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1930s

VIEWS: 9 PAGES: 50

									The Great Depression


     1929-1941
          Stock Market Crash (1929)
• In the days prior to the crash there were some
  warning signs – but most people ignored them
  and continued speculating
• In October the British raised their interest rates
  in an attempt to regain some investment money
  lost to America
• Investors started to dump their investments and
  look for something more secure
• On October 29, 1929 “Black Tuesday” people
  sold over 16 million shares in an attempt to
  salvage some money
• Stockbrokers sold stock they held for buyers who
  could not meet their margin calls
• President Hoover tried to calm the people by
  saying everything was fine
• In a few months stockholders had lost over $40
  billion
• By 1930 over 4 million were out of work; banks
  collapsed; people lost their savings; farms were
  foreclosed
• The crisis seemed to feed on itself as more and
  more people lost their jobs
• Most people were saved from starvation by soup
  kitchens
   Causes of the Crash and Depression
• 1. The country had been producing more than it
  could sell
• 2. Profits had gone to a small, wealthy group and
  not to the workers who would have spent the
  money and probably prevented the crisis
• 3. Credit was too easy to obtain and for too little
  security
• 4. The Hawley-Smoot Tariff of 1930
• 5. In 1930 a terrible drought ruined many
  farmers
• By 1933 over 13 million were out of work, others
  worked for reduced wages and/or shorter hours
• People created shelters called “Hoovervilles”
• People made shelters from cardboard and used
  newspapers “Hoover blankets” to keep
  themselves warm
• Many just abandoned everything, became hobos
  and traveled the country by “riding the rails”
• Treasury Secretary Mellon and Hoover both
  believed the economy would cure itself
• Both asked business owners to keep factories
  open
• Gradually Hoover realized more needed to be
  done – he rushed through government contracts
• However local governments cut back on spending
• Hoover asked the Federal reserve to make credit
  more available, while Congress passed a small
  tax cut
• The Hawley-Smoot Tariff (1930) raised duties to
  an all-time high to protect American
  manufacturers – but other nations retaliated and
  it ultimately hurt the economy
• Economist asked the president to remove the
  tariff, but it was an election year so he refused
• In 1931 the failure of Austria’s largest bank put
  even greater pressure on European economies
  and even less likelihood for the payment of war
  debts
• In 1932 Congress established the Reconstruction
  Finance Corporation to allow loans to banks,
  mortgage associations, railroads, and insurance
  companies
• In the first six months they issued $1.2 billion in
  loans
          Bonus Army March (1932)
• In some areas farmers took the law into their
  own hands and formed the Farmers’ Holiday
  Association calling on farmers to strike and block
  delivery of farm products
• There was even some talk of revolution
• In the Spring of 1932 over 15,000 veterans
  formed the Bonus Expeditionary Force and
  marched on Washington demanding payment of
  a war bonus approved in 1924
• The House passed the bill, but when the Senate
  refused most marchers went home
• Those that stayed camped near the Capitol
• Congress offered to pay their fare home if they
  left – some did
• In a scuffle in July a policeman opened fire and
  killed two veterans
• Hoover ordered General MacArthur aided by
  Dwight D. Eisenhower and George Patton to
  disperse the crowd
• The soldiers forced the veterans to leave, but
  injured many and killed one (an eleven year-old
  boy)
• The administration claimed the Bonus Army was
  full of Communists and troublemakers intent on
  revolution
             The Election of 1932
• Hoover had won the election in 1928 by
  promising a “chicken in every pot”
• The Republicans re-nominated Hoover for 1932,
  but he had little interest
• The Democrats nominated Franklin D. Roosevelt
  (a distant cousin of Theodore)
• Roosevelt was well-educated and well-spoken, he
  had also held many important positions in past
  administrations, but had suffered from polio
  which left him wearing leg braces
• During the campaign Roosevelt promised a New
  Deal for America, but did not elaborate
• He blamed Hoover and the Republicans for the
  Depression and gradually elaborated on his New
  Deal – a balanced budget, regulation of utilities
  companies, and a promise to repeal Prohibition
• Roosevelt won the election 472-59
• In the Winter of 1932-3 the situation continued to
  get worse
• At the inauguration in March the people
  expected action
• Roosevelt claimed “the only thing to fear is fear
  itself”
• The first plan was to relieve the conditions of the
  unemployed
• Second part was to stimulate industry
• Third part was pay farmers for reducing their
  crops which would ultimately raise the price of
  commodities
• Roosevelt called Congress to meet for a special
  session and then closed the banks for a four day
  holiday
• Immediately Congress passed the Emergency
  Banking Relief Act which allowed sound banks to
  reopen and provided managers for those in
  trouble
                Fireside Chats
• On March 12, Roosevelt talked to the nation in
  the first of his “fireside chats”
• He told the people to keep their money in the
  banks and reassured the nation that he was
  working to solve the problem
• Congress passed the Economy Act which granted
  the president power to cut federal salaries and
  they passed the Beer-Wine Revenue Act which
  amended the Volstead Act and permitted the sale
  of low levels of alcohol
• The Twenty-First Amendment was passed in
  December ended Prohibition
               The Hundred Days
• From March 9 to June 16 was known as the
  Hundred Days
• Congress received and enacted 15 major pieces of
  legislation
• After solving the banking problems the
  administration focused on helping the farmers
  and homeowners
• Roosevelt created the Farm Credit
  Administration to consolidate all farm credit
  agencies and to offer refinancing at lower interest
  rates
             Financial Help (1932)
• In April the country abandoned the gold
  standard
• The Federal Securities Act required full
  disclosure of information about stocks and bonds
• The Home Owners’ Loan Act allowed
  homeowners to refinance mortgages at lower
  rates
• The Glass-Steagall Banking Act created the
  Federal Deposit Insurance Corporation to
  guarantee bank deposits up to $5,000. It also
  increased the power of the Federal Reserve to
  regulate credit
             Relief for the People
• Congress created the Civilian Conservation
  Corps (CCC) which was intended to create work
  for the unemployed and unmarried men between
  18 and 25. The program employed nearly 3
  million young men
• The workers were paid about $30 a month and
  spent their time building roads, campgrounds,
  and planting trees
• The Federal Emergency Relief Administration
  (FERA) sent money through state agencies in the
  form of grants to create education programs as
  well as direct cash payments to individuals
• The first federal attempt at work relief was
  through the Civil Works Administration – the
  CWA provided federal jobs for those who could
  not find work. The CWA was dissolved in the
  spring of 1934, but immediately afterwards the
  number of unemployed skyrocketed
• Roosevelt advocated giving people jobs as
  opposed to financial hand-outs
• In 1935 Roosevelt asked Congress for $4.8 billion
  in the Emergency Relief Appropriation Act to
  pay for the programs
• Congress created the Works Progress
  Administration (WPA) to manage the programs
               Relief for Farmers
• With the drop in the price of farm commodities
  in the late 1920s, many farmers could not afford
  to plant crops
• The Agricultural Adjustment Act of 1933
  planned to pay farmers to destroy their crops in
  an attempt to raise prices
• Eventually animals were slaughtered as well as
  crops destroyed
• The decline in supply did increase the prices, but
  the shortage was as much due to the “dust bowl”
  which wiped out many farms on the Great Plains
  between 1932 and 1935
• In 1936 the Supreme Court ruled in United States
  v. Butler the AAA’s tax on food processors as
  unconstitutional
• Congress responded by passing the Soil
  Conservation and Domestic Allotment Act which
  removed quotas, but still provided funds for
  farmers who took land out of production
• In 1938 Congress passed the Second Agricultural
  Adjustment Act
                Industrial Relief
• The National Industrial Recovery Act (NIRA)
• The act had two parts: one dealt with economic
  recovery, the second created the Public Works
  Administration (PWA)
• The NIRA also created the controversial National
  Recovery Administration (NRA) to help
  businesses by setting wages and prices and to
  create more jobs
• The symbol of the NRA was the “Blue Eagle” and
  the words “We do our part” started to appear in
  windows and on products
• Unions worried about the loss of their power and
  about the ability of companies to fix prices
• In response the NRA changed to allow workers to
  form unions
• Problems started when larger companies began
  to dominate industries and eliminated
  competition
• The legislation was terminated by the Supreme
  Court in 1935 because it was deemed
  unconstitutional in the Schechter Poultry
  Corporation v. United States case
• Although the act was a failure it did establish the
  forty-hour work week and ended child labor
       The Tennessee Valley Authority
• One of the largest and most successful programs
  was the creation of the Tennessee Valley
  Authority (TVA)
• The Tennessee Valley was a very underdeveloped
  and impoverished area
• The idea was to build a series of dams on the
  Tennessee River. The result would be more
  industry, better schools and libraries, and cheap
  hydroelectric power
               New Deal Critics
• Not everyone approved of the New Deal
  legislation and attacks from all sides
• H. L. Mencken complained that Roosevelt was
  creating a welfare state
• Father Charles Coughlin “the radio priest”
  preached to millions every week via his radio
  show. In initially he supported the New Deal and
  blamed the Depression on wealthy bankers, but
  by 1934 he had turned against Roosevelt – calling
  the president a liar
• Dr. Francis Townsend suggested that all people
  over 60 receive $200 a month, the money could be
  raised through a sales tax. The plan was for the
  older people to spend the money in the same
  month and thereby generate far more purchasing
  power
• Needless to say the plan attracted plenty of
  followers
• The most vocal critic was Huey Long, once
  governor and senator of Louisiana
• Long was nicknamed the modern-day Robin
  Hood for his “share our wealth” plan
• Long proposed to make “every man a king” by
  limiting the amount of money the wealthy could
  possess
• The government would take control of all
  incomes over $1 million and estates over $5
  million. This money would then be distributed to
  the less fortunate
• Long and Coughlin both appealed to the mass
  through populist movements that feed on
  dissatisfaction and disappointment
• In 1935 Long was assassinated and while the
  movement continued it did not thrive without
  Long
• The Communist party attacked the New Deal for
  being too conservative
• In 1934 the muckraker Upton Sinclair was
  nominated as the Democratic candidate for
  governor on a platform of “End Poverty in
  California” – Sinclair lost
• Membership in the Communist party increased
  during the Depression. While it communism
  never really attracted a mass appeal it did
  became especially appealing to Hollywood people
            The Second New Deal
• With opposition from Congress and the Courts
  Roosevelt launched his Second New Deal in
  which he demanded legislation must be passed
• Congress passed the legislation, but some of it
  proved very controversial
• The National Labor Relations Act (Wagner Act)
  gave workers the right to negotiate through
  unions of their choice. It also prevented
  employers from interfering with union activities
• The Social Security Act (1935) included pensions
  for retired workers
• Starting in 1937 workers would contribute
  money from their payroll
• The act also created a federal-state
  unemployment insurance program
• These programs initiated the belief that the
  federal government is responsible for the welfare
  of those people who can not be employed
• A major problem was the Social Security payroll
  tax was regressive – a fixed fee was paid by all,
  regardless of earnings. The tax also took money
  out of circulation
• The Revenue Act (1935) raised taxes on incomes
  over $50,000
             The Election of 1936
• By 1936 the New Deal and its supporters held the
  advantage
• The Republicans had trouble finding anyone who
  even wanted to run for president. They ended up
  with Alfred Landon of Kansas
• Landon was a moderate and even approved of
  some of the New Deal legislation
• Roosevelt won in a landslide (523-8)
           The Court-Packing Plan
• After winning the election, Roosevelt believed he
  had a mandate for his New Deal
• However many of his plans had been thwarted by
  the Supreme Court – none of whom had been
  appointed by Roosevelt, but six were older than
  70
• Roosevelt could not wait for time to change the
  Court
• Roosevelt asked Congress to allow him to appoint
  an extra Justice for each one who was over 70
  who would not retire. (But never more than 15)
• Roosevelt claimed the Court needed new blood
  and help with extra cases
• Congress, and the nation immediately rebuked
  the president for trying to “pack” the Supreme
  Court
• Many accused the president of trying to create a
  dictatorship
• After the court-packing scheme the Court
  became more sympathetic to New Deal legislation
• Ironically, before he left office Roosevelt was able
  to appoint nine Justices
• Attempts to pack the court seriously backfired on
  the president and cost him a great deal of support
          The End of the New Deal
• In 1937 the short-term benefits of the New deal
  were disappearing as the country faced another
  severe economic downturn
• Early indications had seemed to promise
  recovery as unemployment declined and
  industrial output increased, but so did the deficit
• To help stop the deficit Roosevelt cut back on
  federal spending, which precipitated a new
  recession
• Nearly 4 million workers lost their jobs – causing
  heated debate in the administration about how to
  cure the problem
• The debate was over either limiting regulation on
  businesses and cutting spending or increase
  government control through regulation
• Eventually Roosevelt decided to use consumer
  spending to end the Depression
• His ideas came from the book The General
  Theory of Employment, Interest, and Money
  (1936) written by British economist John
  Maynard Keynes
• The main idea was that government should spend
  its way out of a depression regardless of trying to
  maintain a balanced budget
• Roosevelt increased spending but recovery was
  still slow
• The public turned against Roosevelt and the
  Democrats
• Roosevelt made matters worse when he promised
  to rid the party of those who opposed the New
  Deal – the Republicans made huge gains in the
  1938, midterm election
• By the end of 1939 the New Deal was practically
  dead as people demanded a more conservative
  approach
• However, events in Europe were about to shape
  the next period of American history
                  Foreign Policy
• During the 1930s the nations of western Europe
  the United States were too busy with their own
  problems to interfere with the political events in
  Germany or China. The Americans adopted a
  policy of increasing isolationism
• In 1931 the Japanese occupied Manchuria and
  made it a puppet state
• The occupation violated the Nine-Power Treaty
  and the Kellogg-Briand Pact. When China asked
  the League of Nations for help they received
  nothing
• In 1932 Secretary of State Henry Stimson issued
  the Stimson Doctrine: the United States refused
  to recognize any treaty, or agreement that
  violated American treaties or the Open Door
  policy with China – the doctrine had no effect on
  the Japanese
• 1933 Japan withdrew from the League of Nations
• Soviet Union - In 1933, forced by the need to
  increase trade, America recognized the Soviet
  Union. In return the USSR promised not to
  interfere in American affairs
• In November 1933 the United States formally
  recognized the Soviet Union and renewed
  diplomatic relations
• In 1934 the Platt Amendment was repealed. The
  navy kept a base at Guantanamo Bay
• Buenos Aires Conference (1936) - American
  states promised to consult each other if
  threatened or remain neutral if aggression was
  between any two of them
• The Neutrality Act of 1935, signed by Roosevelt it
  promised to keep America out of any wars and it
  prohibited the sale of weapons and ammunition
  to all warring nations
• Weeks after the treaty was signed Italy invaded
  Ethiopia
• Mussolini did not need to buy arms but he did
  need oil, which was not part of the Neutrality Act
• In 1936 Adolf Hitler ordered German troops into
  the Rhineland in violation of the Versailles
  Treaty
• Also in 1936 General Franco led an uprising in
  Spain
• In 1937 Congress passed another Neutrality Act –
  prohibited Americans from traveling on ships of
  nations at war, prohibited the sale of arms and
  loans, and prohibited the arming of American
  merchant ships trading with warring nations
• By 1939, with help from Hitler and Mussolini,
  Franco had established a fascist dictatorship in
  Spain
• In 1937 Japan and China embarked on a full-
  scale war.
• In December 1937 Japanese planes attacked and
  sank the American gunboat Panay which had
  been anchored in the Yangtze River, China.
  They also attacked 3 American oil tankers
• The Japanese government apologized and paid
  reparations
• Declaration of Lima (1938) - 38 American nations
  would resist threats to their peace
• 1938 Hitler forced the Anschluss (union) with
  Austria. Later the same year he invaded the
  Sudeten region of Czechoslovakia
• Still support for isolationism was strong
• Roosevelt became openly supportive of European
  nations fighting fascism and asked to be able to
  sell material to Britain and France on a cash-
  and-carry basis. His request was refused
• When Germany invaded Poland on September 1,
  1939, Roosevelt called a special session of
  Congress and asked to amend the Neutrality Act
                 Aid to Britain
• The Neutrality Act of 1939 allowed Britain and
  France to send their own planes to the United
  States to pick up supplies that had been
  purchased with cash
• By 1940 only Britain remained free from German
  control and the while Winston Churchill
  promised to never surrender they did need
  supplies
• Roosevelt order an increase in military
  production
               Undeclared War
• In 1940 Roosevelt created the National Defense
  Research Committee to coordinate the war effort
  and examine the possibility of developing atomic
  weapons
• Britain negotiated a secret deal with the United
  States in which they would receive 50 “old”
  destroyers in return for a 99 year lease on bases
  in various locations
• Congress also authorized the first peacetime
  conscription which required all men between 21
  and 35 to register for service
             The Election of 1940
• The Republican choice was Wendell Wilkie, a
  former Democrat, who supported aiding the
  Allies
• Roosevelt probably would not have wanted a
  third term but when war broke out he felt he had
  no other choice. He kept silent about his
  intentions to join the fight
• Roosevelt won a third term (449-82), but it was
  the closest margin of all his victories
             Lend-Lease
• Britain informed the United States that they were
  running out of money, but they still needed the
  supplies
• The Johnson Act of 1934 prohibited loans to
  belligerent nations – Roosevelt needed another
  way to keep Britain supplied but not violate any
  laws
• In a fireside chat he told the American people of
  the Lend-Lease Bill that had been introduced
  into Congress
• America was to be the “Arsenal of Democracy”
• The Bill authorized the president to sell, transfer,
  exchange, lend, or lease any equipment necessary
  to continue the defense the United States
• The Bill was hotly contested for several months
  before being passed
• By 1941 the Germans and their allies had taken
  invaded Greece, Yugoslavia, and Egypt
• Hitler now seemed destined to gain the whole
  Middle East region
• In the summer of 1941 the Germans suddenly
  invaded Russia, in violation of their non-
  aggression pact with the Soviets
            Atlantic Charter (1941)
• In August 1941 Churchill and Roosevelt met at
  Newfoundland to issue the Atlantic Charter:
  It called for self-determination for all people
  equal access to raw materials
  freedom of the seas
  economic cooperation
• By September 15 nations endorsed the Charter
• On September 4, the first attack on an American
  ship took place. The destroyer Greer was
  attacked by a German submarine – Roosevelt
  ordered American ships to shoot any German or
  Italian ships
              Pearl Harbor (1941)
• In September 1940 Germany, Italy, and Japan
  signed the Tripartite Pact – each nation promised
  to declare war on any other nation that declared
  war on any of the three
• The Germans wanted the Japanese to attack
  Russia from Manchuria, but in 1941 the
  Japanese signed a non-aggression pact with the
  Soviet Union
• The Japanese were more interested in the natural
  resources of the Pacific – especially oil, rubber,
  and iron
• In July 1941 the Japanese declared a protectorate
  over all of French Indochina
• Roosevelt:
  A) froze Japanese assets
  b) restricted oil exports to Japan
  c) joined the army of the Philippines with the
  United States army under the command of
  General MacArthur
• The Japanese, desperate for oil, formulated a
  plan to capture Dutch and British colonies in the
  Pacific
• The Japanese underestimated the determination
  of the United States, a move that eventually cost
  them the war
• The Japanese planned a surprise attack on the
  American base at Pearl Harbor – the purpose
  was to sink the aircraft carriers
• Even while both nations negotiated the Japanese
  prepared for war
• On the morning of December 7, 1941 the
  Americans decoded a Japanese message ordering
  the diplomats to break off negotiations at exactly
  1 p.m. Eastern time (7:30 a.m. Honolulu time).
  The message was not received in Hawaii in time
• Japanese planes attacked Pearl Harbor for
  almost two hours with little resistance
• Over 2,400 servicemen and women were killed
• Fortunately the American carriers were all at sea
  and so they remained in tact
• Now there was no issue of neutrality
• The next day Roosevelt asked Congress for a war
  resolution against the Japanese
• December 7, he said would be “a date which will
  in infamy”
• On December 11, Germany and Italy both
  declared war against the United States

								
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