labor on the march – wanted to improve wages and benefits as well as union recognition
1. Wagner Act – sparked a wave of labor activism
2. American Federation of Labor (AFL): unprepared for rush of industrial workers seeking
unionization
3. Congress of Industrial Organization (CIO): organized separate from the AFL to mobilize labor
a. Interracial union campaign that employed aggressive tactics = sit-down strike
b. Companies responded with violence against unionization = Memorial Day Massacre in
Chicago in 1937.
c. Federal court orders forced companies to bargain collectively
4. New Deal Labor Legislation, gov’t investigations, and court orders, and federal refusal to use
force against strikes helped the labor movement secure basic rights
a. Union membership grew from 3 million in 1932 to 9 million in 1939
B. Women and the New Deal
1. New Deal relief programs had a mixed impact on working women
a. Women continued to be restricted to “women’s work” = garment industry & paid lower
wages than men.
b. Women made up half the work force but only gained 19% of the jobs created by the
WPA,
12% of FERA, and 9% of CWA
c. Social Security Act – didn’t included domestic servant jobs, but did include mothers with
dependent children
d. Women gained political influence:
1. Molly Dawson: exercised considerable political power & helped shape the Democrat party
campaigns
2. Francis Perkins appointed to Roosevelt’s cabinet as secretary of Labor
3. Eleanor Roosevelt pushed for women’s rights & demanded reforms.
C. Minorities & the New Deal
1. Many New Deal programs discriminated against African Americans
b. NRA – “Negroes Ruined Again”
c. African Americans did benefit from the New Deal’s welfare and economic programs
d. FDR appointed black officials & the first black federal judge, prohibited discrimination in
the WPA in 1935
3. Mary Bethune McLeod of the National Council of Negro Women “dubbed the Black Cabinet”
a. Worked with civil rights organizations, fought discrimination in gov’t, influenced
patronage, stimulated black interest in politics
b. Illiteracy dropped and enrollment in colleges doubled in the African American community
4. Native Americans: CCC benefited Indians who received training in agriculture, forestry, and
animal husbandry
a. PWA & WPA built schools, hospitals, roads, and irrigation systems on reservations
b. John Collier: Commissioner of Indian Affairs, 1933 = prohibited interference with Indian
religious or cultural life
c. Indian Reorganization Act of 1934 “Indians’ New Deal” – guaranteed religious freedom,
reestablished tribal self-government, and halted the sale of tribal lands.
5. Hispanic Americans – received less assistance from the New Deal
a. New Deal excluded non-citizens (mostly agricultural workers)
VIII. Good Neighbors and Hostile Forces
A. Isolationists in Congress counseled against any U.S. involvement in world affairs
i. Nye Committee (Republican Gerald Nye) est. committee in 1934 to
investigate US involvement in Europe
a. Committee exposed the greed of big business and intimated that President Woodrow
Wilson had gone to war to save profits for capitalists.
1. Jobless & homeless Americans reacted with anger
2. Roosevelt pursued a policy of domestic recovery in the early years of his Presidency
B. FDR expanded trade:
1. extended formal recognition of the Soviet Union in 1933 – American business leaders wanted
to expand trade
2. Good Neighbor policy – relations with Latin America
a. Helped propel ruthless dictators: Cuba, dictator Fulgencio Batista
3. Encouraged trade by reducing tariffs (1929-1933 = trade fell by 40% worldwide)
a. Secretary of State Cordell Hull – trade agreements with Latin America resulted in sharp
increase of US exports
C. Neutrality and Fascism
1. Hitler came to power in 1933 – pledged to restore German pride and nationalism in the
aftermath of Versailles Treaty
a. Nazi Party – Fascist Government: one-party dictatorship – closely aligned with corporate
interests, committed to a “biological world evolution,” and determined to establish a
new empire , the Third Reich.
b. Vowed to destroy bolshevism (Russian Communism) and Jews
c. Remilitarized the Rhineland, 1936 & annexed Austria in 1938
2. Other fascist: Benito Mussolini in Italy & Francisco Franco in Spain
3. Neutrality Acts: passed by Congress, they were designed to continue America’s trade with its
world partners but prohibited the president from taking sides in the mounting European
crisis.
a. 1st Act, 1935 – prohibited Americans from traveling to a war zone, banned loans to
belligerent nations (country’s at war), and instituted an embargo (ban) on trading
weapons to belligerent nations.
b. 1938 – Hitler demanded the Sudetenland from Czechoslovakia = British & French
responded with appeasement (Munich Conference of 1938)
c. Hitler did not regard US as a threat – nation of racially mixed inferiors
d. Isolationism, anti-Semitism, and and lack of unified Jewish leadership in America led to
U.S. denying German Jews a safe haven suffering from German brutality
1. Kristallnacht (night of broken glass) – state sanctioned attacks on German Jews and
their property.
2. Concentration camps used for systematic extermination of Jews, homosexuals, and
political dissidents
3. Japan: resented U.S. interests in East Asia & offended by American immigration
policy which excluded Japanese
1) Japan invaded Manchuria in 1931
2) 1937 – FDR blocked trade with Japan
D. Edging towards war
1. 1939 – FDR gained support in revising the Neutrality Acts to allow for the sale of arms to out
Great Britain and other allied nations (Lend-Lease program)