The Great Depression
and
The New Deal
Unit 7
Notes #1
• Objectives:
– Identify the major, defining characteristics of
the “Great Depression” (US2B)
– Apply Absolute and Relative Chronology
(US2C)
– Identify the Causes of the Great Depression
(US16B)
Causes of the Great Depression
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OVER production of consumer goods
OVER use or excessive use of credit cards
OVER speculation and the stock market
OVER use of farmland and weak farm
economy
• OVER sight on government policies
• OVER spending during World War I
Economic Causes
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Economic problems in America were in part due to a
global depression in post WWI Europe which was made
worse by high American tariffs on imports.
Some tariffs were designed to protect farmers from
European competition, the effect was that world trade
drastically declined
European countries had huge war debts, massive war
damage and foreign consumers couldn’t buy US goods
Reduction of money supply and an increased gap between
rich and poor meant that most people did not have the
buying power to help boost the economy
The increased number of purchases made on credit caused
many people to default on loans.
Stock Speculation
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Buying stock “on margin” meant that you only
needed 10% to be able to complete the
purchase
Led to rampant speculation – when investors
buy shares to sell them later at an increased
value
This led to falsely high stock prices
The Stock Market Crash
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Millions of dollars were invested in the stock market in
the 20’s, as stock value rose often stocks sold for far
more than their true value.
In an attempt to try to slow speculative stock trading the
Federal Reserve raised interest rates in 1928 and 29.
On October 24, 1929 (later nicknamed Black Thursday)
investors who feared rising interest rates began
dumping shares of stock
Stock prices continued to plummet until it CRASHED
on what is now called ‘Black Tuesday’.
Investors that had purchased stocks on credit were
forced to pay back cash immediately.
Banks and Businesses Begin to Fail
• Even though only a small percentage of Americans
had money in the stock market, most people soon
began to feel the impact of the crash.
• As investors were not able to pay back loans, banks
became low on cash. As people began to make large
withdrawals, some banks closed
• Peoples fear of a long depression caused them to stop
spending money and businesses suffered from a
shortage of consumers and investors
• Over 50,000 businesses went bankrupt in two years.
The Face of Unemployment
• By 1933 some 15 million Americans were unemployed
and those who kept their jobs faced massive pay
decreases.
• African American and immigrant workers were often
laid off before white workers.
• Unemployed workers often sold on the street and
waited in lines for bowls of soup and bread that were
given as charity.
• About half a million Mexican-American workers were
forced to return to Mexico as part of the Mexican
Repatriation Program.
• Many were forced to give up their homes and
shantytowns nicknamed Hoovervilles rose outside
cities
Psychological Effects on the Family
• Mothers were often had the job of stretching
every cent to provide enough food and clothing
for her family.
• Marriage rates and birth rates declined
dramatically during the Great Depression.
• More than 20,000 Americans committed suicide
in 1932. ….. up 28% from 1928.
• People that lived through the Great Depression
often kept habits of scrimping and saving and
making every penny count.
Notes #2
• Objective:
• Analyze the impact of physical and human
geographic factors on the settlement of the
Great Plains and the Dust Bowl
• Analyze causes and effects of changing
demographic patterns
The Dust Bowl
• In the mid 1930’s, drought and over production of
farmland caused massive dust storms across the South and
the Great Plains (the high grassland region of central
North America).
• Nicknamed the Dust Bowl, thousands of acres of farmland
were covered in dust.
• To prevent more dust storms the Department of
Agriculture and the Civilian Conservation Corps planted
over 217,000,000 trees.
• Many farmers were forced to migrate west to California
and were nicknamed the ‘Okies’=any poverty-stricken
migrant from the Southwest.
“Okies” and “Arkies”
http://www.eyewitnesstohistory.com/himdustbowl.htm
• California was inundated by a
huge number of these people
because the farmers there kept
advertising in the dust bowl
areas for cheap labor. "Plenty
of jobs for everyone in
California," the advertisements
said and the devastated Okies
and Arkies loaded up their cars
and trucks and left for the
promised land. Texans living
on both the High Plains and
the Lower Plains were equally
affected.
• John Steinbeck wrote “The
Grapes of Wrath”
• Published in 1939,
chronicles the Dust Bowl
migration of the 1930s
• A portrays a conflict
between the powerful and
the powerless, the novel
captures the horrors of the
Great Depression and
probes into the very nature
of equality and justice in
America.
President Hoover’s Policies
• President Hoover believed that the stock market crash
was a temporary problem.
• Hoover was against government handouts of jobs or
food. He believed that using tax money for aid would
just create an inflated federal budget and a dependence
on government.
• Hoover instead encouraged workers to lift themselves
up with hard work and character.
• Hoover believed that aid should come from private
charities and not the government.
Hoovers Economic Reforms
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Hoover did not want the government to directly aide the
unemployed, he believed the rugged individualism of
the American people would cause them to “lift
themselves up by their bootstraps”.
Hoover encouraged businesses to keep producing even
if goods were not selling and he gave cheerful radio
addresses trying to lift the spirits of American workers.
Hoover would also approve $800 million of works
programs including the Hoover Dam, but these projects
couldn’t bring the economy out of the depression.
Hoover Tries to Help Farmers
• Hoover resisted giving direct aid to farmers
• The President created the Federal Farm Board which
helped create and fund farmers co-ops that would buy
seeds and farm equipment in bulk.
• The FFB bought surplus food stocks hoping to keep
prices up, but this caused farmers to increase production
and prices stayed low.
• The government also backed loans specifically for
farmers, offering a low rate to farmers with little
collateral.
Herbert Hoover Reforms Too Late
• In 1932 Hoover created the Reconstruction Finance
Corporation and authorized the spending of $2 billion
of taxpayer money.
• The RFC gave money to troubled banks, insurance
companies, and railroad companies.
• Most felt that the money came too late and wasn’t given
to the truly needy people
• Many began to blame Hoover for the country’s
problems, and the mere sight of him in movie newsreels
sparked angry boos from crowds. (Ouch!)
Bonus Army and the Election of 1932
• In May of 1932, Congress rejected the “Bonus Bill”,
which would have allowed early payment of pension
accounts to WWI veterans.
• When some 2,000 veterans became encamped in
abandoned military buildings, Hoover deployed the
army to drive the veterans out by force.
• Many Americans were shocked by Hoovers treatment of
the veterans and his support dwindled.
• In 1932 Franklin D. Roosevelt was easily elected
president and his Democratic Party also won a majority
in both the House and Senate.
Notes #3
• Objective:
• Describe the various New Deal programs
(US16E)
• Analyze effects of the Great Depression
(US16C)
FDR’S 3 R’S
• FDR wanted to wage war against the
depression.
• FDR did so through programs with 3
different goals.
• These goals were relief, recovery, and
reform.
3 R’s goals
• Relief- immediate action taken to halt
the economies deterioration.
• Recovery- temporary programs to
restart the flow of consumer
demand.
• Reform- permanent programs to avoid
another depression.
Roosevelt’s New Deal
 During his campaign, Franklin Roosevelt had put
forth a 15 measure plan for restoring the economy
called the “New Deal’. Once he was elected
Congress passed all 15 measures
 The first measure was to shut down all banks and
only allow financially sound banks to reopen.
 In a series of fireside chats FDR encouraged people
to put money back into the reopened banks.
 FDIC was established to insure deposits; in one
month, $1,000,000,000 was deposited into banks
due to increased confidence.
Direct Relief for the Needy
• FDR then created the Federal Emergency Relief
Administration and supplied them with $500 million for
direct aid to the unemployed
• Half of the money was distributed to the states to
establish work programs, which people often preferred
to a simple handout
• The Civil Works Administration created jobs picking up
litter and raking leaves to provide jobs to some 4
million people.
• Young men were paid $30 a month working for the
Civilian Conservation Corps, often called the 3 C’s.
Long Term Recovery Goals
Although FDR saw relief efforts as short term
remedies, he also had a vision for the economy in
a ‘long term’ sense.
 FDR created the Securities and Exchange
Commission to oversee the stock market. (SEC)
 The Public Works Administration began larger
scale public works projects including the building
of public roads and buildings.
 The Agricultural Adjustment Administration paid
farmers to reduce their output, raising prices and
making farming more profitable.
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Racial Discrimination and the Depression
• The depression increased racial tensions in the country,
particularly in the South.
• Competition for jobs further slowed immigration and
Nativism continued as a strong social issue.
• Although New Deal programs were offered to all
races, often white and black workers were segregated
and black wages were set lower
• FDR appointed more than 100 black leaders to posts in
the federal government. His wife, Eleanor, was a
known champion for civil rights.
• Congress passed the Indian Reorganization Act in
1933 to help tribes through the depression
The Second New Deal
• After Democrats increased their Congressional
seats in 1934, FDR was able to pass a new series
of long term economic reforms.
• The Works Progress Administration employed
8.5 million people that rebuilt airports, public
buildings, bridges and roads, as well as artists,
musicians, and high school students.
• The Social Security Act provided retirement
accounts for workers over 65, unemployment
payments and money for the disabled.
Notes #4
• Objective:
• Describe how various Dew Deal agencies
and programs continue to affect the lives
of US citizens (US16E)
• Evaluate the impact of the New Deal
legislation on the historical roles of the
state and federal government (US19A)
The 1st New Deal
(Summary)
• The first new deal was to immediately get people back to work
and calm people’s fear
– The Banking Act of 1933 – created the FDIC
– SEC – oversees the stock exchange
– NIRA – increase production/boost wages
– NRA – create fair competition
– PWA – oversee construction projects
– AAA – aid farmers by reducing crops
– TVA – flood control/electricity/jobs in Tennessee
– CCC – planting trees/picking up liter
Critics Attack the New Deal
“We need more
aid!”
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Left Wing:
Robert La Follette
favored works
programs
Dr. Francis Townsend
called for a monthly
payment of $200 to
everyone over 60
“There’s too
much aid!”
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Right Wing:
Conservation
politicians, wealthy
industrialists, bankers,
and religious leaders
American Liberty
League
Al Smith
Socialist:
Norman Thomas (leader of the Socialist party) called for more
radicalism
Upton Sinclair
Critics of the New Deal
• Wealthy taxpayers saw New Deal programs as antiwealthy and unfair to the rich.
• The American Liberty League felt that the New Deal took
the ideals of free enterprise from American businesses.
• Some wanted FDR to go further, calling for ‘Robin Hood’
type tax plans and the nationalization of banks.
• In 1936 Roosevelt began to attempt to cut back
government spending as workers dropped from
government programs re-entered the work force,
unemployment rose and businesses suffered, the economic
downturn was nicknamed Roosevelt’s Recession and FDR
was forced to approve $3 billion of new spending.
The 2nd New Deal (Summary)
• President Roosevelt used “fireside chats”
to calm Americans
• Emergency Relief Appropriation Bill called
for $5 billion in new spending
• REA – brought electricity to rural areas
• WPA – put 3 million to work
• Schechter Poultry Corp v US – struck
down the National Industrial Recovery Act
as a violation of separation of powers
2nd New Deal
• Wagner Act – guaranteed workers “the
right to self-organization, to form, join, or
assist labor organizations, [and] to bargain
collectively through representatives of their
own choosing
• The Fair Labor Standards Act regulated
conditions in the workplace
• Social Security Act provides retirement
and disability
FDR’s Re-election
and
Supreme Court Controversies
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By the 1936 election, FDR’s strong support from
Democrats, farmers, African Americans and even
some Republicans assured him a victory.
After his re-election The Court Packing Plan FDR
proposed adding six seats to the Supreme Court and as
President he would have appointed the new Justices.
Congress did not approve the additions, but the threat
made the Supreme Court more receptive to FDR’s
economic policies. In later years FDR would appoint
eight new justices.
Great Depression Era and the Arts
• Federal Project Number One was created in 1935 as part of
the Works Progress Administration (WPA). This
revolutionary program extended the relief of the New Deal
to artists, actors, writers, and musicians.
• Photographer Dorothea Lange's work for Farm Security
Administration brought the plight of the poor and forgotten
displaced farm families to public attention. Distributed free
to newspapers across the country, her pictures including her
best-known picture is titled "Migrant Mother” became icons
of the era.
• John Steinbeck’s novel The Grapes of Wrath published in
1929 won a Pulitzer prize for its portrail of life during the
Depression Era and specifically the perils of a family
displaced by the Dust bowl.
Evaluating the New Deal
• Perhaps the longest lasting effect of the New Deal was
electricity (TVA) that was brought to rural areas
through federal work programs.
• Some agencies like the Social Security Administration,
FDIC ,and the Securities and Exchange Commission are
still in use today.
• The depression also forced southern planters to
diversify their crops and plant more than cotton
• New Deal policies helped to end the depression, but the
economy did not completely stabilize until the US
began to prepare for WWII.