US History - Unit 6: The Great Depression (Chap 10)
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 over the age 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 oldage 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. forbade employers to adopt unfair labor practices
b. National Labor Relations Board (NLRB): est. to enforce provisions of the Act
2. 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
3. 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
4. “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
5. 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:
2. Molly Dawson: exercised considerable political power & helped shape the Democrat party campaigns
3. Francis Perkins appointed to Roosevelt’s cabinet as secretary of Labor
4. Eleanor Roosevelt pushed for women’s rights & demanded reforms.
C. Minorities & the New Deal
1. Many New Deal programs discriminated against African Americans
a. NRA – “Negroes Ruined Again”
b. African Americans did benefit from the New Deal’s welfare and economic programs
c. FDR appointed black officials & the first black federal judge, prohibited discrimination in the WPA in
1935
2. 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
3. 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.
4. Hispanic Americans – received less assistance from the New Deal
a. New Deal excluded non-citizens (mostly agricultural workers)
VIII. The New Deal: North, South, East, and West
A. South: agricultural program boosted farm prices & income, modernized agribusiness
1. FERA & WPA – built urban sewer systems, airports, bridges, roads
2. TVA (Tennessee Valley Authority) – built dams to control floods & generate hydroelectricity,
produced fertilizer, fostered agriculture and forestry development, etc.
a. REA (Rural Electrified Administration) brought electricity to the rural South
B. West: Westerners received the most federal money per capita in welfare, relief projects, and
loans
1. Bureau of Reclamation – built dams to control Western river systems, promote large-scale
development, prevent flooding, produce hydroelectric power, create reservoirs and canals.
IX. Ebbing of the New Deal
Roosevelt, “The test of our government is not whether we add more to the abundance of those who
have much; it is whether we provide enough enough for those who have too little”
A. Challenging the Court
2. Supreme Court declared several New Deal measures unconstitutional
a. Roosevelt complained “the court held horse-and-buggy” ideas about the role of government
3. FDR decided to “pack the court” – by adding additional judges to the court he hoped to turn the
majority of the court in favor of his New Deal program
4. Plan was attacked by Republicans in Congress as an abuse of power and a weakening of the separation
of powers.
a. Congress voted against expansion of the court, and liberal support of FDR was weakened
B. More Hard Times
1. Due to improving economy of 1936 – Roosevelt decided to cut federal expenditures and balance the
budget
a. Economy plunged into a deep recession in 1937 = unemployment grew from 7 to 12 million
2. Keynesian economics: John Maynard Keynes developed the economic theory that advocated
government serve as the “compensatory agent” – using deficit spending to increase demand and
production when private investment declined and raise taxes to pay its debt and cool the economy
when business activity became excessive.
C. Political stalemate
1. “conservative manifesto” – challenged the New Deal programs
2. Republican / Southern Democrats conservative majority post 1937 – blocked Roosevelt’s reforms