BLACK THURSDAY
• Beginning in 1928, consumer
spending declined and new
construction slowed down
– Manufacturers began to reduce
production and lay off workers
– By beginning of 1929, the U.S. was
in the middle of an economic
contraction
• Hoover knew the economy was in
trouble but he didn’t say anything
• Then the stock market, which had
been declining for the previous few
weeks, crashed
– October 24, 1929 (Black Thursday)
– $9 billion of investments wiped out
in one day
– Market would continue to drop for
the next 2 ½ years, wiping out $70
billion more of investments
UNEMPLOYMENT SKYROCKETS
• Severe economic slump
followed the crash
– Unemployment
jumped from 500,000
to 4 million by 1930
• Increased to 15
million by spring
of 1933 (33% of
entire workforce)
• Millions more
were reduced to
part-time work
BIG TROUBLE (1)
More than a million
unemployed people took to
wandering around the
country looking for work,
hitching rides or hopping
freight trains
Breadlines and soup
kitchens sprang up in
every large city
BIG TROUBLE (2)
Hundreds of thousands of farmers
declared bankruptcy, causing
hundreds of rural banks to fail.
The failure of rural banks pulled
down urban ones. By 1931, 5000
banks had failed, wiping out over
9 million savings accounts
People were forced to invent
their own housing. On the
outskirts of every large city,
shacks made of loose
boards, packing crates, tin
sheets, and cardboard
sprung up on vacant land.
These shanty-towns were
nicknamed “Hoovervilles”
UNEMPLOYMENT
• Worst in large cities, among
unskilled blue collar workers,
and among nonwhites
– White collar workers fared
slightly better
• Unemployment rate for
women was lower than that
for men
– But as male unemployment
increased, discrimination
against women grew
– Many felt that married
women who worked were
taking jobs away from
unemployed men
• When layoffs occurred,
married women were the
first to be let go
MEXICAN-AMERICANS
• Some employers and workers
insisted that whites be given
preference in employment
– Mexican-Americans hardest hit
by this attitude
• Mexican-Americans had made up
the majority of the agricultural
workforce in California during the
1920s
– But many growers laid them off
in the 1930s and replaced them
with ruined Anglo farmers from
Oklahoma, Texas, and
Nebraska who had flooded into
California
• Several states barred Mexican-
Americans from public works
projects and gave them one way
tickets to Mexico when they
applied for aid
AFRICAN-AMERICANS
• Black workers were
almost always laid off
before white workers
• At the same time,
unemployed whites
began to seek and get
low status jobs that
blacks had once
monopolized
• Sometimes drastic
measures were used to
force black workers
from their jobs so that
whites could get them
SCOTTSBORO BOYS
• Nine black young men were
falsely accused of raping two
white women on a freight train
near Scottsboro, Alabama
– 1931
– 8 defendants sentenced to
death after unfair trial
• Their case was first taken up
by the Communist Party and
then by the NAACP and
became an international
scandal
• Death sentences were
eventually over-turned but 5
defendants still served long
prison terms for a crime that
never happened
Some places were Many victims left their homes and
turned into deserts— farms forever and move elsewhere—
crops, livestock, and a especially California—in search of
whole way of life were new opportunities. Known variously
destroyed as “Okies” or “Arkies,” their
strugglewas immortalized in John
Steinbeck’s The Grapes of Wrath
Dust storms began in 1932
Worst hit area was the so-
and continued to the end of
called Dust Bowl: parts of
the decade. Storms
Kansas, Oklahoma, Colorado,
sometimes lasted several
New Mexico, and the Texas
days, often accompanied by
Panhandle.
thunder, lightning, and
powerful winds
HOOVER’S RESPONSE
• Hoover was convinced that a
collapse in public confidence had
caused the slump and tried to be
optimistic in order to restore
confidence
– But what was needed was a large
public works program that would
put people to work and put
money in hands of consumers
• Hoover believed that aid should
come from private charities and
local government
– Did not see that both were
overwhelmed by the the crisis
– Only federal government had
resources to deal with the
disaster
• Hoover refused to commit
those resources
RENT PARTIES
• Given lack of initiative by
government, people took
matters in their own hands
• Originally invented by
African-Americans on the
South side of Chicago,
people began to organize
“rent parties”
– Where neighbors would
raise money to prevent
a friend from being
evicted
BONUS MARCHERS
• Thousands of WWI vets
marched on Washington to
demand cash bonus they had
been promised for fighting in
the war
– Called themselves the Bonus
Expeditionary Force
– June 1932
• Hoover refused to meet with
them and ordered Douglas
McArthur to peacefully disperse
marchers from the camp they
had set up
– He exceeded his orders and
attacked their camp, injuring
over 100 vets and killing two
babies
THINGS GET UGLY
• Desperate farmers in Midwest
used violence to prevent
foreclosures, dumped milk and
slaughtered livestock rather
than sell them at prices below
production costs
• Hungry and desperate men
looted stores and robbed
delivery trucks
• Ford workers strike to demand
jobs for laid off workers
– Police attacked strikers with
machine guns, killing 4 and
injuring over 60
– March 1932
ON THE BRINK
• Dramatic increase in membership
in Communist Party
– Angry people denounced
capitalism as the cause of
Depression and as a cruel and
inhuman system
• It is possible that despair might
have let to the establishment of
Communist or, more likely, a right-
wing dictatorship if the country
had had to endure four more year
of Hoover
– But the democratic system of
government continued to work
despite the severe strain it was
under
FDR
• Democrats nominated
Franklin Delano Roosevelt
for president in 1932
– Wealthy former governor
of New York and Secretary
of the Navy under Wilson
– Polio victim
– Charismatic, out-going
and dynamic man who
surrounded himself with
astute political advisors
• Republicans re-nominated
Hoover
1932 ELECTION
FDR and the Democrats
won easily
Hoover warned that all
FDR would do is make the
country’s problems worse
But no one was in the
mood to listen to him
anymore and he was
FDR was vague as to greeted with catcalls and
precisely what he would hostile demonstrations
do to end the Depression everywhere he went
but he did promise to
increase aid for the
unemployed and take
other steps to ease the
nation’s suffering
FDR’S INAUGURATION SPEECH
• Made ending the Depression his
top priority
• Proposed a program of federal
public works programs,
measures to support agricultural
prices, an end to home and farm
foreclosures, and closer
regulation of banks and the stock
market
• Gave Americans hope
– Told them they “had nothing
to fear but fear itself”
– Gave them the feeling that
they had a strong leader who
cared about them and who
would help them
BRAINS TRUST
• FDR only had a vague
idea about how he was
going to do what he
promised
• But he did recruit a
group of very talented
advisors who did
quickly supply him with
the programs and
innovations that he
needed to get the U.S.
back on its feet
– The “Brains Trust”
THE 100 DAYS
• Launched the “100 Days”
– A whirlwind assault on
defeatism and decline
• Often marked by confusion and
contradiction and it did not end
the Depression
– But it did stop the country from
declining further and restored
a sense of forward motion to
the American people
• Main purpose was to get the
economy rolling again by
increasing the rate of private
investment and consumer
spending
– Only way to do this was for the
government to spend large
sums of money to encourage
these activities
AGRICULTURAL ADJUSTMENT
ACT
• Main goal was to raise farm prices
by creating artificial scarcity
• Paid cash bonus to farmers who
agreed to cut their production of
seven basic commodities
– Based on assumption that
prices rise when supply of a
commodity drops
– Hoped this artificially induced
reduction of farm output would
raise crop and livestock prices
and improve farm incomes
• Some problems with this program
but it did eventually help raise
farm income
– Probably saved the small
farmer from complete oblivion
MORE PROGRAMS
• Reconstruction Finance
Corporation
– Loaned money to needy
businesses at low interest
rates and extended
repayment periods to keep
them afloat
• Home Owners Loan
Corporation
– Gave millions to Savings
and Loan institutions so
that they could refinance
mortgages at lower rates
of interest
STILL MORE PROGRAMS
• Works Progress Administration
– Created public works jobs for
the unemployed
– Put them to work building new
schools, city halls, sewage
treatment plants, hospitals,
libraries, etc
• Civilian Conservations Corps
– Employed 2 ½ million
unemployed young men
– Worked in conservation and
beautification projects such as
planting trees, cleaning
beaches, building forest ranger
stations, restoring historic
landmarks, etc.
SOME PROGRESS
• Programs did push GNP upward for the first time
since 1928 and cut unemployment
– But it did not end Depression
• FDR introduced reforms designed to correct abuses
that had caused Depression
– Securities and Exchange Commission
• Regulated Stock Exchange in order to end
worst abuses
– Federal Deposit Insurance Corporation
• Designed to make the banking system more
stable by insuring savings deposits and
thereby preventing panic withdrawals
GROWING CRITICSIM
• In the beginning, Congress gave FDR almost
everything he asked for without looking too closely
at the cost or even the wisdom of his proposals
• But by 1935, opposition began to grow against the
New Deal from both ends of the political spectrum
– Conservatives charged that his programs
interfered too much in the private sector, cost too
much money, and tended towards socialism
– The Left argued that his programs had not gone
far enough
• Socialists, for example, wanted government to
take over ownership of large industries and run
them in such a way that workers, not absentee
shareholders, would benefit the most
NEO-POPULISTS (1)
• Huey Long
– Senator from Louisiana
• In order to build a base from
which to challenge FDR for
presidency in 1936, he came up
with “Share Our Wealth” plan
– Wanted government to
confiscate all wealth above a
certain level and then use it to
give every American $5000 in
cash and a guaranteed annual
income of $2000
NEO-POPULISTS (2)
• Father Charles Coughlin
– Catholic priest from Detroit who
had a radio show with 30 million
listeners
– Demanded that the government
take over control of production,
profits, and working conditions
throughout the private sector
• Francis E. Townsend
– Retired doctor from California
– Proposed that all people over the
age of 60 be given government
pensions of $200 a month if they
agreed to retire
• Would remove tens of thousands
of older people from the job
market and inject millions of
dollars of fresh purchasing
power into the economy
SECOND NEW DEAL
• FDR ignored attacks by
conservatives
• But he did worry that the
Neo-Populists might cost
him public support in his
1936 re-election bid
– Therefore launched
“Second New Deal” in
1935 to undercut Neo-
Populists and at the
same time weaken to
power of big business,
equalize opportunity,
and increase economic
security
NATIONAL LABOR RELATIONS
ACT
• Also known as Wagner Act
– Protected the right of unions
to organize and gave new
life to labor movement
• Which had been declining
since the 1920s because
of the hostile attitude of
previous Republican
administrations
• Union membership increased
23% after 1935
– Gave unions the numbers to
achieve positive benefits for
their members
SOCIAL SECURITY ACT OF 1935
• Established national system
of unemployment insurance,
financed by a payroll tax
• Also set up a pension system
for retired people over the age
of 65 and their survivors
• Provided federal funds to
states to help them take care
of the destitute, handicapped,
and orphans
• Although conservatives
criticized it as “creeping
socialism,” it did respond to a
crying need in American
society and allowed FDR to
steal much of the thunder
from Neo-Populists
1936 ELECTION
Not only did traditional
Democrats (white
FDR easily won southerners and urban
re-election over Catholics) vote for him,
Alf Landon of but so did African-
Kansas Americans, Mexican-
Americans,
intellectuals, and union
members
Democrats also won
huge majorities in Created the so-called
the House of “Roosevelt Coalition”
Representatives and that would re-elect FDR
Senate for as long as he was
alive
TROUBLE WITH THE NEW DEAL
• In second inaugural address, FDR promised to extend
the New Deal to meet the needs of the “1/3 of the nation
that is still ill-housed, ill-clothed, ill-nourished”
– And he did pass the Fair Labor Standards Act in 1938
to establish the minimum wage
• But the New Deal seemed to run out of steam and was
virtually dead by 1939
– Because the Depression refused to go completely
away despite all the New Deal efforts
– Damaged New Deal morale in the long run
• Solidarity within the Democratic Party began to
weaken and northern liberals and southern
conservatives began to fight among themselves
PROBLEMS WITH SUPREME
COURT
• Supreme Court had a majority of very conservative
justices appointed by the Republican
administrations of the 1920s
– Ruled in 1937 that several of FDR’s first New Deal
programs were unconstitutional
• FDR resented this and worried that, in the
future, they would rule against his Second New
Deal programs
– Especially Social Security
“COURT-PACKING”
• FDR asked in 1937 for the
power to appoint six additional
justices, thereby allowing him
to overcome the current
conservative majority
– Conservatives criticized this
as an attempt to undermine
constitutional system of
checks and balances
– But even many liberals was it
as a potentially dangerous
attack on the judicial branch
• When the court reversed its
stand on several key New Deal-
related cases, all support for
FDR’s proposal disappeared
END OF THE NEW DEAL
• Confidence in FDR gradually
declined after 1937
– As Southern Democrats
increasingly voted against
him
• In Congressional elections of
1938, Democrats retained
control of Congress
– But still lost 81 seats in the
House and 8 in the Senate
– Suggests that Americans
had lost confidence in the
man and party they had
elected in 1932 to save them
• FDR would be re-elected two
more times and would continue
to be admired by many
– But for all real purposes, the
New Deal was dead by 1938