Katie Clark - DOC

Document Sample
Katie Clark - DOC Powered By Docstoc
					Katie Clark

                            The Great Depression and the New Deal:


The Great Depression – The Great Depression refers to the worldwide economic downturn that
resulted from the stock market crash on Black Thursday (October 24, 1929) and Black Tuesday
(October 29, 1929). However, the crash was also a result of bad economic policies that
republicans had adopted, international economic polices such as the Dawes Plan, and the
rampant speculation that had occurred during the 1920s. The Great Depression would last until
1939, with World War II on the horizon.

Stock market; Wall Street - Throughout the 1920s, people were investing in the stock market
because it was pretty much a guaranteed return. In fact, millions of people had their money in the
stock market, and subsequently millions lost their money in October 1929. Wall Street in New
York City is where the stock exchange in located.

Black Tuesday (October 29, 1929) – The crash actually began on Black Thursday, when an
unprecedented amount of people began selling their stock. Hoping to stave off the looming crash,
bankers bought millions of dollars in stocks in an effort to stabilize the dangerously fluctuating
stock prices. However, on Black Tuesday, more panicking investors and their clients were
selling, and prices continued to fall.

Dow Jones Index – On September 3, 1929 the Dow Jones Industrial Average of major stocks had
reached an all time high of 381. However, after the crash the Dow Jones Index plummeted from
381 to 198 and would continue to spiral, reaching the bottom at 41.

Income distribution – Although the 1920s were considered a time of a rising standard of living,
the reality is that only a fraction of Americans were experiencing a large increase in income. In
fact, the top 5% of the richest Americans received over 33% of all income, resulting in a
concentration of wealth that left the poor in squalor.

Margin buying – Margin buying refers to the practice of taking out an unsecured loan to simply
invest in the stock market. Many people were doing this during the 1920s. This allowed investors
to make down payments as low as 10 percent, however investors depended on the increase of the
stock in order to pay back their loan. When the market crashed, loans were unable to be repaid
and the economy sank deeper into the Great Depression.

Gross National Product – The Gross National Product is simply the value of all the goods and
services produced by a nation in one year. The United States’ dropped from $104 billion to $56
billion in just four years after the crash.

Herbert Hoover – Herbert Hoover was president when the stock market crashed. Like many, he
believed that prosperity would return as it had down following previous panics. However,
Hoover greatly underestimated the severity of the state of the nation’s economy. He simply
urged businesses not to cut wages, unions not to strike and for charities to increase their efforts.
Until the summer of 1930, Hoover did not take legislative action on the economy and believed
that public relief should come from state governments, not the federal one.

Hawley-Smoot Tariff (1930) – This tariff increased taxes on foreign imports ranging from 31
percent to 49 percent. The purpose of the tariff politically was to satisfy US business leaders who
thought that higher tariffs would protect the market from foreign competition. However, in
response to the increase in tariff rates, European countries enacted higher tariffs on imported US
goods. Thus, trade was reduced between all nations and the depression deepened around the

Debt moratorium – In 1931, Hoover proposed a moratorium (suspension) on the payment of
international debt. While Britain and Germany readily complied, France refused. Massive loan
defaults hemorrhaged the international economy.

Farm Board – Actually established in 1929 before the crash, the Federal Farm Board was
authorized to help farmers stabilize prices by temporarily holding surpluses of grain and cotton
in storage. The implement was too mild however, and could not account for the massive amounts
of extra goods.

Reconstruction Finance Corporation – The RFC was created by Congress in 1932 in an effort to
support faltering railroads, banks, life insurance companies and other financial institutions. It
followed the idea of Trickle Down Economics, and Democrats scoffed at the federally funded

Bonus march (1932) - A thousand unemployed WWI veterans marched to Washington D.C. to
demand immediate payment on bonuses that had been promised to them by 1945. These
marchers were joined by thousands of other veterans who brought their wives and children and
camped out in shanties near the Capitol. After the death of two veterans during a clash with the
police, Hoover ordered the army to break up the encampment. General Douglas MacArthur used
tanks and tear gas to accomplish the task.

Franklin D. Roosevelt – FDR was the democratic nominee for president for the election of 1932.
He promised a “new deal” for the American people that included the repeal of Prohibition, aid
for the unemployed and reduced government spending. Roosevelt easily won the election over
Hoover and became president. Roosevelt was paralyzed by polio in 1921, although many people
were unaware. He was a gifted speaker and true leader; he was the Governor of New York before
becoming nominated for president.

Eleanor Roosevelt – Eleanor was Roosevelt’s wife. She quickly became a leader in her own right
as the most active first lady in history. She wrote a newspaper column, gave speeches and
traveled the country. She and her husband did not have the happiest of marriages, but they
respected each other; Eleanor was the president’s social conscience and influenced him to
support minorities and the less fortunate.
Twentieth Amendment – Referred to as the lame duck amendment and passed in 1933, the
Twentieth Amendment shortened the period between the presidential election and inauguration.
The Amendment set January 20 as the start of a new president’s term.

First New Deal – Although he outlined no specifics, Roosevelt had strong convictions towards
his New Deal philosophy. His plan stressed the three R’s: relief for unemployed persons,
recovery for business and the economy and reform of American economic institutions.

Relief, Recovery, Reform – These were known as the “three R’s” of Roosevelt’s New Deal.
Relief for people who did not have jobs, recovery for not only businesses but the economy as a
whole and reform of American economic institutions.

Brain Trust – The Brain Trust was a group that consisted of university professors such as
Rexford Tugwell, Raymond Moley and Adolph A. Berle Jr. on whom Roosevelt relied on for
advice on economic matters.

Frances Perkins – Frances Perkins was Roosevelt’s secretary of labor, and was also the first
woman to ever serve in a president’s cabinet.

Hundred Days – After Roosevelt was sworn into office, he called Congress into a special
hundred-day-long session. During this period of time, Congress passed every one of Roosevelt’s
requests into law. They enacted more major legislation than any Congress in history.

Bank holiday – After over 5,000 banks had failed in 1933, President Roosevelt ordered the
remaining banks to close for a bank holiday on March 6, 1933 in order to restore confidence in
them. He went on the radio to explain that they would be reopened after allowing enough time
for the government to reorganize them.

Repeal of Prohibition - Roosevelt kept his inauguration promise of repealing Prohibition. BY
having Congress pass the Beer-Wine Revenue Act, the sale of beer and wine was made legal
while also providing needed tax money. In 1933, the 21st Amendment was ratified and repealed
the 18th, bringing the noble experiment to an end.

Fireside chats – Fireside chats referred to the times when President Roosevelt went on the radio
to talk to the American people, mainly about the health of the banks. The first was on March 12,

Federal Deposit Insurance Corporation – Part of Roosevelt’s financial recovery programs in the
New Deal, the FDIC guaranteed individual bank deposits up to $5,000.

Public Works Administration – The PWA was directed by Secretary of the Interior Harold Ickes
and allotted money to state and local governments for building roads, bridges, dams and other
public works projects.

Harold Ickes – Roosevelt’s Secretary of the Interior, Ickes directed the Public Works
Civilian Conservation Corps – Known as the CCC, they provided young men with employment
on projects on federal lands and paid their families small monthly sums.

Tennessee Valley Authority – The TVA was a government corporation that hired thousands of
people from the nation’s poorest regions, the Tennessee Valley, to build dams, operate electric
power plants, control flooding and erosion and manufacture fertilizer. The TVA made electricity
available to residents of that area for prices that were considerably lower than those previously
charged by a private company.

National Recovery Administration – Hugh Johnson directed The NRA. It was an attempt to
guarantee reasonable profits for businesses and fair wages and hours for labor. As the antitrust
laws had been temporarily suspended, the NRA could help each industry, including steel, oil and
paper, set codes for wages, hours of work, levels of production and prices of finished goods. The
program ran for two years before being declared unconstitutional.

Schechter v. US – This was the Supreme Court Case that declared the National Recovery
Administration unconstitutional.

The Securities and Exchange Commission – The SEC was created to regulate the stock market
and place stricter limits on speculation in an attempt to prevent a crash like the one in October

Federal Housing Administration – By insuring bank loans for building new houses and repairing
old ones, the FHA was able to give the struggling construction industry and homeowners a boost.

Second New Deal – While the first two years of Roosevelt’s presidency focused on mainly the
recovery aspect of the three R’s program, overwhelming democratic victories in congressional
elections gave the president the opportunity to focus on the other two R’s, relief and reform, as
part of the so-called Second New Deal.

Works Progress Administration – Harry Hopkins was selected by Roosevelt to head the much
larger relief agency than any other in the first New Deal known as the WPA. This organization
spent billions of dollars over a five-year period to provide people with jobs. After only its first
year, it employed 3.4 million men and women and paid them double the relief rate. One branch
of the WPA was the National Youth Administration, which provided part time jobs for young
people while allowing them to stay in school.

Harry Hopkins – Harry Hopkins was selected by Roosevelt to head the Works Progress
Administration. It was a wildly successful venture and Hopkins proved an able head.

National Labor Relations (Wagner) Act – Passed in 1935, the Wagner Act replaced the labor
provisions of the National Industrial Recovery Act, which had been declared unconstitutional. It
ensured a worker’s right to join a union and a union’s right to bargain as a collective. The act
also outlawed business practices that were unfair to labor. The National Labor Relations Board
was formed to make sure that workers’ rights were protected.
Social Security Act (1935) – It created a federal insurance program based on the automatic
collection of taxes from employers and their employees throughout people’s working careers.
The Social Security Trust fund would then be used to make monthly payments to retired persons
over 65. The act also established unemployment compensation, and provided social security to
disabled persons as well as dependent children and their mothers.

Father Charles Coughlin – A Catholic priest, Coughlin attracted a huge following in the early
1930s for his weekly radio broadcasts. He also founded the National Union for Social Injustice,
and was an opponent of the New Deal. His opposition to the New Deal became increasingly anti-
Semitic and Fascist until the Catholic Church ordered him to stop his broadcasts.

Francis Townsend – Dr. Francis E. Townsend became a hero among elder citizens when he
proposed that 2% of federal sales tax be used to create a special fund from which every retired
person over sixty would receive $200 a month. This retired doctor from Long Beach California
and the popularity of his plan persuaded Roosevelt to adopt a more moderate version of the
Townsend Plan, which would become the Social Security System.

Huey Long – Known as the “Kingfish,” Senator Huey Long was from Louisiana and Roosevelt
considered him to be the most dangerous of the depression demagogues. Long proposed a “Share
Our Wealth” program that promised a minimum annual income of $5,000 for every American
family, to be paid for by taxing the wealthy. Long challenged Roosevelt’s leadership of the
Democratic Party by announcing that he was running for president, however he was killed by an
assassin before he could prove himself against Roosevelt.

Supreme Court Reorganization Plan – In order to remove the Court as an obstacle to the New
Deal, Roosevelt proposed what critics called a “Court packing” bill. In effect, the bill allowed the
president to appoint an additional justice for each current justice that was above 70.5 years of
age. Republicans and Democrats alike were furious with the tampering of the checks and
balances system. The bill faced decisive defeat in Congress.

Congress of Industrial Organizations – In 1935, the industrial unions joined together under the
American Federation of Labor as the Committee of Industrial Organizations. Their leader, John
J. Lewis was also president of the United Mine Workers Union. In 1936, the AF of L suspended
the committee. However, it came back as the Congress of Industrial Organizations and ironically
became the AF of L’s chief rival.

John J. Lewis – President of the United Mine Workers Union, Lewis became the leader of the
Congress of Industrial Organizations.

Sit-down Strike – A sit-down strike is when workers literally sit down at the assembly line and
refuse to work. Workers at the General Motors Plant in Flint, Michigan did this in 1937.

Fair Labors Standards Act – Passed in 1938, the Fair Labor Standards Act established a
minimum wage (40 cents/hour), a maximum workweek of 40 hours and time and a half for
overtime and child labor restrictions on those under 16.
John Maynard Keynes – Keynes was a British economist. According to Keynesian economics,
deficit spending was acceptable because the government needed to spend more money than
allowed by tax revenues during difficult times in order to stimulate economic growth.
Roosevelt’s own economists adopted this theory in 1938.

Depression Mentality – Refers to the general feeling of insecurity economic concern that lasted
even during times of prosperity.

Drought; Dust Bowl; Oakies – While farmers struggled under their deplorable conditions, things
were made worse by a severe drought in the early 1930s that ruined crops in the Great Plains.
The region became a dust bowl; gusts of wind would blow the dry topsoil away. “Oakies”
became the derogatory term of people not just from Oklahoma, but surrounding states that
migrated to California in search of better work and lives.

John Steinbeck, The Grapes of Wrath – This story of the Joad family tells the tale of a desperate
and destitute family as they make their won trip to California. Steinbeck actually traveled with
migrant workers while writing this book, and it serves as a classic study of the hardships of the

Marian Anderson – Anderson was an African American singer who had been denied use of
Constitution Hall by the Daughters of the American Revolution. Eleanor Roosevelt and Ickes
arranged for Anderson to instead have a special concert at the Lincoln Memorial.

Mary McLeod Bethune – An African American woman and long time women’s rights activist
who was appointed to direct the National Youth Administration by Roosevelt. She established
the Federal Council on Negro Affairs with the goal of increasing African American involvement
in the New Deal.

Fair Employment Practices Committee – This committee was set up by Roosevelt in 1941 to
assist minorities in gaining jobs in defense industries after a march demanding equal job
opportunities for blacks was threatened on Washington.

A. Philip Randolph – Head of the Railroad Porters Union, he was the one who threatened the
afore mentioned march on the capitol.

Indian Reorganization (Wheeler-Howard) Act – Passed in 1934, this measure returned lands to
the control of tribes and supported the preservation of Native American Cultures. However, this
plan was later accused of being too restricting of control from Native Americans.


The Politics of Boom and Bust

I. The Great Crash Ends the Golden Twenties
   - The stock market crash happened in October 1929, Black Tuesday (October 29, 1929) millions of
     stocks were sold in a panic. By the end of 1929, stockholders had lost $40 billion.
 - As a result, millions lost their jobs and thousands of banks closed. The US suffered the most severe
    setback compared to the other industrialized nations.
II. Hooked on the Horn of Plenty
 - One of the main causes of the Great Depression was the overproduction of farm and factory goods.
    There were surpluses was everything. Overexpansion of credit also contributed to the depression.
 - The Great Depression occurred worldwide, especially in Europe, where they had not fully recovered
    from WWI.
 - In the early 1930s, there was a drought that forced many farmers to sell their lands.
III. Rugged Times for Rugged Individuals
 - Hoover believed that self-reliance and “rugged individualism” would be enough to pull the economy
    out of the depression. However, her eventually realized that the government needed to take action.
 - Hoover’s plan involved more Trickle Down Economics theory, it did not work.
IV. Herbert Hoover Battles the Great Depression
 - Hoover got $2.25 billion from Congress for public works (like the Hoover Dam)
 - Hoover vetoed the Muscle Shoals Bill, which was designed to dam the Tennessee River and sell
    government-produced electricity in competition with private companies.
 - Reconstruction Finance Program, 1932: provided indirect economic relief.
 - Norris-La Gaurdia Anti-Injunction Act, 1932: outlawed anti-union contracts and forded federal courts
    to issue injunctions to restrain strikes, boycotts, etc.
V. Routing the Bonus Army in Washington
 - Veterans of WWI were hit hard by the depression. The Bonus Expeditionary Force (about 20,000
    people) converged on the capital in 1932, demanding immediate payment of their entire bonus.
 - The BEF refused to leave the capital, and Hoover sent in the army to evacuate the group. Riots
    erupted and Hoover fell in popularity some more.
VI. Japanese Militarists Attack China
 - September 1931: Japanese imperialists invaded the Chinese province of Manchuria, a direct violation
    of the League of Nations. The League however, could not do anything without America’s support.
 - Henry L. Stimson, secretary of state, issued the Stimson doctrine. It stated that the US would not
    recognize any territorial acquisitions gained through force. Japan ignored this, and moved on to
    Shanghai in 1932. The violence continued until eventually, WWII.
VII. Hoover Pioneers the Good Neighbor Policy
 - Hoover was able to foster better relations with Latin America; he withdrew troops from the region
    and engineered the foundation of a “Good Neighbor” policy.

The Great Depression and the New Deal

I. FDR: Politician in a Wheelchair
   - Eleanor Roosevelt became the most active First Lady in history. She was a powerful influence on
     politics and a strong campaigner for improving conditions among the oppressed.
   - Roosevelt was an extremely gifted orator.
II. Presidential Hopefuls of 1932
   - As the Democratic candidate for the election of 1932, Roosevelt attacked Republican policies and
     promised a New Deal.
   - Herbert Hoover, running for reelection, reaffirmed his faith in “rugged individualism.”
III. Hoover's Humiliation in 1932
   - FDR won the election of 1932 in a landslide, both popular vote and Electoral College.
   - This election noted the transition of blacks from Lincoln’s Republican Party to the Democratic Party.
IV. FDR and the Three R's: Relief, Recovery, Reform
   - The Hundred Days Congress: (March 9-June 16, 1933) passes legislation to help deal with the Great
  - Roosevelt’s New Deal focused on the 3 R’s: relief, recovery and reform
  - Congress allotted Roosevelt a lot of power during this time
  - The New Deal embraced the ideas of unemployment insurance, minimum wage regulation,
    restrictions on child labor, etc.
V. Roosevelt Tackles Money and Banking
  - Emergency Banking Relief Act: (1933) Gave the president power to regulate banking transactions
    and foreign exchange and to reopen solvent banks.
  - Roosevelt gave “fireside chats” over the radio to restore public faith in banks.
  - Glass-Steagall Banking Reform Act: created the Federal Deposit Insurance Corporation (FDIC), it
    insured bank deposits up $5,000.
  - Roosevelt took the nation off of the gold standard.
  - The “managed currency” goal was inflation, which Roosevelt believed would relieve debt and
    stimulate new production. Inflation was achieved through buying gold, which eventually increased
    the amount of dollars in circulation.
VI. Creating Jobs for the Jobless
  - Civilian Conservation Corps: Provided the employment of about 3 million men in government camps.
    The work included reforestation, fire fighting, flood control and swamp drainage.
  - Federal Emergency Relief Act: Headed by Harry Hopkins, FERA granted about $3 billion to the
    states for direct relief payments and for work project wages.
  - Civil Works Administration: (1933) A branch of FERA, the CWA was designed to provide temporary
    jobs during the winter emergency. The CWA employed thousands.
  - Agriculture Adjustment Act: Made millions of dollars available to farmers struggling with their
  - Home Owners’ Loan Corporation: assisted households that had trouble paying mortgages.
VII. A Day for Every Demagogue
  - Father Charles Coughlin: an anti-New Deal demagogue, his radio broadcasts became so fascist and
    anti-Semitic that he was order off the air
  - Huey P. Long: “Share Our Wealth,” he was assassinated in 1935
  - Dr. Francis E. Townsend: his plan was that every person over 60 would be granted $200 a month.
VIII. A Helping Hand for Industry and Labor
  - National Recovery Administration: designed to assist industry, labor and the unemployed.
  - Regular work hours and minimum wage regulations were established.
  - The NRA collapsed in 1935 with the Supreme Court’s Schechter decision in which it ruled that
    Congress could not delegate legislative powers to the president.
  - Public Works Administration: intended for industrial recovery and unemployment relief. Harold L.
    Ickes was head of the PWA, and the agency spent over $4 billion on thousands of projects.
  - Congress repealed prohibition with the 21st Amendment in 1933.
IX. Paying Farmers Not to Farm
  - Agricultural Adjustment Administration: It established “parity prices” for basic goods. It also paid
    farmers to reduce their crop acreage to eliminate surplus, however this also increased unemployment.
  - Parity: the price set for a product that gave it the same real value, in purchasing power, that it had
    from 1909-1914.
  - The Supreme Court shut down the AAA in 1936, declaring its regulatory taxation provisions
  - Soil Conservation and Domestic Allotment Act, 1936: The reduction of crop acreage was now
    achieved by paying farmers to plant soil-conserving crops.
  - Second Inaugural Adjustment Act, 1938: continued conservation payments and if farmers obeyed
    acreage restrictions on certain commodities, they would be eligible for parity payments.
X. Dust Bowls and Black Blizzards
 - In 1933, a period known as the Dust Bowl began, affected the states of the trans-Mississippi Great
    Plains regions and was largely due to drought. It was also caused by the over-farming of countless
    acres, dry-farming techniques and mechanization.
 - Frazier-Lemke Farm Bankruptcy Act, 1934: made a five-year suspension on a mortgage possible. It
    was overturned by the Supreme Court in 1935.
 - Indian Reorganization Act of 1934: This act encouraged Native Americans to establish self-
    government and to preserve their culture. 77 tribes refused, hundreds of others complied.
XI. Battling Bankers and Big Business
 - Federal Security Act, also known as the “Truth in Securities Act” required promoters to transmit to
    the investor sworn information regarding the soundness of their stocks and bonds.
 - Securities and Exchange Commission (SEC), 1934: was designed as a regulatory agency.
XII. The TVA Harnesses the Tennessee River
 - 1933: The Hundred Days Congress created the Tennessee Valley Authority. The TVA was assigned
    the task of predicting how much the production and distribution of electricity would cost so that a
    yardstick could be set up to test fairness of rates charged by private companies.
 - Constructing dams on the Tennessee River provided full employment, cheap electric power, low-cost
    housing, abundant cheap nitrates, reforestation, improved navigation, and flood control.
 - Where 2.5 million people had lived in poverty, a flourishing region was now being constructed.
 - The conservative backlash of the actions of the TVA would confine the organization’s brand of
    federally guided resource management and comprehensive regional development to the area.
XIII. Housing Reform and Social Security
 - Federal Housing Administration, 1934: speed recovery and better homes.
 - United States Housing Authority, 1937: Designed to strengthen the FHA, it lent money to states or
    communities for low-sot construction.
 - Social Security Act, 1935: provided federal-state unemployment insurance.
 - Republicans were strongly opposed to Social Security.
 - The government was finally taking an active role in the urbanized economy.
XIV. A New Deal for Unskilled Labor
 - National Labor Relations Act (Wagner Act), 1935: created the powerful National Labor Relations
    Board, which asserted the rights of labor to engage in self-organization and bargain collectively.
 - The Wagner Act was passed when the Supreme Court shut down the NRA.
 - John J. Lewis, head of the United Mine Workers, formed the Committee for Industrial Organization
    in 1935. The CIO led a series of strikes (including one at GM in 1936).
 - Fair Labor Standards Act (Wages and Hours Bill), 1938: set up a minimum wage and max-hour
    levels. Labor by children under 16 was made illegal.
 - 1938: The CIO joined with the American Federation of Labor and changed their name to Congress of
    Industrial Organizations,” by 1940 the CIO hade 4 million members.
XV. Landon Challenges "the Champ" in 1936
 - Republican Alfred M. Landon ran against Roosevelt during the election of 1936.
 - Roosevelt was reelected, largely due to his appeal to the “forgotten man.” His constituency consisted
    largely of the South, blacks, urbanites and the poor.
XVI. Nine Old Men on the Supreme Bench
 - 20th Amendment, ratified in 1933, shortened the period from election to inauguration by 6 weeks.
 - The Supreme Court had thus far thwarted 7 attempts by the Roosevelt administration to further his
    New Deal.
 - Roosevelt’s plan was to pass legislation that would allow 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
    judges would be 15.
 - This plan was disliked by Congress and the public, and did not pass.
XVII. The Court Changes Course
 - Roosevelt received much negative feedback for his attempt to mess with the checks and balances
 - Justice Own J. Roberts, originally a conservative began voting liberal, changing the decisions of some
   cases. The Court upheld the states minimum wage for women, reversing a decision earlier that year.
   They also upheld the National Labor Relations Act and the Social Security Act.
 - A succession of deaths and resignations allowed Roosevelt to appoint 9 new justices to the court.
 - However, he had lost much of the goodwill that he once had.
XVIII. The Twilight of the New Deal
 - In 1937, the economy took another downturn as new Social Securities taxes cut into payrolls and as
   the Roosevelt Administration cut back on spending.
 - Roosevelt began to embrace the teachings of British economist John Maynard Keynes.
 - Keynesian economics: deficit spending galore!
 - Reorganization Act, 1939: gave Roosevelt limited powers for administrative officials for
   administrative reforms.
 - Hath Act, 1939: barred federal administrative officials from active political campaigning and
   soliciting. Also forbade the use of government funds for political purposes as well as the collection of
   campaign contributions from people on relief payments.
XIX. New Deal or Raw Deal?
 - Roosevelt and the New deal were criticized for spending too much money and increasing the national
   debt. By 1939, that debt was at $40,440,000,000.
 - States’ rights were also being ignored.
 - The New Deal was also criticized for not ending the depression, rather putting a Band-Aid on it. The
   depression would not truly end until WWII.
XX. FDR's Balance Sheet
 - Roosevelt believed that the government was morally bound to manage the economy and prevent
 - He was a supporter of big government, but was still greatly concerned with the “forgotten man.”


            RELIEF                            RECOVERY                              REFORM
Public Works Administration         Federal Housing Administration:      Federal Deposit Insurance
(PWA): allotted money to state      By insuring bank loans for           Corporation (FDIC): Guaranteed
and local governments for           building new houses and              individual bank deposits up to
building roads, bridges, dams and   repairing old ones, gave the         $5,000.
other public works projects, thus   struggling construction industry
creating jobs.                      and homeowners a boost.

Tennessee Valley Authority          Repeal of Prohibition:               Securities and Exchange
(TVA): hired thousands of people    The Beer-Wine Revenue Act            Commission (SEC): regulated the
from the Tennessee Valley, to       gave the government much need        stock market and placed stricter
build dams, operate electric        tax money.                           limits on speculation in an
power plants, control flooding                                           attempt to prevent a crash like
and erosion and manufacture                                              the one in October 1929.
fertilizer. Also made cheaper
electricity available.
Works Progress Administration                                  National Labor Relations
(WPA): spent billions of dollars                               (Wagner) Act: ensured a
over a five year period to provide                             worker’s right to join a union and
people (including youths) with                                 a union’s right to bargain as a
jobs.                                                          collective. The act also outlawed
                                                               business practices that were
                                                               unfair to labor.
Social Security Act (1935) :gave                               Fair Labors Standards Act:
pensions to the elderly.                                       established a minimum wage, a
                                                               maximum workweek of 40 hours
Civilian Conservation Corps                                    and time and a half for overtime
(CCC): provided employment on                                  and child labor restrictions on
projects on federal lands and paid                             those under 16.
workers’ families small monthly


During the early 1930s, drought plagued the American Midwest. Coupled with soil exhausting
farming techniques, the Dust Bowl was born. Gusts of wind would blow the loose topsoil away
and create massive dust storms. The Dust Bowl precipitated many farmers selling their now
useless land, becoming migrant and making their way to California for job opportunities.
A picture of a migrant family during the Dust Bowl.


What led to the worsening economic conditions between 1929-1933? How did Hoover
respond to the Depression? Why?
        Republican Economic policies, mainly the theory of Trickle Down Economics, was a
contributing factor to the worsening economic conditions. Instead, the tax breaks afforded to the
wealthy only increased the schism between poor and rich and made the situation worse.
International economic policies such as the Dawes Plan, where debt was just passed around and
nothing was paid off also worsened the economy’s health in the years leading up to the Great
Depression. Speculation in the Stock Market, where uncontrolled margin buying led to inflated
values with nothing to back it up further contributed to the downward spiral of the economy.
October 29, 1929 – the day of the crash, was the final nail in the coffin. Hoover really didn’t
respond to the depression, preferring instead to believe that “rugged individualism” would be
enough to pull the economy through. He and his predecessors all believed in laissez-faire
economics and Hoover was reluctant to take action.

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?
        Through the New Deal, FDR promised relief for people out of work, recovery for
business and the economy and reform of American economic institutions. The First New Deal
focused primarily on recovery through legislation such as the Federal Housing Administration
and the repeal of Prohibition. This legislation was designed to give the economy a much needed
boost. The Second New Deal focused on the other two “R’s”, relief and reform. The WPA gave
jobs to 3.4 million men and women, and the Wagner Act helped define workers’ rights and the
rights of unions. The New Deal enjoyed its fair share of success. Jobs were provided, and the
economy seemed to be on the rise. However, the Supreme Court proved to be an obstacle to
FDR’s New Deal Legislation, so much so that he tried to alter the system of checks and balances
through an act that would reorganize the Supreme Court. This was widely despised by Congress
and the public alike and Roosevelt faltered, and subsequently the New Deal faltered as well.
Also, when the economy again took a downward turn in 1937, faith in the New Deal was shaken.
However, as tensions rose in Europe, domestic policy became increasingly insignificant and
eventually WWII would pull America out of the Great Depression.

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 had profoundly lasting effects of the United States. For the first time, the
government actively became involved with the welfare of its people and began to shy away from
laissez-fair economics. A pension system was set up, child labor laws were enacted, insurance on
banks and many more acts of legislation that were created for the Great Depression still exist
today. The trend of deficit spending also caught on as a result of Keynes’ influence on Roosevelt
– a theory of economics still in use today. As for social ramifications, the government became
more directly involved with its people. The New Deal Coalition was made up of Democrats,
unions, minorities, white Southerners, farmers and intellectuals. The purpose of this coalition
established by FDR was to create a stronger Democratic Party that would be able to retain power
throughout the entirety of the Great Depression.

Shared By: