01:512:104 Lecture 24: Chapter 24
15 May 2018
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Department
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Professor
Chapter 24 - The Great Depression and the New Deal
Hard Times
- No even of the 20th Century had a greater effect on Americans than the
Depression
- “The invisible scar” - the emotional and psychological toll of the Depression
years
The Bull Market
- Following stock trading in the late 20s became as popular as following sports
stars
- Prices in the late 20s far outran the real rate of industrial production
- On paper, people were very successful, but in reality, there was no real
value
- Many people bought on margin (only pay for a small % of the cost now, rest
later)
The Crash
- Bull market peaked in September of 1929
- Oct 23 - Dow Jones lost 21 points in one hour - many investors felt the boom
was over
- Oct 29 - “Black Tuesday” - more than 16 million shares were traded as panic
took over
- Hardly anyone predicted a Depression would follow - many saw potential
benefits
Underlying Weaknesses
- Production had been accelerated to the extent that it was hard to adjust to
the drop off
- Most of the wealth in the US was clustered at the top
- This spiral could have been stopped by mass consumer spending, but
everyone saved $
- Many banks failed because of mass withdrawls - thousands lost their
savings
Mass Unemployment
- 1930 - Roughly 9% of the labor work force was out of work
- 1933 - More than 25% of the labor work force was unemployed
- Unemployment left many with feelings of guilt and emotional stress
- Many contemplated suicide
- Even if people hated their jobs, they hung onto them for fear of losing them
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find more resources at oneclass.com
Hoover’s Failure
- In large urban centers, unemployment neared 50%
- Although Hoover aided large-scale humanitarian projects in WWI, he did little
now
- 1931 - Hoover claimed Americans were responding well to the Depression
- Declined to help out the unemployed - “It would be doing them a disservice”
- Reconstruction Finance Corporation (RFC) - 1932
- Managed to save many banks by extending credit
Protest and the Election of 1932
- Many Americans turned to violent protests - eg: Commie-led march at Ford
factory
- Detroit police used tear gas and bullets - 4 killed, 50 wounded
- “Bonus Army” of WWI vets gathered at Washington, DC
- Wanted immediate payments of $1,000 bonus bonds due for payment in
1945
- Eventually evicted y Douglas MacArthur, who claimed they were
revolutionaries
- Democrats nominated New York senator FDR
- Pledged to give Americans a “new deal”
- Democrats won huge majorities in the House and the Senate as well
FDR and the First New Deal
- Of all the century’s presidents, FDR had the greatest impact
- FDR controlled American policy through the Depression and the Second
World War
FDR the Man
- FDR’s family had long-standing aristocratic values - educated at Harvard
and Columbia
- Born 1882 in Dutchess County, New York
- 1905 - Married Eleanor Roosevelt, his distant cousin - EEEEWWWW!
- Nominated for VP in the losing 1920 campaign
- Stricken with polio in 1921 - Strengthened his resolve to continue in politics
- Won a national reputation as a reformer as governor of New York in the late
20s
- Built a “brain trust” around him who believed in using experts to sort out the
economy
Restoring Confidence
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find more resources at oneclass.com
- FDR’s inaugural address: “The only thing we have to fear is fear itself”
- Called a four-day “bank holiday” to clear up the nation’s failing bank system
- FDR began a series of “fireside chats” to let the nation know what he was
doing
- Became enormously successful
- Emergency Banking Act - allowed successful banks to reopen only with
permission
- By mid-March, 1933, 50% of banks held about 90% of the nation’s deposits
The Hundred Days
- From March to June 1933 FDR pushed through various acts to combat the
Depression
- The “New Deal”, as it was called, was not one unified program but many acts
- Focused on reviving industrial and agricultural sectors - Five main aspects:
- Civilian Conservation Corps (CCC) - gave young men work conserving the
nation’s natural resources, building roads, reforesting, etc
- Federal Emergency Relief Administration (FERA) - gave federal grants
directly to the states and local governments for relief
- Led by Harry Hopkins, who became the most important New Deal figure
- Agricultural Adjustment Administration (AAA) - gave relief to farmers by
establishing parity prices for products, and also gave grants for reducing
production surpluses
- Tennessee Valley Authority (TVA) - economic development and cheap
electricity for Tennessee Valley, also gave cheap fertilizer to farmers
- National Industrial Recovery Act - made up of two main parts:
- National Recovery Administration (NRA) - regulated businesses through
codes regulating prices, output, and trade practices
- Public Works Administration (PWA) - Gave more than $3 billion for
public works; wanted to increase the number of jobs and also raise consumer
spending
Left Turn and the Second New Deal
- FDR’s active spirit in Washington brought reassurance that the nation was
on track
- Some felt Roosevelt had done too much, others felt not enough
Roosevelt’s Critics
- American Liberty League held FDR responsible for the decline of personal
liberty
- Democrats managed to increase their majorities in the mid-term elections -
unusual
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Chapter 24 - the great depression and the new deal. No even of the 20th century had a greater effect on americans than the. The invisible scar - the emotional and psychological toll of the depression years. Following stock trading in the late 20s became as popular as following sports stars. Prices in the late 20s far outran the real rate of industrial production. On paper, people were very successful, but in reality, there was no real value. Many people bought on margin (only pay for a small % of the cost now, rest later) Bull market peaked in september of 1929. Oct 23 - dow jones lost 21 points in one hour - many investors felt the boom was over. Oct 29 - black tuesday - more than 16 million shares were traded as panic took over. Hardly anyone predicted a depression would follow - many saw potential benefits.
