The Great DepressionThe Great Depression

 

 

                                                                                               

                                                       

What caused it?What caused it?

Great Stock Market crash of 1929Great Stock Market crash of 1929 On Black Tuesday, October 29On Black Tuesday, October 29thth after after

panic selling market fell 89%panic selling market fell 89% Our economy had some serious Our economy had some serious

weaknesses such as…weaknesses such as…

Worldwide price of agricultural good Worldwide price of agricultural good dropped hurting farmersdropped hurting farmers

High unemployment in RR, coal, and High unemployment in RR, coal, and textile industriestextile industries

Bank failures because people could Bank failures because people could not pay back loansnot pay back loans

Also…Also…

Unequal distribution of wealthUnequal distribution of wealth Excessive buying on credit, then less Excessive buying on credit, then less

buying as debt piles upbuying as debt piles up Business consolidations resulting in just a Business consolidations resulting in just a

few large companies in each industry are few large companies in each industry are left vulnerable to failureleft vulnerable to failure

Weak banking structureWeak banking structure Weak post war international economyWeak post war international economy Inadequate government policies to deal Inadequate government policies to deal

with all of the problems!with all of the problems!

Herbert Hoover 1929-1933Herbert Hoover 1929-1933

Tried to restore confidenceTried to restore confidence• Helped businesses in hopes of a Helped businesses in hopes of a

“trickle down” effect“trickle down” effect Created some public works programs Created some public works programs

to create jobs to create jobs

The Great DepressionThe Great Depression

Two Main Causes: Two Main Causes: 1. OVERPRODUCTION1. OVERPRODUCTION 2. UNDER CONSUMPTION2. UNDER CONSUMPTION

TRICKLE DOWN ECONOMICSTRICKLE DOWN ECONOMICS

GOVERNMENT LOANS TO BUSINESS SO THEY

INVESTPLAN TO EXPANDTO CREATE

NEW JOBS TO

INCREASE PRODUCTION

MORE WAGESIN CIRCULATION

DEMANDINCREASES

NO MORE DEPRESSION?!NO MORE DEPRESSION?!

This failed because…This failed because… Businesses were afraid to spend Businesses were afraid to spend

money given to them by the gov’t – money given to them by the gov’t – therefore no one is hired.therefore no one is hired.

Also…Also…

Relief was not immediate or directRelief was not immediate or direct He kept insisting things were getting He kept insisting things were getting

better, but they were getting worse!better, but they were getting worse! He sent the army to break up a camp of He sent the army to break up a camp of

WWI veterans camped out in D.C. WWI veterans camped out in D.C. demanding early payments of their demanding early payments of their bonuses for their war service. Americans bonuses for their war service. Americans were outraged when they saw the troops were outraged when they saw the troops using tear gas and tanks on this “Bonus using tear gas and tanks on this “Bonus Army.”Army.”

His program was a failure.His program was a failure.

BONUS ARMYBONUS ARMY

Franklin Delano Franklin Delano RooseveltRoosevelt

““I pledge you, I pledge myself, to a I pledge you, I pledge myself, to a new deal for the American people.”new deal for the American people.”

100 Days 100 Days – first few months of – first few months of presidency saw intense action, presidency saw intense action, 15 15 pieces of New Deal Legislationpieces of New Deal Legislation

Master communicator Master communicator used used “fireside “fireside chats” chats” to get his message to the to get his message to the people over radiopeople over radio

First lady Eleanor, continued to push First lady Eleanor, continued to push humanitarian, women’s, and minority humanitarian, women’s, and minority issues to her husbandissues to her husband

The New Deal in ActionThe New Deal in ActionAlphabet Soup ProgramsAlphabet Soup Programs

RReliefelief RRecoveryecovery RReformeform

THE NEW DEALTHE NEW DEALstrategiesstrategies

Action was Action was direct, federal gov’t more direct, federal gov’t more involved in economy involved in economy than ever beforethan ever before

This required lower taxes, but increased This required lower taxes, but increased gov’t spendinggov’t spending

Increased federal regulation Increased federal regulation over over banks, businesses, stock exchangebanks, businesses, stock exchange

Deficit spending Deficit spending – gov’t was spending – gov’t was spending more than taking in to stimulate more than taking in to stimulate economy so people would start economy so people would start spending againspending again

FDR AND THE SUPREME FDR AND THE SUPREME COURT, CONSTITUTION, AND COURT, CONSTITUTION, AND

CRITICS, CRITICS, Schechter Poultry Corp. v. U.S. Schechter Poultry Corp. v. U.S. 19351935

Declared the NRA (National Recovery Act) Declared the NRA (National Recovery Act) unconstitutionalunconstitutional

Why? Why? 1.1. Congress does not have the right to Congress does not have the right to

regulate intrastate commerceregulate intrastate commerce, (commerce , (commerce within a state) or pass that to the executive within a state) or pass that to the executive branchbranch

2.2. Violated separation of powers Violated separation of powers by giving this by giving this power to the executive branch (Congress is power to the executive branch (Congress is supposed to regulate commerce)supposed to regulate commerce)

U.S. v. Butler 1936U.S. v. Butler 1936 AAAAAA (Agricultural Adjustment Act) (Agricultural Adjustment Act)

declared declared unconstitutionalunconstitutional Why?Why? Agriculture is a localAgriculture is a local, not interstate , not interstate

matter according to 10matter according to 10thth Amendment Amendment

The Judicial Reorganization The Judicial Reorganization PlanPlan

Also know as the Also know as the “court packing” “court packing” planplan New Deal legislation continues to get New Deal legislation continues to get

vetoed by Court so…vetoed by Court so… FDRFDR wanted the number of wanted the number of Supreme Supreme

Court Court justices to go justices to go from 9 – 15 from 9 – 15 if if they refused to retire at age 70they refused to retire at age 70

What does this threaten?What does this threaten? Separation of Powers and system of Separation of Powers and system of

checks and balanceschecks and balances

TVA Tennessee Valley TVA Tennessee Valley AuthorityAuthority

Provided Provided jobs, flood control, cheap jobs, flood control, cheap electricity for rural areas of 7 stateselectricity for rural areas of 7 states

But some But some criticized criticized it as being it as being socialistsocialist

FDR Serves 4 termsFDR Serves 4 terms

Unwritten constitution Unwritten constitution says says presidents should only presidents should only serve 2 termsserve 2 terms

Who started this precedent?Who started this precedent? FDR wins a 4FDR wins a 4thth term! term! 2222ndnd Amendment later Amendment later passed to limit passed to limit

presidential terms to 2presidential terms to 2

CriticsCritics

Less opportunities for women and Less opportunities for women and African AmericansAfrican Americans than white men than white men

Progressives Progressives and Socialist said and Socialist said FDRFDR not not going going far enoughfar enough

RepublicansRepublicans and some business owners and some business owners said programs said programs too socialisttoo socialist, FDR like a , FDR like a dictator, wealthy don’t like higher taxesdictator, wealthy don’t like higher taxes

Some critical of Some critical of new role of gov’t and new role of gov’t and deficit spending that adds to national deficit spending that adds to national debtdebt

New DealNew Deal

Helped with many of the problems of Helped with many of the problems of the Depression, but the Depression, but WWII probably WWII probably helped morehelped more