Chapter 25
The Great Depression and the
New Deal, 1929–1941
The Election of 1928 and
the End of the New Era
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Hoover (Rep) win:
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campaign on prosperity
Smith increase Dem ties with urban
ethnics
As president (1929–33), Hoover promote
business growth
Stock prices drop with panic selling (Oct.
‘29)
Crash unleash devastating depression
Interrelated factors cause depression
Declining Demand
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Growth industries stagnate, late 1920s:
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Under-consumption:
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autos, electric appliances, housing
neither farmers nor workers earn enough to
maintain demand
Widening income gap:
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income of richest 1% skyrocket (up 75%)
modest gains for middle/lower classes
Corporate Debt;
Stock Market Speculation
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Use loans for expansion:
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Many buy stocks “on margin”
When stock prices drop:
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when sales drop, defaults occur
brokers, banks, investors, and businesses
ruined
Growing stock investments (late 1920s)
hamper US-European economic links
Ch. 25: Great Depression and
New Deal, 1929–1941
 FDR promise vigorous action because of:
 widespread suffering
 crisis of capitalism
 New Deal:
 = experimentation
 maintain existing economy/society
 Goal = save capitalism
 Many helped by New Deal:
 even if depression continue until WWII
Fig. 25-CO, p. 678
p. 680
I. Hard Times, 1929–1933
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GNP drop by 50%
Profits fall from $10 to $1 billion
100,000 businesses close
Early 1933: unemployed = 25%:
 millions more only part-time
 Industrial wages cut by ⅓
 Millions suffer:
 hunger, malnutrition
 inadequate heat, poor housing
 illness
I. Hard Times, 1929–33 (cont.)
 Homeless form “Hoovervilles”
 Couples delay marriage and parenthood
 Farm crisis (1920s) deepen with:
 overproduction and low prices
 drought and insects
 debt and foreclosures
 Many migrate (Montgomerys)
p. 683
II. Marginal Workers
 Blacks suffer more than whites
 unemployment = 50% (1932)
 Whites take jobs from blacks and
Hispanics:
 USA deport 82,000 Hispanics (1929-35)
 ½ million more leave because of coercion
 Women suffer low pay/segregation:
 plus claim they take jobs from men
 Most single, but:
 some married women take jobs because of
crisis
III. Middle Class;
Hoover’s Initial Response
 “Make do” with less
 All face uncertainty/fear
 Hoover resist activity:
 prefer “associationalism”
 rely on charities (POUR)
 Crisis too big for charities
p. 684
IV. Hoover’s Limited Solutions
 Reject direct relief to individuals:
 because undermines character
 Eventually implement some public works
 Raise tariffs (Hawley-Smoot, 1930):
 further weaken international trade
 Direct assistance to private industry:
 RFC loan money to banks, railroads,
insurance
 Extensive popular anger at Hoover
V. Protest and Social Unrest
 Most bewildered
 Scattered protest
 Farmers’ Holiday Association use strikes
to raise food prices
 Some farmers block foreclosures
 Communist Unemployment Councils:
 organize protest
 some turn violent
 Racial violence increase (e.g. KKK)
VI. Bonus Army (1932)
 Want bonus promised to WWI vets
 March on DC
 Hoover refuse:
 forcibly evict vets and families
 Many fear fate of capitalism and
democracy:
 worry poor might turn to dictator
 Hitler’s rise increases this concern
p. 685
Hoover’s opponent in the election
was Democrat Franklin D. Roosevelt.
• Harvard graduate
• New York State senator
• Assistant Secretary of the
Navy
• 1920 Nominee for Vice
President
• Polio survivor
• Governor of New York
The two candidates offered very different approaches
to the problems of the Great Depression.
Hoover
Roosevelt
State and local
governments
and private
agencies should
provide relief.
Leadership
should come
from the
federal
government.
Roosevelt won in a landslide.
Map 25-1, p. 686
VII. FDR, the 1932 Election, and
Launching the New Deal
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Disability strengthen his character
Advocate direct relief and USG activity
Win presidency and majorities in Congress
Not take office till March 1933
“Bank runs” threaten full collapse
Promise “war” on Depression
Proclaim bank holiday
Call Congress to DC
p. 687
• The New Deal would
focus on the three R’s –
Relief, Reform, &
Recovery
1.Relief for the needy
2.Recovery from the
depression
3.Reform to prevent future
depressions
VIII. First Hundred Days (1933)
 Emergency Banking Relief
Act:
 reopen solvent banks
 reorganize insolvent ones
 show New Deal’s
conservatism
 First fireside chat assure
people banks safe:
 bank runs end
 FDR and Brain Trust lack
coherent plan (Sec’t of Labor – Frances
Perkins

To spur economic recovery,
experiment with:
 central planning
 direct relief
IX. National Industrial Recovery
Act (1933)
 Respond to “destructive competition”
 Seek stable prices and wages
 Encourage cooperation with “codes:”
 limit production
 set prices/wages
 Big businesses dominate code-writing
 Not deliver economic recovery
 Court void (1935) as too much USG
power
He created the Glass-Steagall Act where investors
would have their money insured under FDIC (Federal
Deposit Insurance Corporation) originally set at
$5,000.00
X. Agricultural Adjustment Act
(1933)
 Pay farmers to cut production:
 less overproduction should raise prices
 Tax processors to fund payments
 Food destruction confuse many
 Favor landowners:
 many tenants/sharecroppers go to cities
 Rewritten because of Court objections
(US v. Butler)
XI. Relief Programs (1933)
 Prefer “work relief” to dole
 Civilian Conservation Corps:
 jobs for young men (2.5 million)
 Public Works Administration and deficit
spending:
 spur recovery and development via
infrastructure
 John Maynard Keynes- “Priming the
Pump”
 FDR and New Deal very popular
p. 689
Fig. 25-1a, p. 691
Fig. 25-1b, p. 691
Fig. 25-1c, p. 691
Fig. 25-1d, p. 691
Fig. 25-1e, p. 691
XII. Opposition to New Deal
 As economy improve, businesses and
conservatives increase opposition
 Oppose:
 regulation
 taxes
 deficit spending
 American Liberty League:
 claim New Deal = radicalism
 Populists claim FDR favors big business:
 want more for common people
XIII. Demagogues
 Manipulate popular prejudices
 Fr. Coughlin:
 blame global Jewish conspiracy
 Dr. Townsend:
 demand USG pensions for aged
 Senator Long:
 blame rich for Depression
 seize incomes greater than $1 million
 provide yearly payments to every family
 Socialists and Communists criticize FDR
Huey Long, the kingfish and exgovernor of Louisiana
Fr. Charles Coughlin,
XIV. Shaping the Second New
Deal
 Eleanor = key advisor:
 lead social justice activists
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“Black Cabinet”
FDR respond by extending New Deal
“Greater security for the average man”
$4 billion (deficit spending) to help poor
p. 693
Mary McLeod Bethune, pictured here with
her friend and supporter Eleanor
Roosevelt, became the first African
American woman to head a federal agency
as director of the Division of Negro Affairs
for the National Youth Administration.
p. 694
XV. Emergency Relief
Appropriation Act (1935)
 Resettlement Administration:
 housing for destitute families
 Rural Electrification Administration
 Works Progress Administration = 8.5
million jobs
 Include actors, writers, musicians, artists:
 provide jobs
 bring culture
 celebrate plain folk (slave narratives)
p. 695
XVI. Social Security Act (1935)
 Initiate:
 federal pension system
 unemployment compensation
 aid to dependents
 More USG responsibility, but
conservative:
 funded by taxes on workers and employers
 taxes regressive
 not including farm labor, domestic service,
public sector
 Often exclude people of color and women
Started with the idea in mind that the
elderly would retire and open jobs for
young workers.
XVII. FDR’s Populist Strategies
 Criticize big business
 Wealth Tax (‘35) raise taxes on rich/corps
 Slight redistribution of income (Figure
25.2)
 Defeat Landon by landslide (1936)
 Cement Democratic coalition:
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unions
urbanities (new immigrants)
Solid South
northern blacks
dominate USG for next 30 years
Fig. 25-2, p. 696
XVIII. Labor
 Millions join unions and strike
 Suffer violence by management
 National Labor Relations Act (1935):
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right to unionize and bargain collectively
Board to mediate disputes and
punish antiunion actions
further alienate big business
XIX. Rivalry between
Craft and Industrial Unions
 Unlike craft unions, industrial unions:
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unite all workers in an industry
open to unskilled
people of color
women
Lewis break with AFL to form CIO (1935)
UAW win recognition (sit-down strikes, ‘36)
Unions improve conditions for workers
Memorial Day Massacre (1937)
XX. New Deal in West
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Many dams and public works
Harness rivers (irrigation/cheap electricity)
Buy land to cut Dust Bowl/overgrazing
Accelerate development and
Growth of large farms/ranches
FDR and Collier reverse Indian policy:
 restore lands to tribal ownership
 some political autonomy
XXI. New Deal in South
 Extensive poverty
 Tennessee Valley Authority:
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enhance economy
limit floods
provide electricity
damage environment (water and air pollution)
 Leaders adamant on white supremacy
 As in West, increase South’s links with
national economy/politics/culture
 USG more active in lives of citizens
p. 700
XXII. Mass Media and
Popular Culture
 Radio:
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reduce regional boundaries
foster national connections
provide news and escape
= shared experiences
 Movies increase shared popular culture
 More teenagers stay in high school:
 youth culture (1920s) develop further
 including music, dance, clothing, etc.
Map 25-2, p. 701
XXIII. Limits of New Deal
(Reform over by 1938-39)
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Court-packing plan (1937) backfire
Court begin to uphold New Deal
Budget cuts cause recession (1937–39)
Resume deficit financing
Conflicts abroad take priority:
 need conservative support
 with New Deal coalition, defeat Willkie for
3rd term (1940)
XXIV. Race and
Limits of the New Deal
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People of color benefit
But not as much as whites
WPA pay non-whites less
Scottsboro Trials (1931) = era’s racism
FDR hesitate to offend southern whites
Some try direct protest:
 boycott white businesses
 Randolph and Sleeping Car Porters
p. 703
Map 25-3, p. 704
p. 705
p. 706
XXV. Assessment of New Deal
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Historians vary on FDR
Some praise ability to inspire/experiment
Others criticize for not doing more
FDR = capitalist, not radical:
 reduce suffering and
 preserve capitalist economy
 Strengthen USG, esp. presidency
XXV. Assessment of New Deal
(cont.)
 USG:
 more regulation
 some responsibility for people’s welfare
 stimulate economy (deficit spending/pump
priming)
 Not end Depression
 Stay active so no repeat depressions
 Liberal reform, not revolution
Summary: Discuss Links to the
World and Legacy
 1936 Olympics and boycott debate as
link?
 US anti-Semitism?
 African Americans win medals
 Hitler gain public relations victory
 Why Social Security key legacy?
 Dramatically cut poverty among aged
 Current pressures because of:
 funding formula?
 increased life expectancy?
p. 698
p. 702
p. 702