The Great Depression
Hoover and FDR’s Handling of the
Crisis
The Stock Market
 Dow-Jones Industrial Average: measures values of 30
widely held stocks on the New York Stock Exchange.
 New York Stock Exchange: can be traced back to 1789
when George Washington called for the sale of $80
million in bonds. The exchange is where approximately
1700 of the nations top companies, such as General
Electric and General Motors.
 Bull Market: Prices are going up in market-seller’s
market
 Bear Market: Prices decline and a buyer’s market.
The Crash in 1929
 Black Thursday, October 24, 13 million shares sold
 Monday, October 28, J.P. Morgan and others buy
stock to try and stop slide.
 Black Tuesday, October 29, 16 million shares sold.
 Within 2 weeks there had been a loss of $30 billion.
This equals the total amount of wages for the entire
U.S. in 1929!!!!!!!!!!!!
 1.5 million investors were in the stock market.
 RCA $101 in 1929 and $2.50 in 1932! Many lost
everything and some profited from lower prices.
 Impact of the Crash????
Herbert Hoover 1929-1933
 Special Session of Congress:Farm relief & tariff
(April 1929)
 Agricultural Marketing Act Agricultural Coops
and stabilization corporations $500m loans; limit
production 1931 ends purchasing & 1933
terminated $180m
 Decentralized work relief: National voluntary
self-help programs “individual & local
responsibility” $100-150m public works
construction
Herbert Hoover’s Views
 The Rugged Individual
 Welfare was a local and a private matter
 Free enterprise capitalism was best
 Direct handouts from the government could cause a
loss of self-respect
 He vetoed Garner-Wagner Act which would have
provided direct relief and the Norris Bill which would
have sold electricity in competition with private
companies
 First elected office was president!
Hoover (cont.)
 Hoover and the 18th Amendment
 Bonus for Veterans (1924) Hoover veto (Congress
overrides) government economy and issue of need by all
 Reconstruction Finance Corporation: Loans to banks and
railroads check deflation in agriculture and industry debt
to $2b and pump priming principal
 Relief and Construction Act RFC debt $3b $1.5b loans
public works All public works had to generate revenue,
e.g., dams for electricity or roads with tolls. $300m loan
states for relief
Hoover (cont.)
 Hawley-Smoot Tariff: Increase from Fordney-McCumber.
Economists call for veto. Hoover signs it and 25 nations
raise their rates. Some U.S. corporations move overseas
to sell goods without tariff.
 Federal Home Loan Bank Act reduce foreclosures, push
housing construction, and encourage home ownership
$125m
 Democrats win control of the House of Representatives in
1930.
 Bonus Army: Douglas MacArthur disregards Hoover’s
orders
Election of 1932
 FDR and the New Deal and the Democrats (472) and both
houses!
 From “Great” to Greater” as national income went from
$81 billion to $41 billion.
 20th Amendment & lame-ducks
 Economic crisis 1930-March 1933 5,054 banks ($3.5b) shut
down
 Toledo, Ohio provides meals for 2 cents-New York City
provides welfare for a family for $2.39 a week! Apples sold
for 5 cents as surplus of apples in Northwest sell basket
100-120 apples for $1.75. Demand for selling apples results
in price increase to $2.25 a crate. Now need to sell ½ of
apples to make profit.
 March 4 FDR gives his inaugural address. “The only thing
we have to fear is fear itself.”
FDR’s First Inaugural Address
FDR & New Deal
 100 days
FDR & the New Deal
 Banking Holiday 4
days within week
75% fed. Reserve
 Relief & recovery
Emergency Banking
Relief Act
banks reopen…stocks
up 15%
 1st Fireside Chat Mar
12
 Special Session Mar 9
The 100 Days
 Economy Act 15% cut
in govt. salaries &
pensions and govt
reorg.
 Beer-Wine Revenue
Act 4% $5 tax
st
1
New Deal
 Civilian Conservation Corps 18-25
$1 diem
 Federal Emergency Relief Act
$500m $1 fed for $3 state/local
grant NOT loan
 Agricultural Adjustment Act
(1)subsidy principle + processing
tax
 Tennesse Valley Authority
electricity, fertilizers& explosives
Muscle Shoals WW1 power plants
& munitions $145m Construct 9
dams and develop economic and
social well being of Tenn, KY, NC,
VA, Miss, & GA
 Public Works Administration
roads, public bldg $4.2b 34,000
projects – pump priming
 Glass-Steagall Act FDIC $5000
insurance
 National Industrial Recovery Act
industrial self-regulation and
competition codes Section 7a
labor’s right to organize for
collective bargaining
 Commodity Dollar $.66 gold fixed
at $.59 Gold Reserve At
 Civil Works Administration 4m
employed ends 1934 180,000




projects $933m-$740 to salaries
21st Amendment ends 18th
Securities Exchange Act & SEC
Communications Act & FCC
Home Owners Loan
Corp:refinance $2b bonds
The Fireside chats
2nd Phase New Deal (19351936)
 Works Progress Administration
8.5m, 1.4m projects $11b
Construction & arts
 Resettlement Administration
homesteads & greenbelt towns
Greenhills, OH
 Rural Electrification
Administration Lend $ 3% build
electrical plants
 Social Security Act
Townsend/Long influence:
unemployment, pension $10-$85
mos, grants for homeles and
disabled
 National Labor Relation over 50%
union recog.
 Revenue Act 75% $5m+
 National youth Administration
(16-25) work relief for non school
youth and part time for students
 Re-election 1936
Supreme Court & FDR
Schecter v U.S. NIRA “intrastate” and
executive power over legislative (1935)
Butler v U.S. AAA “processor’s tax”
Judiciary Reorganization Act Justice 70
add 1 up to 6 “packing” the court
The Supreme Court
 The court packing
plan
Opponents to the New Deal
 Dr. Townsend “Ham & Eggs” $200 month spend
it all (2% tax)
 Rev. Charles Coughlin “Radio Priest” attack
international bankers, communists, and Jews and
favor fascism and Hitler
 Huey Long “Share Our Wealth Movement”
$2,000 income & homestead or $6,000 for home
nationalize banks no one over $10m
Assassinated Sept 10, 1935
New Deal Phase 3 1938
 AAA (2) “parity
payment” fed govt $
 Fair Labor Standards
Act Minimum wage
$.40 interstate work
week = 44 hours
children under 16 not
work
 END TO NEW DEAL
 Reasons: Court
packing, conservative,
Europe & Asia
 IMPACTS??