Chapter 25Chapter 25

The Great Depression and the New Deal, 1929–1939

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Causes of the Great DepressionCauses of the Great Depression

Stock Market Speculation Buying on margin common Stock prices spiraled out of control

Mistakes by the Federal Reserve Tight money policy in 1930 and 1931 Worsened situation and prevented recovery

Ill-advised tariff

Causes of the Great DepressionCauses of the Great Depression (cont)

Hawley-Smoot Tariff (1930) Increased duties and fostered retaliation by other

countries Seriously curtailed exports, and international trade in

general

Maldistribution of wealth Fostered by Republican tax policies Slowed consumption and prevented consumer-driven

growth

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Income Distribution Before the Great

Depression

Hoover: the Fall of the Self-Made ManHoover: the Fall of the Self-Made Man Hoover’s program

First turned to “associational” principles Turned to more vigorous action when that didn’t work

Moratorium on foreign loan payments Glass-Steagall Act of 1932 Reconstruction Finance Corporation (1932) Home Loan Bank Board (1932)

Could not accept radical solutions, such as deficit spending Reluctant to provide direct aid to individuals

Bonus Army, 1932 World War I veterans sought early payment of promised

bonus Hoover authorized force to eject them from Washington Shocked the nation Contributed to Hoover’s defeat in 1932

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Presidential Election, 1932

The Democratic RooseveltThe Democratic Roosevelt

Franklin Delano Roosevelt (FDR) Governor of New York (1929–1933) Eleanor Roosevelt

Democratic Party divided during 1920s Agrarians favored government regulation of both the

economy and people’s lives Urban ethnics opposed government intervention in

people’s lives but were divided about the efficacy of intervention in the economy

FDR gravitation toward new reform movement of “liberalism” Government should regulate capitalism Government should not tell people how to behave

First New Deal, 1933–1935First New Deal, 1933–1935

Saving the banks Bank holiday and Emergency Banking Act Glass-Steagall Act (1933)

Created Federal Deposit Insurance Corporation Securities Act (1933) and Exchange Act (1934)

Saving the people Federal Emergency Relief Administration (FERA) Civilian Conservation Corps (CCC) Civil Works Administration (CWA) Homeowners’ Loan Corporation (HLC)

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Bank Failures, 1929–1933

First New Deal First New Deal (cont)

Repairing the Economy: Agriculture Agricultural Adjustment Administration (AAA)

Goal was curtailing farm production by paying farmers not to produce

Tenant Farmers and sharecroppers left out Soil Conservation Service (SCS)

Deal with problem of Dust Bowl Supreme Court declared AAA unconstitutional in

1935 Administration replied with Soil Conservation and

Domestic Allotment Act– Took land out of cultivation for conservation

rather than economic reasons

First New Deal First New Deal (cont)

Repairing the Economy: Industry National Recovery administration (NRA)

Goal was to limit production through persuasion and association

Industry-drafted codes for prices, wages and hours Supreme Court declared unconstitutional in 1935

First New Deal First New Deal (cont)

Public Works Administration (PWA) Built bridges, roads, dams, hospitals, schools, airports Helped to spur development in Arizona, California,

Washington

Tennessee Valley Authority (TVA) Government itself would promote economic

development Control flooding, generate electricity, develop industry,

improve transportation

The New Deal and Western development Dam construction central

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Tennessee Valley Authority

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Federal Water Projects in

California Built or Funded by the

New Deal

Political Mobilization, Political Unrest, Political Mobilization, Political Unrest, 1934–19351934–1935 Populist critics of the New Deal

Huey Long (“spread the wealth among all our people”) Father Charles Coughlin and National Union for Social

Justice Francis Townsend and elderly pensions

Labor and the New Deal NIRA supposedly supported collective bargaining Employers’ refusal to follow codes spurred strikes and

violence

Midterm elections of 1934

Political Mobilization, Political Unrest, Political Mobilization, Political Unrest, 1934–19351934–1935 (cont)

Huge victories for Democrats Many radicals sent to Congress

Would help to shape post-1935 New Deal

Rise of radical third parties and political movements Minnesota Farmer-Labor (MFL) Party End poverty in California (EPIC) Growth of Communist Party of America

Second New Deal 1935–1937 Second New Deal 1935–1937 Philosophical underpinnings

Reliance on economic theory of underconsumptionism Route to recovery was boosting consumer

expenditures, not restricting output Supporting unions to push wages up Social welfare put money in people’s pockets Public works projects to create new jobs Government borrowing from private sources would

fund new measures and lead to end of Depression Major measures of the Second New Deal

Social Security Act National Labor Relations Act Rural Electrification Administration Emergency Relief Appropriation Act Works Progress Administration

Second New Deal Second New Deal (cont)

FDR re-elected by landslide Strong anti-corporate rhetoric during campaign Gave Democrats reputation as party of reform and of

common American

Gap between FDR’s Rhetoric and reality Not as radical in practice as his words would have

suggested Receiving significant support from some capitalists

Second New Deal Second New Deal (cont)

FDR’s Advisors Idealistic, dedicated, confident Not all were men of wealth and privilege Important women in administration worked mostly

behind the scenes Frances Perkins

Little commitment in administration for women’s equality

Focused instead on protective legislation Organized labor

Congress of Industrial Organization (CIO) Labor’s Non-Partisan League (LNPL) UAW sit-down strike against GM, 1936 Gained public stature as well as members

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Labor Union Membership 1933–1945

America’s Minorities and the New DealAmerica’s Minorities and the New Deal

Easter and Southern European ethnics Formidable force within Democratic Party Received New Deal aid through programs targeted at

urban areas

African Americans Marian Anderson New Deal did more to reinforce patterns of racial

discrimination than to advance the cause of racial equality

Administration took symbolic steps in support of civil rights but did not make the issue a priority

America’s Minorities and the New America’s Minorities and the New DealDeal (cont)

Mexican Americans Deportation campaign continued from Hoover

administration Not really included in most New Deal programs

Native Americans John Collier at the Bureau of Indian Affairs

Commitment to cultural pluralism Indian Reorganization Act (1934)

Revoked allotment practices Redistributed land to tribes and otherwise fostered

community authority

The New Deal AbroadThe New Deal Abroad

Followed international course after initial flirtation with nationalism Established diplomatic relations with Soviet Union “Good Neighbor” policy with Latin America Reciprocal Trade Agreement Overreaching goal was to stimulate international trade

and boost U.S. exports

Stalemate, 1937–1940 Stalemate, 1937–1940

New Deal losing momentum by 1937 and 1938 Court-packing fiasco

Motivated by political purposes Protect National Labor Relations Act and Social Security Generated firestorm of public opposition Fueled critics organizing the 1938 midterm elections Rendered unnecessary, in any event, by subsequent

events Recession, 1937–1938

Economic improvements in late 1937 caused spending cut backs

Economy slid back into depressed conditions Led to setbacks for Democrats in 1938 elections

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Federal Expenditures and

Surpluses / Deficits 1929–1945

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Discussion QuestionsDiscussion Questions

What were the causes of the Great Depression? What was FDR’s approach in dealing with the

Depression during his first term? Compare and contrast the First and Second New

Deals. Which had more far-reaching success? What role did the New Deal play in the lives of

American minorities? Did it have lasting impact on our society?