Bailey Chapter 36 The Great Depression and the New Deal p

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Bailey Chapter 36 The Great Depression and the New Deal p Powered By Docstoc
o    The American Pageant: The Politics of Boom and
                 Bust, p 744-745, 756-767
l    The American Pageant: The Great Depression and
a               the New Deal, p 770-798
0   “We in America today are closer to the final triumph over poverty than
-   ever before in the history of any land. We shall soon…be in sight of
s   the day when poverty will be banished from this nation.” So Herbert
9   Hoover told the American people as he accepted the Republican nomination
t   for president in 1928.
    Apparently the people believed him because Hoover was elected by an 8-1
e   margin that November. As the 1920s neared an end, big business
o   seemingly had solved many of America’s social problems. Corporate
G   leaders replaced the intense competition of the late 19th century with
r   the oligopolistic arrangements in many large industries. Living
e   standards rose at home.
t   However, all was not what it seemed. Underneath the veneer of
    prosperity and social peace lay an American economy built like a house
e   of cards with nothing stabilizing it when the winds of periodic business
p   decline blew. In the decade of the 1930s, our ability to produce goods
r   outran our capacity to consume and pay for them. The human calamity
e   (SAT word: _________) known as the Great Depression was created by an
s   over expansion of credit, technological advancements in labor-saving
s   devices, and too much money in the hands of too few. Added to that, our
i   bread basket of the mid-west turned into the Dust Bowl as a 7 year
D   drought ripped through the region. Talk about being kicked when you’re
1   already down! Ouch! Through no fault of their own thousands were out
a   of work and evicted from their homes. The desire to work was there, the
n   jobs were not. So began the Great Depression….
t   1.) PEDLIGS:
    -Great Depression: A depression of the 1930's that lasted longer,
e   caused more business failures and unemployment than any other preceding
N   period of hard times. (12 years)
-stock market; Wall Street: Rising stock prices and a booming economy
of the late 1920's ended after millions invested.

-Black Tuesday (Oct. 29, 1929): Millions of panicky investors tried to
sell stocks only to find nobody would buy (After black Thurs. when there
was an unprecedented volume of selling on Wall Street)

-Dow Jones index: By late Nov., it had fallen from 381 to 198 to
eventually 41, three yrs. Later

-income distribution: top 5% of the richest Americans received over 33%
of all income. Also, wages raised little compared to the increase in
productivity and corporate profits.

-buying on margin: allowed people to borrow most of the cost of stock
making down payments low. When the market crashed, couldn't repay loans
and many lost everything they had borrowed/ invested.

-Gross National Product: value of all the goods and services produced
by the nation in one year
      (dropped from $104billion to $56billion in 4 years)

-Herbert Hoover: Urged businesses not to cut wages, unions not to
strike, and private charities to increase efforts. Afraid to ask
Congress for economic help because it might destroy self reliance. He
then thought that public relief should come from state/local government,
not federal.

-Hawley-Smoot Tariff (1930): highest tariff in history meant to satisfy
US business leaders who thought a tariff would protect their markets
from foreign competition. Europe reacted by setting even higher tariffs,
reducing trade of all nations, and further worsening of the depression.

-debt moratorium: Dawes plan no longer effective: Hoover proposed the
suspension on the payment of international debts.

-Farm Board: authorized to help farmers stabilize prices by temporarily
holding surplus grain and cotton in storage. (too modest to handle
continued overproduction of farm goods)
-Reconstruction Finance Corporation: Created by congress as a measure
for propping up faltering railroads, banks, life insurance companies,
and other financial institutions.

-bonus march (1932): unemployed WWI veterans marched to the capitol to
demand bonuses promised to them at a later date.

-Franklin D. Roosevelt: Democratic NY governor elected to president-
public desperately needed change. Expanded size of federal government,
enlarged presidents' powers. Also serves 3 terms.

-Eleanor Roosevelt: FDR's wife who became the most active first
lady,who wrote newspaper columns, gave speeches, traveled the country,
served as FDR's social conscience, and influenced him to support
minorities and the less fortunate.

-Twentieth Amendment (“lame-duck)”: shortened the period between the
presidential election and inauguration. (Jan 20th: term starts)

-first New Deal: FDR's vague promises to experiment with political
solutions to economic problems. Focused on the 3 R's!

-relief, recovery, reform: FDR's promise- relief for people out of
work, recovery for business and the economy as a whole, and reform of
American economic institutions.

-Brain Trust: group of university professors who were FDR's economic

-Frances Perkins: the 1st woman ever to serve in the president's cabinet

-Hundred Days: 100-day-long special session when congress passed into
law every request of FDR, enacting more major legislation than any
single Congress in history.

-bank holiday: FDR ordered banks closed to restore confidence in the
banks and keep people from withdrawing funds. They would be reopened
after allowing enough time for the gov. to reorganize them on a sound
-repeal of Prohibition:
      Beer-Wine Revenue Act: legalized the sale of beer and wine and
raised much-needed tax        money.
      Twenty-first Amendment: repealed 18th Amend., ending prohibition

-fireside chats: FDR would go on the radio and assure the people. (In
the 1st chat, FDR assured the banks now reopened were safe, which
resulted in people depositing more money than withdrawn)

-Federal Deposit Insurance Corporation: guaranteed individual bank
deposits up to $5,000

-Public Works Administration: allotted $ to state and local gov. for
building roads, bridges, dams, and other public works that provided
thousands of jobs.

-Harold Ickes: Secretary of Interior in charge of PWA

-Civilian Conservation Corps: Employed young men on projects on federal
lands and paid their families small monthly sums.

-Tennessee Valley Authority: hired thousands of people on one of the
nation's poorest regions (Tennessee Valley) to build dams, operate
electric power plants, control flooding/erosion, and manufacture
fertilizer. Also sold electricity to residents of the region at rates
that were well below those previously charged by a pvt. Power company.

-National Recovery Administration: an attempt to guarantee reasonable
profits for business and fair wages and hours for labor. (with anti-
trust laws temporarily suspended, NRA could help each industry set codes
for wages, hours, levels of production, and prices of goods. Also gave
workers the right to organize and bargain collectively)

-Schecter v. U.S.: Supreme Court case that declared the NRA

-Securities and Exchange Commission: created to regulate the stock
market and to place strict limits on the kind of speculative practices
that had led to the Wall Street crash.
-Federal Housing Administration: gave the construction industry and
homeowners a boost by insuring bank loans for building new houses and
repairing old ones.

-second New Deal: Focused on the remaining two R's: Relief and Recovery
during the summer of 1935

-Works Progress Administration: larger than relief agencies in the 1st
New Deal, WPA spent billions to provide people with jobs. (employed
3.4million men and women who were previously on relief rolls of state
and local gov. It paid double the relief rate but less than going wage
for reg. Workers. Most built bridges, roads, airports, and public
buildings while unemployed artists, writers, and actors were paid to
paint murals, write histories, and perform in plays. Another part of WPA
provided students with part-time jobs so that they could stay in school)

-Harry Hopkins: headed WPA

-National Labor Relations (Wagner) Act (1935): guaranteed a worker's
right to join a union and a union's right to bargain collectively. Also
outlawed business practices that were unfair to labor. National Labor
Relations Board established to enforce the law and protect workers.

-Social Security Act: created a fed. Insurance program based upon the
automatic collection of taxes throughout peoples' working careers. It
would be used to make monthly payments to retired people over age 65, as
well as workers who lost jobs, people who were blind/disabled, and
dependent children and their mothers.

-Father Charles Coughlin: Catholic priest who had a weekly radio
broadcast in which he attacked the New Deal and became increasingly
anti-Semitic and Fascist until superiors in the Catholic Church ordered
him to stop his broadcasts.

-Francis Townsend: retired physician who proposed a simple plan for
guaranteeing a secure income- 2% of federal sales tax be used to create
a special fund, from which every retired person over 60yrs old would
receive $200/month. By spending the $ promptly, recipients would
stimulate the economy and bring the depression to an end. (persuaded FDR
to enact Social Sec. System)
-Huey Long: Senator “Kingfish” from Louisiana who proposed “Share
Our Weath” program that promised a min. annual income of
$5,000/American family, to be paid for taxing the wealthy. KILLED BY AN
ASSASSIN after announcing his candidacy for Pres.

-Supreme Court reorganization plan: FDR saw conservative Supreme court
as obstacle- “Court-packing bill” : proposed that the Pres. Be
authorized to appoint to the Supreme Court an additional justice for
each current justice who was older than 70.5 years old. Allowed FDR to
add up to 6 justices of the liberal persuasion.

-Congress of Industrial Organizations: Broke away from the American
Federation of Labor (Union), and became it's chief rival. Concentrated
on organizing unskilled workers in the automobile, steel, and southern
textile industries.

-John L. Lewis: Leader of the C.I.O. And president of the United Mine
Workers union

-sit-down strike: sitting down at the assembly line and refusing to
work – (GM plant in Michigan)

-Fair Labor Standards Act (1938): Host of regulations on businesses in
interstate commerce;
      -a min. wage (initially 40 cents/hr)
      -a max. workweek of 40 hrs. and time and a half for overtime
      -child-labor restrictions on those under 16

-new Democratic coalition: After Court-packing fight, not everyone
automatically followed FDR and the 1938 elections brought a reduced
Democratic majority in congress. Blocked further New Deal reform

-John Maynard Keynes: British economist who helped FDR realize mistake
in balancing the budget – deficit spending was acceptable because in
difficult times the gov. needed to spend well above its tax revenues in
order to initiate economic growth. It would increase investment and
create jobs.

-depression mentality: an attitude of insecurity and economic concern
that would remain, even in times of prosperity.
-drought; dust bowl; Okies: a severe drought in the early 30's, ruining
crops in the Great Plains. Thousands of “Okies” from Oklahoma and
surrounding states migrated westward to California in search of farm or
factory work.

-John Steinback, The Grapes of Wrath: Novelist who wrote about their
hardships in his classic study of economic heartbreak.

-Marian    Anderson: distinguished African-American singer had been
refused    the use of Constitution Hall in Washington, DC and Ickes and
Eleanor    Roosevelt promptly arranged for Anderson to give a special
concert    at the Lincoln Memorial.

-Mary McLeod Bethune: Black woman appointed by FDR to middle-level
position, invited to Washington to direct a division of the National
Youth Administration, and established the Federal Council on Negro
Affairs for the purpose of increasing African-American involvement in
the ND.

-Fair Employment Practices Committee: an executive order to set up a
committee to assist minorities in gaining jobs in defense industries.

-A. Phillip Randolph: Head of Railroad Porters Union who threatened a
march on Washington to demand equal job opportunities for African-

-Indian Reorganization (Wheeler-Howard) Act (1934): Returned lands to
the control of tribes an supported the preservation of Native American

FDR: President in a Wheelchair
1.Franklin D. Roosevelt was nominated as the Democratic Party Candidate to run in
the election of 1932.
2.FDR was suffering from polio but that did not stop him.
3.Eleanor Roosevelt supported the impoverished and the oppressed.
4.President Herbert Hoover was nominated again for the Republican candidacy.
              A       He boast that his policies have kept the depression from become severe
              B.     Most Americans did not see any big change with his policies and wanted a
                                              new president.
8.Democrats wanted to end the prohibition of alcohol, they also promised to balance the budget and
destroying social and economic reforms

Presidential Hopefuls:
1.FDR bashed the Republicans for their outrageous spending
2.Roosevelt wanted to show off his vibrant and lively attitude to as many voters as possible and
          constantly talked about his “New Deal” plan, but when he talked about it, it was very    vague.
Many of his speeches were written by the Brain Trust, they were the brains behind          the New Deal
3.The Republican’s campaign wasn’t going well, and talked badly about many bills that might        fail
which would plunge them into a depression unless Hoover was President.
4. Because the Republicans acted upon the Depression so badly, Democrats had the upper hand.

Hoover's Humiliation:
1.Hoover, in 1932, he had suffered a miserable defeat.
        b.And Hoover won only six Republican states.
2.Much great support came from African Americans who had suffered the most
        from the Depression.

3.African American’s used to support the Republicans because of Lincoln, butbecause of the promise to
help those in need. The Democrats swiftly stole the support of the African Americans.

4.During the preinauguration period, Hoover wished to enact on some of
        Roosevelt’s plan but could not because he did not have the support.
5.Hoover soon confessed that he was trying to enact policies that would make the
        New Deal difficult.
6.Hooverites blamed FDR for making the Depression worse when people had lost
        their jobs and banks were closing

FDR and the Three R’s: Relief, Recovery and Reform
1.FDR called for a bank-closing holiday in order to stop the mass of withdrawals from the banks.
2. With a Democratic Congress, President Roosevelt was able to pass legislations quickly and     w/o
5.Roosevelt introduced the three R’s: Relief, Recovery and Reform.
6.Short- term goals were categorized as Relief and Recovery.
7.Long- term coals were aimed at the Reform ideas.
8.Congress was afraid of the future for Americans and quickly passed any bills of Roosevelt

Roosevelt Manages the Money
 1.Due to the chaos of bank closures, in eight hours, Congress decided upon the Emergency Banking Relief
  Act of 1933- the president is able to regulate any banking transactions and foreign money exchange, they
                    were also granted the power to close bad banks and open new banks.
3.FDR then broadcasted his voice, with one of his 30 “Fireside Chats” with America.

4.Congress then passed the Glass- Steagall Banking Reform Act : paved the way for the FDIC.
5.FDIC- insured individual deposits of up to $5000 at the time and showed new trusts for the banks
         and banking failures lessened.
6.Roosevelt takes the nation of the gold standard. He ordered all private gold sharings to be exchanged
         for paper money.
7.Congress ended all payment in goal and paid for items in paper money.
8.With the increasing prices of gold, Americans were able to make money off of
        they’re gold.

Creating Jobs for the Jobless

1.Roosevelt wanted to use the Federal Reserve’s money to help the unemployed, and had no doubt in
        his mind that he was going to do it.

4.CCC (Civilian Conservation Corps)- employment for about 3 million men, who may become criminals in
order to support themselves.

a.They were hired for hard work such as reforestation, fire fighting, and flood control and swamp
        drainage. Many had to send home much of their pay to their families.

6.Federal Emergency Relief Act- Gave $3 billion to every state to be used for higher wages and funding
        government projects in order to hire more people.
7.AAA (Agricultural Adjustment Act)- helped farmers meet their mortgages.
8.HOLC (Home Owners Loan Corporation)- used to refinance mortgages for nonfarm homes, helped
        about a million house holds keep their payments up.
9.CWA (Civil Works Administration)- it was designed to provide temporary jobs during winter

A Day for Every Demagogue
1.The New Deal was widely criticized especially from famous programs on the radio.
          a.One of FDR spokesperson Father Charles Coughlin used to agree with the New Deal but
          was now against it.
2. Senator Huey P. Long ran a popular program called “Share the Wealth.”
          a.Each family was to receive $5000 from the wealthy. (math did not add up in this plan)
3. 5 million senior citizens heard Dr. Francis E. Townsend of California, with a plan for every senior
          citizen to have $200 a month.
4.Many of these plans failed because of the outrageousness of the money needed.
5.WPA (Works Progress Administration)- gave $11 mill to 1000's of public buildings, bridges and roads.
          -It also found part-time jobs for needy high school and college students and for actors,
          musicians, and writers

New Visibility for Women
1. First female cabinet member as well as the highest ranking AA being a woman in FDR's cabinet Sec. of
Labor Frances Perkins was the first female cabinet member.

2.Anthropologist Ruth Benedict helped develop the “culture and personality movement” and her student
Margaret Mead helped to promote her work with “Patterns of Culture.” , Pearl S. Buck won the Nobel
Peace Prize in literature for her best selling book, The Good Earth.

Helping Industry and Labor

1.Emergency Congress initiated the NRA (National Recovery Administration) : plan for now short-
        term relief and long-term recovery.
2.Hours of for work time were reduced to in order to give jobs for those in need, minimum wages were
        established and so were maximum working hours in order to guarantee fairness to all.

3.Workers were able to elect their labor union representatives instead of being picked.
5.PWA (Public Works Administration)- it aimed at long-range recovery by spending over $4 billion
       on some 34,000 projects that included public buildings, highways,and parkways
Paying Farmers Not to Farm

1.Ever since the end of WWI, farmers have been suffering from the continuing price drops of crops and
their ever growing surpluses. (caused foreclosures and refusal to sell prods. To depressing mrkts.)

2.AAA (Agriculture Adjustment Act)- paid farmers to reduce their crop acreage and would eliminate the
price of crops lowering due to surpluses. (This act increased unemployment and was ended in 1936)

3.Soil Conservation and Domestic Allotment Act (1936)- paid farmers to plan soil conserving plants.
4.Second Agricultural Adjustment Act- it continued the conservation payments but this time was accepted
         by the Supreme Court.
5.Farmers were one of the most hard hit groups of the depression

Dust Bowls and Black Blizzards
1.After a drought in 1933, winds had moved a lot of dirt to Missouri, Texas, Kansas,
         Arkansas and Oklahoma
3.The Frazier-Lemke Farm Bankruptcy Act, passed in 1934, which suspended mortgage foreclosure for
         five years (act was voided by Congress in 1935)

4.FDR set up the Resettlement Administration: moved near-farmless farmers to better land for farming.
5.John Collier promoted the Indian Reorganization Act of 1934, which encouraged tribes to preserve their
        culture and traditions. “The Indian New Deal.”

Battling Bankers and Big Businesses

1.The Federal Securities Act required promoters to tell all truthful information to investors and buyers.
2.Securities and Exchange Commission was used to watch the stock markets
3.Stock markets were now seen as trading marts rather then casinos.
4.When Samuel Insull’s company had crashed, FDR set up Public Utility Holding Company Act of 1935

The TVA Harness the Tennessee
1.TVA (Tennessee Valley Authority)- looked into how much money it actually costed to generate power
and worked on fixing rates.

2.The TVA constructed dams on the Tennessee River and enriched the lives of 2.5 million extremely poor

Housing and Social Security

1.To speed recovery and better homes, FDR set up the FHA (Federal Housing Administration)- Give small
        loans to householders.
2.USHA (U.S. Housing Authority)- lent money states for low-cost construction.
3.SSA (Social Securities Act)- created pensions and insurance for seniors, handicapped, blind, delinquent
        children and others by taxing employees and employers

A New Deal for Labor

1.An increase of walkouts occurred in the summer of 1934.
2.After the NRA was abolished, the Wagner Act took it’s place : guaranteed the right of unions to organize
         with management
3.CIO (Committee for Industrial Organization)- unskilled workers began to organize themselves into
         effective unions
4.Fair Labor Standards Act- setting up minimum wages and maximum hours able to work
5.Roosevelt gained much support from Labor Unions

Landon Challenges "the Champ" in 1936
1.FDR was reelected as president in a lopsided victory. FDR won primarily because he had
appealed to the "forgotten man."

Nine Old Men on the Supreme Bench
        1. Ratified in 1933, the 20th Amendment shortened the period from election to inauguration by 6
         2. FDR released his plan to ask Congress to pass legislation allowing him to appoint
             one new justice to the Supreme Court for every member over the age of 70 who
             would not retire; the maximum number of justices would now be 15.
 The Court Changes Course
1. A succession of deaths and resignations of justices enabled Roosevelt to appoint 9      justices
to the Court.
2. FDR aroused conservatives of both parties in Congress so that few New Deal reforms were
passed after 1937. He lost much of the political goodwill that had helped him to win the election
of 1936.
 The Twilight of the New Deal
1. In 1937, the economy took another downturn as new Social Security taxes began to cut
         into payrolls and as the Roosevelt administration cut back on spending out of the
         continuing reverence for the orthodox economic doctrine of the balanced budget.
2. In 1939, Congress passed the Reorganization Act, giving President Roosevelt limited powers
for administrative reforms.
3. Congress passed the Hatch Act of 1939, barring federal administrative officials from active
political campaigning and soliciting.
 New Deal or Raw Deal?
1. Foes of the New Deal charged the president of spending too much money on his
         programs, significantly increasing the national debt.
2. Private enterprise was being suppressed and states' rights were being ignored.
 FDR's Balance Sheet
New Deal supporters had pointed out that relief, not economy, had been the primary objective of
      their war on the depression. Roosevelt believed that the government was morally bound to
      prevent mass hunger and starvation by "managing" the economy.

3.) Dust Bowl:

A map of the affected areas of the Dust Bowl, showing the areas of
severe wind erosion, states that lost a substantial amounts of the
population, and marginal cropland.
   4.)      What led to the worsening economic conditions between1929-
      1933? How did Hoover respond to the Depression? Why?
The economy throughout the 1930's was failing not just because of the
Wall Street Crash, but also an uneven distribution of income, stock
market speculation, excessive use of credit, overproduction of consumer
goods, a weak farm economy, government policies that offered little
regulations high tariffs, and global economic problems, such as Europe's
struggle to pay off war debts and consequently a stoppage of money flow
through the nations. Hoover at first responded with little activity in
which he believed in rugged individualism. He thought that the people
should work their way out of troubles and urged private charities and
local government to help. He avoided federal government interception at
first because he essentially thought it would create a huge bureaucracy,
inflate the scope of the government too much, and cut the pride of those
who received help. Once he realized this was unrealistic, Hoover deficit
spent more than any previous president for public works programs, with
the intent of stimulating business and providing relief by creating

  5.)      What did FDR hope to achieve with the New Deal? What
     specific programs were designed to meet specific goals? What
     degree of success did the New Deal enjoy? What were its failures?
     How did the 2nd New Deal differ?

      FDR's New Deal was designed to help relieve the unemployed,
recover the economy, and reform the system so another depression of that
magnitude happens again. Some specific programs include the PWA, which
provided meaningful jobs for people, building bridges, roads, schools,
and other public services, the bank holiday was a recovering program to
restore faith in the banks so spending could take place and stimulate
the economy, and the creation of the FDIC insured bank accounts so the
banking system wouldn't fail again in the future. The 2nd New Deal
differed only in which it focused on the relief and reform where as the
first new deal was more so revolved around recovery. Its failure were
that it wasn't extended to everyone, including blacks, and lost momentum
in the late 1930's because the US went through another recession.

   6.)      Beyond economics, how did the New Deal affect the US? What
      were its political and social ramifications? Who made up the New
      Deal Coalition? Why?
The New Deal affected the US because it brought change from the past
presidents. It marked a time in American history where the government
started regulating the economy. It also established many programs that
the US still depends on today, such as the FDIC, social security, the
SEC and more. However, the New Deal Coalition was made up of republicans
and conservative democrats to further block any New Deal form
legislation. This was mainly because the unpopularity once the nation
went into a recession again, after FDR lost popularity because of the
court-packing bill, and because Nazi Germany was diverting attention
towards foreign affairs.

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