Unit 12: 1930's The Great Depression

Smoot-Hawley Tariff

(June 1930): [← did not start in October 1920 despite popular belief in October 1920 it was just a recession] • Before, unemployment was still below 10% even after the Crash • Put a tariff on imported manufactured goods from Europe • Retaliatory taxes • Lay offs - unemployment goes way up

One Last Thing to Keep in Mind...

*The Depression w/in the Great Depression or the Roosevelt Depression → when the government is trying to spend money by increasing sales tax, which causes the product price to increase, which causes people to not buy, which causes poverty, which causes...well a lot of other things..."almost like a domino effect" -Keeble

The 2nd New Deal

*he stops trying to help individual people and went from microeconomics (i.e. just the banks/checkbooks) to macroeconomics (the whole economy)*

The election is a Turning Point b/t...

- Between the relationship of the government and the economy

The National Recovery Act (NRA)

- Established the Public Works Administration: - Established the National Recovery Administration: created codes of fair competition companies that belonged to it; encouraged business to get ride of competition and come together to determine prices of goods. The Eagle represents→ • Schechter Poultry Corp. vs. United States (1933): they found the NRA to be unconstitutional [Significance of the trial: set the stage for and epic battle b/t the president and the Supreme Court.]

Father Charles Coughlin

- Left Side Critic Criticizes FDR and wanted more redistribution of wealth; he felt FDR didn't do enough to help the poor; he had a radio show, and liked Huey Long's plans.

Upton Sinclair and EPIC

- Left Side Critic • Ran for governor of California and created EPIC which stated: 1) Buy closed factories and unused land 2) Put poor to work in state owned factories and farms 3) Good produced will be sold in California run stores 4) Paid in state of California money 5) Buy goods and such in California stores that only accepted California money • This was much like sharecropping and slavery and dictatorship and communism. • This was so shocking, and disturbing, that the democrats started to allow the republicans to win.

Home Owners Loan Corp. (HOLC)

- form of recovery • Bought bad loans from owners who couldn't pay off these loans • Refinanced the loan back to the homeowner at a lower interest rate so that this way, the owner could pay his/her mortgage at a lower payment with much lower interest rates, and easier payments.

Agricultural Adjustment Administration (AAA)

- form of recovery • Bought crops and cattle and then they burned or destroyed them • They paid the farmers to not plant certain crops • Put a tax on companies that process crops • This led to a decrease in the market and an increase in price of the crops • This is the least favorite act of FDR's new deal - critics will reason that you do not reduce food when people are starving. • Us vs. butler = reasoned the AAA unconstitutional b/c they took the tax money and gave it right back farmers; this also shows how FDR is against the supreme court.

Tennessee Valley Authority (TVA)

- form of recovery • Generates hydroelectric power (creates more jobs - cheap electricity; demand for aluminum industry)

Securities and Exchange Commission (SEC)

- form of reform • Federal government has the power to regulate stock market • Outlawed stock pools, margin buying, insider trading • They regulate the way in which publicly held stocks are sold and how they are regulated with their shareholders. • Full disclosure of information about public securities, (in other words: ex: Boeing is in negotiations with India, who will make many 777 jets, the public knows about it and that will be profitable for the company, since demand is now high, price goes up. But if the stock was to go down, before the news issued the quarterly session and you sold it before then, you break the full disclosure law.) • Joseph P. Kennedy → chairman of the SEC, related to John F. Kennedy.

Federal Deposit Insurance Corporation (FDIC)

- form of reform • In 1936, Guaranteed bank deposit up to $50,000 ($ will always be there) • A Bank that is under the FDIC is regulated under the FDIC rules. • Roosevelt creates bank holidays (so people won't rush to banks to pull out money - slows down the public's emotionalism) • They make sure they do not make unsound loans by using collateral and assets. • Government is given the power to control the money supply (control deflation/inflation) • Government regulates how much money banks can loan out (Government basically reforms the banking system)

Tennessee Valley Authority (TVA)

- form of reform • Provided electricity → jobs → prevented people from being in poverty for a long time

Tennessee Valley Authority (TVA)

- form of relief• All 3 categories (relief, recovery, and reform) • Built dams along the Tennessee River (provided jobs) • Had long reaching consequences. • They created jobs by building dams, (long term jobs), and then decided to do hydroelectric power plants. ← these plants lead to recovery. Reform was provided by creating electricity in these plants which led to even more jobs provided. • The TVA will be very important later on in WWII when we need aircraft/boeing

Federal Emergency Relief Administration (FERA)

- form of relief• Government gave the state government a check, to do things in the state that the federal government could not do. • The federal government gave 3.1 billion dollars to the states to start these projects. • Provided 20 million jobs (even if some were very temporary)

Civilian Works Administration (CWA)

- form of relief• Job program so people could make $$ • Worked from inside of FERA • Built sidewalks, roads, and schools • mainly construction jobs • Provided 4 million jobs

Civilian Conservation Corps (CCC)

- form of relief• Plant trees, rake leaves, earth work, house carpentry, dig ditches, build sidewalk...just keeping people busy. Men could use these skills could use them in other jobs. • Employed about 3 million men • Focused on hiring men so that the criminal rate goes down • Gave people jobs to keep their head above water

Where Do You Live?

1) Families who could not pay rent were evicted from their homes 2) Multiple families would live together in a small, crowded apartment 3) Some slept in doorways and on park benches 4) Many rummaged around vacant lots and deserted construction sites to seek scrap materials in order to build a shack/shelter 5) Villages that were built on vacant lots and that were composed of makeshift construction material were known as Shantytowns or Hoovervilles (as to blame Hoover for the depression - but it wasn't his fault at all)

The Life of Hobos

1) Hobos were unemployed Americans who traveled, looking for work 2) They walked, hitch-hiked, and stowed away on railroad cars 3) Hobos resorted to being criminals and had run ins with the police and railroad security 4) Criminal rates - a lot of kidnapping for ransom money and banks were robbed left and right

Where/What do You Eat?

1) Many were without jobs and went hungry 2) Charities set up bread lines and soup kitchens, but charitable money ran out sometimes 3) Many people mixed boiling water with garbage, rotten vegetables, or other things in attempt to make some kind of soup mixture. (boiling water generally removes impurities but not all)

Where Do You Work?

1) Minorities were the first to lose their jobs 2) Women were fired and replaced with men - society felt that the woman's place was at home and that men should be the providers (women making money = luxury)

Impact on Life During the Great Depression

1) There were thousands of bank failures with a total of 1/3 of all banks collapsing 2) Unemployment and the decline of the farming industry continues [minorities fired/laid off first, especially women and African Americans] 3) Many farms failed 4) Many people are poor, homeless, and hungry 5) In 1930: 1,352 banks failed (twice the number from the year before) 6) In 1932: 30,000 companies go out of business, they just shut down whether they had products to sell or not... 7) In 1933: More than 9,000 banks failed 8) In 1933: 12 million workers were unemployed = 25% of the American workforce was unemployed = The HIGHEST amount in American History 9) Average Family income dropped from $2,300/year to $1,600/year

The Dust Bowl

1) Uncultivated Great Plains and severe drought caused the soil to dry up and form dust 2) American pastures from the Dakotas to Texas are now desolate wastelands - "Dust Bowl"

Depression in Visual Arts

1. Art 2. Literature 3. Photography

Causes of the Stock Market Crash

1. Overspeculation 2. Margin Buying 3. Federal Reserve Bank 4. Stock Pools 5. Protective Tariffs 6. Smoot-Hawley Tariff

Escaping the Depression through Entertainment

1. Radio shows 2. Movies

Keynesian Economics

1.) Government spending increases when unemployment increases 2.) Government spending decreases when unemployment decreases 3.) Government spending alleviates unemployment through government service projects such as building schools, sidewalks, dams o It is the greatest single change in American government/economic policy in United States History

Okies

3) Some farmers managed to hang on while many lost their farm and their land and many moved to California

Significance of the Court Packing Scheme

It showed that the system of checks and balances worked b/c if the president overstepped his boundary, then he could be checked. It also showed how the court can be pressured.

The New Deal!!!

Next 14 Cards!

Result of the 1932 Election

Roosevelt wins in a landslide with only 5 northern states voting for Hoover o FDR's inaugural address is famous for the quote "The only thing we have to fear is fear itself" - tries to calm the nation's emotional panic

Social Security

Unemployment insurance o Compensation for disabled workers o Assistance to widows and orphans (factories are dangerous for men) o Old age insurance (←no intention of people to collect this b/c you had to live to about 65, and the average age in the 1930's was 57)

Decline in the Farming Industry of the 1930's

a. Drought on Great Plains b. Vast lands of wheat and corn are now deserted by farmers c. Dust Storms - the wind whips up the loose dirt on the abandoned, fruitless fields d. Grasshoppers, eating machines with legs, ate up surviving crops e. Because planters are not planting crops, there are no trees and no grass i. Dust Bowl is a result → Migration of Oklahoma to California

Decline in the Farming Industry of the 1920's

a. Farmers in debt b. Large bank loans c. Low prices on their goods

Recession

businesses slow down, layoffs, unemployment increases, money tight, not willing to take risks

Recovery

businesses starts to increase, people are being hired, $$ getting easier to get

Depression

companies are going bankrupt, unemployment is above 12%

Prosperity

growth and business, low unemployment, easy access to $ (loans easier to get, low interest rates), high prices

Relief

help NOW! *you falling down a bridge and giving you a floatation device*

Stock Pools

investors conspire (buy low, sell high) - they get others to buy stocks too (prices increase, demands increase)

Margin Buying

investors gave a fraction of their stock to brokers; investors were unable to pay margin call so the shares were sold causing prices on the market to decrease

Farm Security Administration (FSA)

loans money to farmers at a lower interest rate so they can buy the supplies and tools they need to produce and harvest crops.

Federal Reserve Bank

lowered interest rates to keep more $$ in circulation, but needed to increase tax to curb speculation

Photography

o Dorothea Lange - famous for her black and white photo stills (So iconic that many people think of the 1930's in black and white, even though color existed; many pictures seen of the 1930's are black and white due to her influence.) > Humanized the consequences of the Depression by documenting the era through her photos > Photographed the homeless in Hoovervilles, Okies, and Dust Storms o Russell Lee: "introduce America to the Americans" he worked with color pictures, and they are very rare and hard to come across. Give a different angle of the great depression than Lange's photos. (See distinctive stress lines/attitude and tan lines!)

Overall Impact of the New Deal

o Expanded the power of the federal government unlike ever before since Civil War o Expanded the power of the President unlike ever before since Jackson -created the term "Imperial President" o Deficit spending - government in debt during peace time o Federal social programs established the Welfare State (where the government shifts away from laissez faire, and starts to worry more about the workers) o Creates concern for workers o Conservation became a permanent part of the political debate (Dust Bowl - plant trees to keep the dirt down) o It renewed faith in democracy - Since, people felt that capitalism and democracy failed during Depression.

National Labor Relations Board (NLRB)

o Hears employee grievances and complaints o Cease and assist order to stop complaints from unfair practices

Literature

o John Steinbeck - wrote about poverty in The Grapes of Wrath and Of Mice and Men > The movie was made in 1930 starring Henry Fonda > Although color was available, it was filmed in black and white to convey the bleakness of the time period o William Faulkner - wrote about racism in the South in The Sound of Fury

Significance of the Election of 1932

o Prior, the policy was laissez faire → Now the government takes a hands ON approach o Federal government takes on greater roles like never before (socially, economically, politically) [The greatest increase during peaceful times]

Art

o Regionalist School: stressed traditional American values of the MIDWEST o In most entertainment/movies, the Midwestern point of view is reflected o Thomas Hart Benton o Grant Wood

Election of 1936

o Republican - Alfred Landon o Union Party -[ made of followers of Huey Long and Father Coughlin] nominated William Lemke (promoters of Share the Wealth) o FDR wins every state except for Maine and Vermont [Roosevelt determined that they were going to put the New Deal ideas into areas that were undecided on who they were going to essentially vote for, to help his elections tremendously] (they voted for him, because they have jobs due to his efforts) o Significance: FDR walks away with a landslide, and it is seen as a mandate [a public rounds well of support for an idea or purpose = in this case the New Deal]

Election of 1932 - turning point!

o Republican - re-nominated Hoover > By not re-nominating, you are admitting fault so the re-nomination is a way to try and convince people that Depression was not the Republican party's fault > Hoover never recognized the severity of the Depression (thought the worst of it was over) o Democrat - Franklin D. Roosevelt ( aka FDR) promises a "New Deal" that voters weren't so sure what it was exactly, but they wanted relief so they vote for him

Movies

o Snow White & the Seven Dwarves - first full length colored animated movie o Wizard of Oz - relates to Cleveland Panic in 1890's, farm reform, and gold & silver; farm scenes = black & white (sad and desolate) o Gone with the Wind - spoke to the rural South going through hard times [after the civil war, during reconstruction]

FDR takes on the Supreme Court

o Supreme Court declared some New Deal programs unconstitutional (The Constitution never specifically stated that Congress nor the President had the authority to conduct such Deals)

Radio Shows

o The Green Hornet - comic book o Guiding Light - soap opera o The Lone Ranger

Rural Electrification Administration (REA)

o money given to community to build public utilities o Helped build electric power plant o Bring little towns into the 19th century

Reform

preventing the problem from happening again *we get wood and rebuild the bridge so you don't fall back in*

Recovery

tries to give a solution to your particular problem; long term/permanent employment *we throw you a rope so you can get out of the river*

Court Packing Scheme

• FDR needs support for his New Deal • FDR wants to replace each Justice after they retire and are 70 years old • His own people did not accept this idea • Defeated 70 to 20 in Senate • In 1942, FDR appointed 7 out of the 9 Justices (but by now the issue was about WWII, not the New Deal)

Protective Tariffs

• Fordney - McCumber Tax created a farm depression (from the 20's it allowed the President to raise the tariffs)

Left Side: Critics of the New Deal

• Huey Long - Socialist that believed in complete redistribution of wealth [share the wealth program, all income of 100,000 would be confiscated] • uses money to guarantee a minimum income of $5,000 or each individually $2,000 • In 1935, he planned to run against and challenge FDR in the 1936 election, and he made FDR nervous about this; but unfortunately he was shot before he could do this and died. And no one knows why he was shot...

Over Speculation

• People thought prices would keep rising (but what goes up must come down) • much like the Panic & specie circular during Jackson's administration

Right Side: Critics of the New Deal

➢ American Liberty League: to "defend and uphold the Constitution" and to "foster the right to work, earn, save and acquire property." (wikipedia) • Prescott Bush • Dean Acheson • Members of the Du Pont family (gunpowder manufacturing - influential in American politics; ran GM corp. through WWII) ➢ Opposed FDR ➢ Denial of property rights would lead to the denial of moral of personal rights/liberty