History: after break notes
The Great Depression
A. Herbert Hoover
1. The “Great Humanitarian”: Herbert Hoover personified the rags-to-riches ideal. His
success in managing efforts to feed civilian victims in WWI won him acclaim as “The
Great Humanitarian.” Served as secretary of commerce under Harding and Coolidge.
2. Progressive Republican: although he considered himself a progressive, he still largely
believed in self-reliance and a laissez fair economy. Called for a limited business-govt
partnership and a reform agenda that called for a nation of homeowners and farm
owners whose savings were protected and whose jobs were secure.
3. Ideological and Political Liabilities: not ideologically or philosophically capable of
handling a nation calamity on the scale of the Great Depression. Burdened by
B. Distorted Economy
1. Unstable International Economy: high tariffs and demands on Europeans for
repayment of wartime loans led to an unstable international economy
2. Credit Problem: a consumption problem. Rich continued to spend lavishly but cold only
absorb a small fraction of the nation’s output. Ordinary folk were unable to take up the
slack and much of what they had been purchasing had been on credit and with the
economy worsening, they could not pay what they had borrowed. At the end of the
decade, 4 out of 5 cars and 2 out of 3 radios were bought on credit.
3. Signs of Trouble: new construction slowed down, automobile sales faltered, companies
began cutting back production and laying off workers, and as investment and loan
opportunities faded, as many as 5,000 banks failed. Warning sirens going off but no one
was paying attention.
[America: partying its way towards an economic cliff]
C. Stock Market Crash of 1929
1. Faith in the Market: between 1924 and 1929, the values of the stocks listed on the
NYSE increased by more than 400%. America was buying on margin. Created a
bubble and Dow Jones could not provide an accurate value of stock. Banks invested so
much in the stock market that when there was a run on the bank they couldn’t pay
people back. After crash they had to call in all of their loans (mortgages) which meant
that people lost their homes.
2. Market Crashes: in the autumn of 1929 (Black Thursday and Black Tuesday) the
market hesitated. Nervous investors began to sell their overvalued stock and stock
market lost six-sevenths of its total value over the next six months. 3. Halting Economic Activity: dramatic losses in the stock market and the fear of risking
what they had left acted as a great brake on economic activity.
D. Hooverism: Hoover and the Limits of Individualism
1. bargaining with business and labor: in November 1929, Hoover urged business and labor to
join in a voluntary plan for recovery: businesses would maintain production and keep their
workers on the job, and labor leaders would accept existing wages, hours, and conditions.
Bargain quickly fell apart.
2. aiding rural America: congress passed the Agricultural Marketing Act and Hawley-Smoot
tariff which was meant to generate industry but led other countries to make their own tariffs on
American goods. Economic conditions still worsened.
3. aiding industry: Hoover authorized Reconstruction Finance Corporation, a federal agency
empowered to lend government funds to endangered banks and corporations (trickle-down
economics). Did little to help the poor.
4. Hoover’s limits: A Do nothing President? No federal assistance. Hoover’s response revealed
the limits of his conception of the government’s proper role. American people blamed Hoover for
their suffering and he became unpopular (Hooverviles [shanty towns popped up on outskirts],
Hoover Blanket [newspapers covering homeless on street], Hoover Flag [pockets inside out
showing no money], and Hoover Hogs [jack rabbits caught for food when had nothing else to
[not that he did nothing; he did nothing that worked]
E. Life during the Depression: The Human Toll
1. Joblessness, Hunger, and Poverty: in 1929, national income was $88 billion, by 1933 it was
$40 billion. In 1929, unemployment was 3.2% or 1.5 million workers, by 1933 it was 25% or 13
million workers. By 1932, more than 9,000 banks had gone out of business wiping out some 9
million savings accounts.
2. finding scapegoats: the deepening crisis roused old fears and caused some Americans to
look for scapegoats. Gov’t officials targeted people of Mexican descent for deportation
regardless of their citizenship status.
3. changing the family: young people postponed marriage and had fewer children. Wives often
became breadwinners as they were less likely to lose jobs than their husbands.
4. rising crime: crime increased during the 1930s, steal or starve!
[bank robbers=depression era robin hoods]
With the economic crash that ushered in the Great Depression the political policies of the
republicans and the ideology of lassiez-faire would be discredited and the seeds of a new
conception of the role of gov’t in the economy and the lives of Americans would be planted. FDR’s America: A New Deal
In 1932, the US was in a dark place. America was mired in the great depression and escape
seemed futile. Massive unemployment and widespread hunger griped the nation. HH policies
actually increased the severity of the depression.
As the election of 1932 approached, America was done with Hoover, Republicans,
Conservatism, and Lassiez-Faire Gov’t. Exit hoover, enter Franklin Delano Roosevelt.
FDR brought hope, promise and a New Deal.
The Rise of Franklin D. Roosevelt
A. The Making of Politician
1. Background: born to wealthy family. 5 cousin of Teddy Roosevelt. Appointed
undersecretary of the navy during WWI. Vice president candidate in 1920 election
2. Polio: contracted polio in 1921. Paralyzed both his legs. For the rest of his life, he
needed heavy metal braces in order to walk.
3. Governor of New York: won New York’s 1928 gubernatorial. Believed gov’t should
intervene to protect citizens from economic hardships. 1931, he created the Temporary
Emergency Relief Administration (TERA) and provided a unprecedented $20 million
in aid to the poor NY.
4. Roosevelt’s Appeal: FDR seemed to be a leader determined to use the resources of
the gov’t to attack economic crisis w/o deviating from democracy or capitalism. Common
man felt like FDR was working for him, and not big business.
B. The Election of 1932
1. Democrat Party Divisions: Democratic Party contained warring factions that divided
the party by religion, region, culture, and commitment to the status quo. In ordere to win
the presidency, democratic nominee would have to find a way to form a cohesive and
functioning coalition involving all wings of the democratic party and appeal to moderate
republicans as well.
2. A New Deal: FDR vowed to help “the forgotten man at the bottom of the pyramid” with
“bold, persistent, experimentation”. Promised a New Deal for the American people. Knew
America wanted work and security. Had to rebuild American psyche. Simultaneously
embraced old orthodoxies and radical change. New deal coalition: FDRs victory represented the emergence of what came to be called the new
deal coalition attracting support form and unlikely alliance of (everyone)
The First New Deal
A. New Dealers
1. “Brains Trust”: FDR hoped to reconcile democracy, individual liberty and economic
planning. To design and implement the New Deal, Roosevelt needed ideas and people.
Convened a “Brains Trus