Unit 10

THE GREAT DEPRESSION, 1929-1941

IN A NUTSHELL L The stock market crash of 1929 signaled the beginning of the Great Depression, the worst financial crisis in U.S. history. L As the Depression grew worse President Herbert Hoover followed a policy of denying government relief to the unemployed. He was not re-elected in 1932. L President Franklin Roosevelt pushed several legislative programs through Congress in an attempt to end the Depression. L The Depression ended after Americans found employment building war materials for the Second World War.

ESSENTIAL INFORMATION
A. What caused the Great Depression? The Depression was caused by an economic system out of balancetoo much supply and too little demand. This situation was created by monopolistic pricing, unsound banking practices, overproduction, high tariffs, and a tightening of the money supply by the Federal Reserve Board. B. What caused the stock market crash? A slump in economic activity accompanied with overspeculation in stocks and buying stocks on margin caused the market to crash in October 1929. The stock market crash marked the beginning of the Depression. C. What were the characteristics of the Great Depression? The Depression was characterized by high unemployment, the loss of farms and businesses, the closing of banks, the drying up of credit, low purchasing power, and hunger in the midst of plenty. Although not everyone suffered, many people grew concerned that capitalism had failed and that democracy could not provide solutions to the problems. D. How did President Herbert Hoover react to the Depression? Hoover, a strong believer in rugged individualism, believed in minimal government interference to deal with the Depression. He based his policies upon supplying optimism, expanding public works, and loaning money to struggling banks. E. What was the Bonus March? In the summer of 1932 about 20,000 impoverished veterans from the First World War marched on Washington demanding early payment of a financial bonus that was due in 1945. After the bonus bill failed in Congress, President Hoover ordered the U.S. army to evacuate veterans from Washington, D.C. The U.S. army, led by Douglas MacArthur, forcefully drove the veterans out of the city. The armys handling of the Bonus March ended Hoovers chance for reelection and fostered a growing fear of revolution in America. F. What happened in the presidential election of 1932? With the economy at rock bottom in the summer of 1932 President Hoover and his Republican Party were blamed for the Depression. Franklin Roosevelt was therefore elected president promising to save capitalism, to help the common man, and to provide work rather than the dole. FDR remained vague about his specific plan, simply promising to experiment, to try something. G. What was the New Deal? FDRs plan to pull the nation out of the Depression was known as the New Deal. Devised by FDRs brain trust, the New Deal instituted policies of relief for the poor, recovery from the Depression, and reform of the economic system. The First New Deal was passed during the first one hundred days of FDRs presidency. With growing pressures from the left wing of American politics and a leveling out of the economy in 1935, FDR pushed a Second

New Deal through Congress. After he cut government spending in 1937 to decrease the budget deficit, the economy fell back into a recession. H. Did FDR and the New Deal win the support of the American public? In 1936 FDR was reelected by an electoral landslide (523-8). FDR was also reelected in 1940 and 1944, becoming the only person elected four times to the presidency. I. Who were the critics of the New Deal? The New Deal was criticized not only by the Republican Party, but also from the far left wing and the far right wing of American politics. Critics on the far right attacked bankers and Jews. Critics on the far left believed FDR was not doing enough to help poor people. The far left called for a greater and more equitable redistribution of wealth.Republicans criticized the increased federal debt as well as the fact that government was becoming, in their minds,too big and the presidency too powerful. Republicans believed that the New Deal was destroying private initiative, that it would lead to ruinous inflation, and that it was creeping socialism. J. Why did FDR try to pack the Supreme Court? Angered by a Supreme Court that declared several New Deal laws unconstitutional, FDR introduced legislation to increase the size of the Court. FDR hoped to place justices favorable to the New Deal on the Supreme Court. Roosevelts plan to pack the Court failed and weakened FDR politically. K. How did the Depression end? The Depression ended after Americans found employment producing war materials for the Second World War. This year marks the 150th anniversary of the Constitutional Convention which made us a nation. At that Convention our forefathers found the way out of the chaos which followed the Revolutionary War; they created a strong government with powers of united action sufficient then and now to solve problems utterly beyond individual or local solution. A century and a half ago they established the federal government in order to promote the general welfare and secure the blessings of liberty to the American people. Today we invoke those same powers of government to achieve the same objectives. . . . . . . The essential democracy of our nation, and the safety of our people depend not upon the absence of power, but upon lodging it with those whom the people can change or continue at stated intervals through an honest and free system of elections. The Constitution of 1787 did not make our democracy impotent. In fact, . . . we have made the exercise of all power more democratic; for we have begun to bring private autocratic powers into their proper subordination to the publics government. The legend that they were invincibleabove and beyond the processes of a democracyhas been shattered. They have been challenged and beaten. . . . But here is the challenge to our democracy: in this nation I see tens of millions of its citizensa substantial part of its whole populationwho at this very moment are denied the greater part of what the very lowest standards of today call the necessities of life. . . . I see one-third of a nation ill-housed, ill-clad, ill-nourished. . . . We are determined to make every American citizen the subject of his countrys interest and concern; and we will never regard any faithful, law-abiding group within our borders as superfluous. The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.

EVENTS 1. Stock Market Crash, 1929- October 29, 1929. Devastated the economy and was key factor in Great Depression. In late 1920's everyone was buying stocks as the economy was believed to be strong, but not everyone had the money. When they didn't they were "buying on margin". They'd put some of their own money then the rest he would borrow from a broker. he could borrow 80%to90%. Over speculation. so on Oct. 29 everyone

was selling and nearly no one was buying and the stock prices collapsed. panic hit and over 16.4 million shares were sold. 2. Hawley-Smoot Tariff, 1930- Hoover raised tarriff to help protect domestic farmers against agricultural imports. symbol of "beggar-thy-neighbor" policies (policies designed to improve on'es own lot at expense of others) decline in international trade by 66% between 1929 and 1934 3. Reconstruction Finance Corporation, 1932- Hoover with 2 billion capital to uphold credit structure. Hoover says that it prevented failures of banks, insurance companies, building and loan associations, to save 25 millions of families 4. Bonus March, 1932- 15,000 veterans marched on Washington to demand immediate payment of bonus insurance money that was awarded in 1924. When Congress didn't answer many stayed in camps. Hoover sent Douglas MacArthur to move the veterans out. They used tear gas and tanks to make them leave. 5. First New Deal (First Hundred Days), 1933-By 1933, unemployment in the United States was at a staggering 25%. Franklin Roosevelt became president on March 4, 1933 and immediately instituted the first New Deal. This was a comprehensive group of shortterm recovery programs. It not only included economic aid and work assistance programs but also the end of the gold standard and of prohibition 6. Bank Holiday, 1933- On March 5, 1933, President Franklin D. Roosevelt declared a "bank holiday." Being sworn in as President of a nation that was in the midst of the Great Depression, Roosevelt acted quickly to put a freeze on banking in order to get the Emergency Banking Act passed. Beginning his weekly "fireside chats" the following week helped to restore public confidence. 7. Federal Deposit Insurance Corporation, 1933- was created by the Glass-Steagull act. It basically insured should a bank go bankrupt, the people who had money in the bank could get up to 5000 dollars of their money back. This corporation is still around today, but it insures up to 100,000 dollars now. 8. Civilian Conservation Corps, 1933- A group created by congress to give jobs to the jobless. It was the most popular of Roosevelts many plans. It gave hundreds of men the job of conserving nature, fighting fires, draining swamps, and controlling floods. The men were required to send most of their pay home to their families. 9. Public Works Administration, 1933- came from the same act that created the National Recovery Agency. It was intended for industrial recovery and unemployment relief. Its primary intention was for long-ranged recovery as opposed to short ranged. It spent over 4 billion dollars on over thirty thousand projects to build public buildings, highways, and parkways. It also made the Grand Coulee Dam. 10. Agricultural Adjustment Act, 1933- It was an act that paid farmers a little extra to lower their crop surpluses. It was attempting to increase the price of farm produce because the surplus of farm crops is what had lowered the price in the first place. People thoroughly disliked this act, and it actually increased unemployment. 11. Tennessee Valley Authority, 1933- was charged with figuring out how much the production and distribution of electricity costs. This way there would be a yardstick to measure how fair private utility companies were being to their consumers. The TVA also built several projects in the Tennessee River valley that provided countless jobs and electricity to millions of Americans.

12. Federal Emergency Relief Administration, 1933- this act aimed to provide immediate unemployment relief. The administration gave a lot of money to all the states to provide direct dole payments, or more preferable as wages for workers on public works projects. 13. National Recovery Administration, 1933- The government provided a helping hand to laborers. The act essentially declared that organized labor was fully legal. It also placed a maximum on the number of hours a worker could work in a day, and a minimum wage. It also put restrictions on child labor. 14. Securities and Exchange Commission, 1934- was designed to be a watchdog administration and make sure that sellers in the stock market were playing fair. The stock market afterwards became more of a trading market as opposed to the previous gambling casino that it was. 15. Second New Deal (Second Hundred Days), 1935After FDRs first hundred days in office and the passage of the New Deal, in his second hundred days he passed several more important reforms Including the WPA, SSA, and a new tax bill to raise taxes on the wealthy. 16. Works Progress Administration, 1935The WPA was instituted by presidential executive order under the Emergency Relief Appropriation Act in April 1935 to generate public jobs for the unemployed. Over 3.4 million people were employed to various public works projects such as roads, bridges, and parks. 17. National Youth Administration, 1935The NYA was a branch underneath the WPA that focused on providing work and education for Americans between the ages of 16 and 24. This program influenced a large number of American youth and they were generally employed doing construction or repair projects. 18. Rural Electrification Administration, 1935The REA was created to help bring electricity to the rural homes. The Tennessee Valley was one of such places that the REA was implemented in. By 1939 the REA had helped to establish 417 rural electric cooperatives, which served 288,000 households. The actions of the REA encouraged private utilities to electrify the countryside as well. 19. Wagner Act, 1935Also known as the Nation Labor Relations Act was created in order to help protect laborers by creation the National Labor Board to monitor the rights and conditions of laborers. This act also protected unions and fought against unfair violations of laborers rights. 20. Social Security Act, 1935-- The Social Security Act was an attempt to limit what were seen as dangers in the modern American life through financial aid to certain people. The SSA gave money to states to provide assistance to the elderly, unemployed, dependent children, maternal and child welfare, public health services, and the blind. 21. Schecter v. United States, 1935-- the Supreme Court declared unconstitutional a central piece of the New Deal legislation. In reviewing the conviction of a poultry company for breaking the Live Poultry Code, the Court held that the code violated the Constitution's separation of powers because it was written by agents of the president with no genuine congressional direction. The Court also held that much of the code exceeded the powers of Congress because the activities it policed were beyond what Congress could constitutionally regulate. The Live Poultry Code however was a part of the National Industrial Recovery Act (NIRA), a law passed by Congress to regulate

companies during the recovery from the great depression and thus the ruling that it was unconstitutional affected the NIRA of president FDRs New Deal. 22. Huey Long assassinated, 1935Huey Long, aka The Kingfish, served as the Governor of Louisiana from 19281932 and as a U.S. Senator from 1932 to 1935. He was a democrat although he was noted for his radical populist policies. He used to be on FDRs side but after Roosevelt gained presidency, his views split and he planned to run for presidency in 1936. Long was accused by his opponents of dictatorial tendencies for his near-total control of the state government and was assassinated in 1935 before he had a chance to run for president. 23. Court Packing Plan, 1937 aka the Judicial Procedures Reform Bill of 1937was a legislative initiative proposed by U.S. President Franklin Roosevelt to add more justices to the U.S. Supreme Court. Roosevelt's purpose was to obtain favorable rulings regarding New Deal legislation that had been previously ruled unconstitutional. The central and most controversial provision of the bill would have granted the President power to appoint an additional Justice to the U.S. Supreme Court, up to a maximum of six, for every sitting member over the age of 70 years and 6 months. It failed to go through and was never inacted. 24. Roosevelt Recession, 1938-- a period from mid-1937 to 1938 when the economic recovery from the Great Depression temporarily stalled, lasting about 13 months. The unemployment rate jumped from 14.3% to 19.0%, the first increase since FDR took office, and manufacturing output fell by 37% to 1934 levels. In response, in April 1938, Roosevelt got $3.75 billion in new spending from Congress, which was split among various recovery agencies, and the economy once again began to recover. 25. Congress of Industrial Organizations created, 1938The CIO was a federation of unions that organized workers in industrial unions in the United States. The CIO was a branch off of the AFL and supported Franklin D. Roosevelt and the New Deal Coalition, and was open to African Americans. The federation grew rapidly during the Great Depression. In 1955, the CIO rejoined the AFL, forming the new entity known as the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO). IMPORTANT PEOPLE 26. Herbert HooverHe was the 31st president of the United States. Hoover believed in the Efficiency Movement, which held that the government and the economy were riddled with inefficiency and waste, and could be improved by experts who could identify the problems and solve them. He also believed in the importance of volunteerism and the role of individuals in playing a role in American society and the economy. When the Wall Street Crash of 1929 struck less than eight months after he took office, Hoover tried to combat the ensuing Great Depression with volunteer efforts, public works projects such as the Hoover Dam, tariffs such as the Smoot-Hawley Tariff, an increase in the top tax bracket from 25% to 63%, and increases in corporate taxes. These initiatives did not produce economic recovery during his term, but served as the groundwork for various policies laid out in Franklin D. Roosevelt's New Deal. After 1933 he became a leading conservative spokesman in opposition to the domestic and foreign policies of the New Deal.

27. Franklin Roosevelt He was the 32nd president of the United States. Advocated his New Deal program that was a series of Acts and legislation passed in his first 100 days of his presidency in order to try and help the people of the U.S. out of the great depression. He ignored whether or not the acts were constitutional because his main focus was in saving the U.S. from the depression. In his second hundred days, he passed the Second New Deal which added even more new acts to help the American people. 28. Douglas MacArthur-- he became Chief of Staff of the United States Army in 1930. As such, he was involved with the expulsion of the Bonus Army protesters from Washington, D.C., in 1932, and the establishment and organization of the Civilian Conservation Corps. 29. John L. Lewis- Was an American leader of organized labor who served as president of the United Mine Workers of America from 1920 to 1960. A major player in the history of coal mining, he was the driving force behind the founding of the Congress of Industrial Organizations ,which established the United Steel Workers of America and helped organize millions of other industrial workers in the 1930s.. 30. Charles Coughlin-Was a controversial Roman Catholic priest at Royal Oak, Michigan's National Shrine of the Little Flower church. He was one of the first political leaders to use radio to reach a mass audience, as more than thirty million tuned to his weekly broadcasts during the 1930s. Early in his career Coughlin was a vocal supporter of Franklin D. Roosevelt and his early New Deal proposals, before later becoming a harsh critic of Roosevelt as too friendly to bankers. In 1934 he announced a new political organization called the National Union for Social Justice. He wrote a platform calling for monetary reforms, the nationalization of major industries and railroads, and protection of the rights of labor. The membership ran into the millions, resembling the Populist movement of the 1890s. 31. Huey Long- served as the 40th Governor of Louisiana from 19281932 and as a U.S. Senator from 1932 to 1935. A Democrat, he was noted for his radical populist policies. Though a backer of Franklin D. Roosevelt in the 1932 presidential election, Long split with Roosevelt in June 1933 and planned to mount his own presidential bid for 1936.Long created the Share Our Wealth program in 1934 proposing new wealth redistribution measures in the form of a net asset tax on corporations and individuals to curb the poverty and homelessness endemic nationwide during the Great Depression. 32. Francis Townsend- was an American physician who was best known for his revolving old-age pension proposal during the Great Depression. Known as the "Townsend Plan," this proposal influenced the establishment of the Roosevelt administration's Social Security system 33. Frances Perkins-was the U.S. Secretary of Labor from 1933 to 1945, and the first woman appointed to the U.S. Cabinet. As a loyal supporter of her friend, Franklin D. Roosevelt, she helped pull the labor movement into the coalition. During her term as Secretary of Labor, Perkins championed many aspects of the New Deal, including the Civilian Conservation Corps, the Public Works Administration and its successor the

Federal Works Agency, and the labor portion of the National Industrial Recovery Act. With The Social Security Act she established unemployment benefits, pensions for the many uncovered elderly Americans, and welfare for the poorest Americans. She pushed to reduce workplace accidents and helped craft laws against child labor. Through the Fair Labor Standards Act, she established the first minimum wage and overtime laws for American workers, and defined the standard 40-hour work week. She formed governmental policy for working with labor unions and helped to alleviate strikes by way of the United States Conciliation Service, Perkins resisted having American women be drafted to serve the military in World War II so that they could enter the civilian workforce in greatly expanded numbers ADDITIONAL INFORMATION 34. Black Tuesday- was the most devastating stock market crash in the history of the United States, taking into consideration the full extent and duration of its fallout. The crash signaled the beginning of the 10-year Great Depression that affected all Western industrialized countries and did not end in the United States until 1947. 35. Rugged individualism-The belief that people should help themselves not count on their government for everything. 36. Hooverville- Thousands of these farmers and other unemployed workers traveled to California to find work. Many wound up homeless living in shantytowns called Hoovervilles after the President Hoover 37. New Deal- In 1932, Franklin Delano Roosevelt was elected President based on his promises to create Federal Government programs to end the Great Depression. Within 100 days the New Deal was signed into law. This created 42 new agencies designed to create jobs, allow unionization, and provide unemployment insurance. Many of these programs, such as Social Security, the SEC (Securities and Exchange Commission), and FDIC (Federal Deposit Insurance Corporation) are still here today, helping to safeguard the economy. 38. Brain Trust- In 1932, Franklin Roosevelt won the Democratic nomination for the presidency with John Nance Garner as his Vice President. He ran against incumbent Herbert Hoover. The Great Depression was the backdrop for the campaign. Roosevelt gathered a Brain Trust to help him come up with effective public policy. In the end, Roosevelt carried 57% of the popular vote and 472 electors versus Hoover's 59. 39. Relief, Recovery, Reform- Roosevelt's theme of his New Deal programs. To bring relief to the unemployed. To recover from the Great Depression. and to reform so it never happens again; preventative measures. 40. Blue Eagle (We Do Our Part)- The National Recovery Administration (NRA) was one of a constellation of federal agencies that made up President Franklin D. Roosevelts New Deal program to help Americans recover from the Great Depression. Established in 1933 in an effort to spur industrial recovery, the NRA sought to use government power to restrain competition and end the downward cycle of wage cuts and price reductions, without abolishing the free market. To encourage voluntary adoption of these new codes, participating businesses were allowed to display a blue eagle logo, and consumers were urged to spend money only where the symbol was displayed. 41. New Deal Coalition- Another shift in political parties occurred with the presidential election of 1932. Franklin Roosevelt's Democratic Party came to power by forming the New Deal coalition that united groups that previously had not been associated with the

same party. These included urban workers, northern African-Americans, Southern whites, and Jewish voters. Today's Democratic Party is still largely comprised of this coalition. Significance: A new coalition and realignment of political parties occurred that would help shape future policies and elections. 42. Share-Our-Wealth- Huey Long unveiled his Share Our Wealth plan (also known as Huey Long's "Share the Wealth" plan), a program designed to provide a decent standard of living to all Americans by spreading the nations wealth among the people. This was hugely popular in the high unemployment rates US of the time and many began to follow him. But he was assassinated and no one took up his role.
One bright Sunday morning in the shadows of the steeple By the Relief Office I seen my people; As they stood there hungry, I stood there whistling; This land was made for you and me. Woody Guthrie, This Land is Your Land, 1940