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The Depression and 1930s

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Title: The Depression and 1930s


1
The Depression and 1930s
  • An Age of Despair and Idealism

2
We are nearer today to the ideal of the
abolition of poverty and fear from the lives of
men and women than ever before in any land.
  • Herbert Hoover - 1928

3
The 1920s did not roar for everybody
  • Farmers struggled during the 1920s after the boom
    of the 1900s and 1910s. Overproduction resulted
    in lower prices. Farmers planted on every
    available scrap of land to produce as much as
    possible.
  • While there was greater prosperity in the 1920s,
    there were large segments of the population that
    were struggling to survive. Roughly one half of
    the population functioned at subsistence levels.
  • Many could afford the homes, cars, and appliances
    only with the help of credit. By the late 1920s,
    the market for consumer goods had become
    saturated.
  • From farming to aviation, there were scores of
    small, undercapitalized companies that were
    marginally profitable at best.

4
Banks
  • In an age when there was still a distrust of
    large corporations, national banks were suspect
    but, of course, the friendly local bank next door
    seemed just fine.
  • The nation was overbanked, meaning there were
    too many small banks that did not have enough
    capital to sustain them.

5
DEPOSITS BORROWS
Bank
Account Holder
Borrower
WITHDRAWS DEPOSIT PAYS BACK LOANS WITH
INTEREST
6
The Stock Market
  • A stocks value is based on what people are
    willing to pay for it. So long as it seems like
    a good investment, the value is high. If no one
    wants to buy it, the value declines.
  • Like houses and cars, people could purchase stock
    on credit, promising to pay back loans when they
    made money off of the stock market.
  • Greater numbers of average Americans were
    investing. They were new to the process and
    could be drawn to supporting risky ventures by
    seductive advertising.

7
Economics and the public
  • As a general rule, people act based on their
    perceptions of how the economy is doing, not
    their personal situation. If their perception is
    that the economy is doing poorly, people will act
    as if they are doing poorly even if their
    personal finances are in decent shape.

8
Stock Market Crash 1929
  • In October 1929, the stock market started to
    decline. On October 29, Black Tuesday, it sank
    in that this was not a temporary correction.
    People started selling off stock to preserve what
    little profit was left. Stock became worth less
    and less.

9
A local affair at first.
  • Everybody talks about the Crash of 29. In
    small towns out west, we didnt know there was a
    crash. What did the stock market mean to us? Not
    a dang thing. If you were in Cut Bank, Montana,
    who owned stock?
  •  

10
A chain reaction begins
  • The Crash reinforced an already saturated
    consumer market.
  • People stopped buying consumer goods.
  • Manufacturing firms had to cut back on producing
    things so that their surplus of unsold goods
    would not get too large.
  • As companies made fewer profits, they laid off
    workers.
  • Laid off workers cut back further on their
    purchasing, making the cycle worse.

11
Unemployment
  • During the Great Depression, between 1/4 to 1/3
    of the working age population was unemployed.
    Hardest hit included
  • Women
  • African Americanswhose unemployment rate could
    be 30-60 higher than whites
  • Migrant workers
  • The elderly

12
Meanwhile..
  • People got scared about the money they had
    deposited in banks and started withdrawing their
    deposits.
  • Banks did not have the money to cover those
    withdrawals and started calling in loans.
  • Those who had borrowed money, such as farmers,
    did not have the money to pay back loans. Low
    crop prices meant no profits and therefore, even
    less money to pay back the banks.
  • Banks started foreclosing on farms and other
    loans.

13
Panic sets in!
  • People rushed to banks to take out what little
    was left of their deposits. These panics were
    called bank runs
  • Smaller banks were left without any capital to
    function and so had to close.
  • The news of banks closing fueled the scare.

14
An ecological disaster
  • Out west, decades of overfarming had worn out the
    soil. When a drought came in, there were no
    plants to hold down the soil. Clouds of dust
    rolled across the Great Plains in what became
    known as The Dust Bowl.

15
The result
16
Migration
  • Those out of work or who lost their farms
    searched for work where they could.
  • Started a migration out west to California.
  • Included Okies from Oklahoma, Dokies from the
    Dakotas, and Arkies from Arkansas. In Canada,
    they were called Hosers because they siphoned
    off fuel from farm machinery.

17
A global crisis
  • The economic crisis was global in nature.
  • There were fewer investments available for
    Germany.
  • Germany could not pay the reparations to Britain
    and France.
  • Britain and France stopped paying back on their
    loans from the United States.
  • In 1930, the government, in an attempt to protect
    U.S. producers, raised tariffs, sparking a trade
    war with the Europeans, who raised their tariffs
    in retaliation.

18
New Approaches and Alternatives
  • Disillusionment with older laissez faire
    economics result in popularity of new approaches
  • Fascism Includes strong central planning to
    support the nation-state, usually with a strong
    military presence
  • Communism Government ownership and control of
    major industries and, depending on area, smaller
    businesses as well, usually with a strong
    socialist or communist party. Land reform favors
    collective farms instead of estates or private
    farms.
  • Keynsian economics Rise of thought of John
    Maynard Keynes in favor of government as
    supportive, guiding force in economy though
    techniques such as government programs.
    Governments can go into debt if economy grows as
    a result.

19
Law and Order vs. Revolution
  • Fascism
  • Controls society but keeps existing elites power
    structure of estates, private industry, and state
    churches
  • Intensely nationalistic with strong military
    presence . Leadership operates through the
    military but may maintain the façade of monarchy
    or democracy.
  • Communism
  • Totally restructures society in favor of working
    classes and peasants by limiting or eliminating
    the power of elites
  • Officially international, hoping an international
    working class revolution will eventually make the
    nation state unnecessary

20
Meanwhile, in Mexico
  • In Mexico, in the late 1920s the Institutional
    Revolutionary Party or PRI came to be the
    dominant, exclusive party of Mexican governance.
  • Left-leaning sentiments popular through the
    artwork of figures such as Diego Rivera.
  • After another series of power struggles, Lazaro
    Cardenas becomes president in 1934. Leftist in
    approach.

21
Works by Diego Rivera (both from the Mexico City
Palace of Fine Arts)
22
The Cardenas Administration 1934-1940
  • Promoted communal land holdings called ejidos
    (pr. Eh-HEE-dos)
  • Nationalized the oil industry and the railroads
    of Mexico.
  • Served as haven for communist figures such as
    Leon Trotsky.
  • Promoted a Latin American trade bloc against the
    U.S.
  • As 1930s unfolded, both communist and fascist
    groups worked to establish themselves in Mexico.
    In 1940, Juan Almazan, with ties to Spanish
    fascists, ran for president. U.S. backed the
    ultimate winner, General Manuel Avila Camacho

23
Meanwhile, up north
  • In Canada, William Lyon Mackenzie King served
    1921-1930 (with a brief year of interruption in
    1926). A lifelong bachelor, was known for being
    moderate, pragmatic, and devoutly religious.
  • Conservative R.B. Bennett was prime minister from
    1930-1935. In 1935, Mackenzie King regained
    office and served as prime minister through 1948.
    Established social programs such as old age
    pensions and welfare.
  • Rise of clerical-nationalism among some
    Quebecois that celebrated a Catholic, folk
    vision of Quebec as an alternative to
    Anglophone-dominated Canada.
  • Meanwhile left-leaning groups such as the
    Cooperative Commonwealth Federation form,
    especially in western Canada. Movement centered
    on the charismatic figure Tommy Douglas.

24
From the Regina Manifesto of 1933
  • We aim to replace the present capitalist
    system, with its inherent injustice and
    inhumanity, by a social order from which the
    domination and exploitation of one class by
    another will be eliminated, in which economic
    planning will supersede unregulated private
    enterprise and competition, and in which genuine
    democratic self-government, based upon economic
    equality will be possible. The present order is
    marked by glaring inequalities of wealth and
    opportunity, by chaotic waste and instability
    and in an age of plenty it condemns the great
    mass of the people to poverty and insecurity.
    Power has become more and more concentrated into
    the hands of a small irresponsible minority of
    financiers and industrialists and to their
    predatory interests the majority are habitually
    sacrificed. When private profit is the main
    stimulus to economic effort, our society
    oscillates between periods of feverish prosperity
    in which the main benefits go to speculators and
    profiteers, and of catastrophic depression, in
    which the common man's normal state of insecurity
    and hardship is accentuated. We believe that
    these evils can be removed only in a planned and
    socialized economy in which our natural resources
    and principal means of production and
    distribution are owned, controlled and operated
    by the people.

25
Herbert Hoover
  • Hoover believed that voluntary action on the part
    business to maintain wages and jobs would
    eventually bring the U.S. out of the Depression.
    By 1930, this clearly was not the solution.
  • Meanwhile, progressive Democrats started getting
    elected to Congress in 1930 to challenge the
    Republican Hoover.
  • Late in his administration, Hoovers
    administration started setting up programs help
    with financing and loans. Seemed too little, too
    late.

26
An image problem gets worse
  • In June 1932, a group of 12-14,000 out of work
    veterans marched on Washington, D.C. Members of
    this Bonus March, demanded immediate payment of
    full veterans benefits. Set up shantytown in
    Washington D.C. A riot occurred and the military
    was called in to preserve order. Leading the
    crackdown was Douglas MacArthur.
  • Over time, unemployed and migrants across the
    nation started calling the shantytowns that they
    lived in Hoovervilles.
  • Labor unrest added to the tensions as capitalism
    itself seemed incapable of resolving the crisis.

27
What would you do?
  • Since so much of public behavior rests on
    perceptions of the state of the economy, how do
    you improve public confidence?
  • Should the government intervene in the economics
    of the nation or let the market take its course?
    If so, how?
  • Should things be left up to the states instead of
    the federal government? If so, how do you
    encourage the states to comply?
  • Is this a natural up and down of the economic
    cycle that is necessary to cull out the
    inefficient? If so, how do you convince people
    of that?
  • Should people spend more to boost the economy or
    save more so that they have reserves to fall back
    on?
  • What would you do to ensure that the electorate
    votes in people who favored your recommended
    program?

28
Taking it to the states
  • In California, author Upton Sinclair (same one
    who wrote The Jungle) ran for governor under his
    End Poverty in California or EPIC plan in
    which the state of California would run factories
    and farms as cooperatives.
  • Huey Long in Louisiana espoused a populist
    rhetoric while maintaining a powerful political
    machine.
  • Governors in Oklahoma and Texas called in the
    national guard to shut down their states oil
    fields to curb overproduction

29
One commentary
  • Is that, my friends, giving them a fair shake
    of the dice or anything like the inalienable
    right of life, liberty, and the pursuit of
    happiness, or anything resembling the fact that
    all people are created equal when we have today
    in America thousands and hundreds of thousands
    and millions of children on the verge of
    starvation in a land that is overflowing with too
    much to eat and too much to wear? -- Huey Long

30
Enter Franklin Delano Roosevelt (president from
1933-1945)
  • From a wealthy New York background
  • Distant relative of Theodore Roosevelt
  • Assistant Secy of the Navy in 1910s.
  • An attack of polio in 1921 left him largely
    paralyzed from the waist down.
  • His wife, Eleanor, and others encouraged him to
    get back into politics.
  • Elected governor of New York in 1928.
  • Wins presidency in race against Hoover in 1932.

31
The New Deal Coalition
  • White southerners and westerners
  • Northeastern intellectuals
  • Labor
  • Immigrants
  • African Americans and Latinos (Both groups
    switched from being loyal Republicans to loyal
    Democrats during this time.)

32
Excerpts from FDRs first inaugural speech, March
4, 1933
  • So first let me assert my firm belief that the
    only thing we have to fear is fear
    itselfnameless, unreasoning, unjustified terror
    which paralyzes needed efforts to convert retreat
    into advance.
  • The measure of restoration lies in the extent to
    which we apply social values more noble than mere
    monetary profit. Happiness lies not in the mere
    possession of money it lies in the joy of
    achievement, in the thrill of creative effort.
  • It (restoration) can be helped by the unifying
    of relief activities which today are often
    scattered, uneconomical and unequal. It can be
    helped by national planning for and supervision
    of all forms of transportation and of
    communications and other utilities which have a
    definitely public character.

33
Help along the way
  • FDR did not do this by himself. He had help
  • A committee of advisors and agency heads called
    the Brains Trust helped shape a lot of New Deal
    policy. These included Rex Tugwell, Harry
    Hopkins, and Harold Ickes.
  • Eleanor Roosevelt provided commentary and support
    through her column My Day and other venues.
  • Congress was made up of sympathetic Democrats.
  • State governments tended to have leadership that
    was supportive of the New Deal. Many programs
    used federal funds but had the state governments
    implement the actual programs.
  • FDR tried to cultivate good relationships with
    the press.

34
FDRs New Deal
  • Relief Helping soothe the current suffering of
    people.
  • Recovery Getting the society back to prosperity
    again.
  • Reform Changing features of society to address
    certain issues. May or may not have be directly
    related to the economic crisis.

35
Three main phases
  • The First New Deal 1933-1934
  • The Second New Deal 1935-1937
  • Aftermath 1938-1941

36
The First New Deal 1933-1934
  • A flurry of activity and legislation known as the
    First 100 Days.
  • Compared to the Second New Deal, tended to be
    more moderate in scope.
  • FDR tended to use a lot of trial and error,
    coming up with lots of different policies to see
    what would work.

37
Banking and Finance
  • Emergency Banking Act Closed all banks for a
    temporary holiday. Ones that were stable were
    allowed to reopen.
  • Glass-Steagall Act or Banking Reform Act
    Promoted sound banking practices including the
    creation of the FDIC as federal insurance on
    deposits.
  • Securities and Exchange Commission Promoted
    sound practices in the stock market.

38
Agriculture
  • Emergency Farm Mortgage Act Through the Farm
    Credit Administration, helped farmers refinance
    mortgages and borrow money.
  • Agricultural Adjustment Act Set up a system of
    crop subsidies to pay farmers to grow less and
    stabilize agricultural prices.

39
Natural Resources
  • Civilian Conservation Corps/CCC Put young men to
    work on construction projects, especially in
    national and state parks and forests.
  • Tennessee Valley Authority/TVA A program to
    create dams and artificial reservoirs along the
    Tennessee Valley in the upper south. Provided
    flood control, electrification, and water-based
    recreation.
  • Although work began on the Hoover Dam in Arizona
    during the 1920s, most of the construction took
    place under the New Deal. The dam was completed
    in 1936. Shown here is the Parker Dam, another
    New Deal project along the Colorado River.

40
Business and Labor
  • The National Industrial Recovery Act/NIRA
  • National Recovery Administration/NRA (no, not the
    National Rifle Association) Established a series
    of voluntary codes of wages and prices.
  • Section 7a Gave labor the right to organize and
    engage in collective bargaining.
  • Public Works Administration/PWA An early public
    works program.

41
Other programs
  • Civil Works Administration/CWA An early public
    works program.
  • Federal Emergency Relief Administration/FERA The
    only direct relief program that simply allocated
    money for needs rather than be through public
    works programs.
  • Home Owners Loan Corporation Provided home
    loans.
  • Indian Reorganization Act Reconstituted tribal
    governments.

42
Foreign Policy Case Study Cuba
  • Growing nationalist sentiment.
  • In September 1933, a military junta gave way to a
    new civilian govt. under Grau San Martin that
    resisted the restrictions of the Platt Amendment
    and pushed for land reform and labor reform.
  • The Roosevelt admin debated whether to invade.
    Decided to try to weaken the new San Martin
    administration, which collapses in early 1934.
    Head of the army, Fulgencio Batista, put his
    support behind Carlos Mendieta. By the late
    1930s, Batista was in power, officially becoming
    president in 1940. The military, through groups
    like the Civic-Military Institute, became an
    organizing presence in Cuba.

43
U.S. in the Caribbean
  • Virgin Islands Establishes civil government in
    1931 (had been run by U.S. Navy). FDR extended
    relief to the islands. Universal suffrage in
    1938.
  • Puerto Rico Relief to islands through New Deal.
    Rise of nationalist movement that desired
    complete independence as well as an opposing
    movement that wanted statehood.
  • Haiti U.S. forces occupied in 1914, making the
    nation a virtual U.S. protectorate. With the
    help of U.S. support, government of Stenio
    Vincent comes to power in 1930. U.S. forces out
    by 1934.

44
(No Transcript)
45
The Second New Deal 1935-1937
  • Tended to be more reform-oriented.
  • FDRs administration is reacting against critics
    on both the right, for being too socialist, and
    on the left, for not doing enough.
  • National figures such as Father Coughlin or Huey
    Long suggested that they could do even more than
    FDR.

46
Concerns
  • You cannot solve these things through these
    various and sundry alphabetical codes. You can
    have the N.R.A. and P.W.A. and C.W.A. and the
    U.U.G. and G.I.N. and any other kind of
    dad-gummed lettered code. You can wait until
    doomsday and see 25 more alphabets, but that is
    not going to solve this propositionGod told you
    what the trouble was. The philosophers told you
    what the trouble was and when you have a country
    where one man owns more than 100,000 people.,you
    know what the trouble is. Huey Long, Share Our
    Wealth
  • When fascism comes to America it will be
    wrapped in the flag and carrying a cross. -
    Sinclair Lewis

47
Reform legislation
  • Rural Electrification Administration Brought
    electric power to rural areas.
  • Housing Act Provided low cost housing in cities.
  • National Youth Administration To keep youth in
    school and out of labor market.
  • Soil Conservation and Domestic Allotment Act
    Promoted better farming techniques to save the
    soil and water.

48
WPA
  • Works Progress Administration/WPA Public works
    program that hired a wide range of people, from
    artists to academics, from laborers to social
    workers, to develop a wide range of projects.

49
Social Security
  • Created a pension system to supplement the income
    of the elderly.
  • Intended to encourage the elderly to retire so
    that younger people could stay in the job market.
  • Although sold akin to a retirement investment
    system, the current generation of workers
    contributes the money that current retirees use.

50
Labor troubles
  • A rift between skilled and unskilled workers
    results in the unions for unskilled workers
    leaving the AFL to form the Congress of
    Industrial Organizations (CIO) in 1937.
  • One of the largest strikes of the era took place
    in late 1936/early 1937 when the United Auto
    Workers/UAW organized a sit-down strike at
    General Motors Fisher Body plant that shut down
    the facility. General Motors eventually agreed to
    many of the UAWs demands.
  • UAW leaders conducted a similar strike against
    Chrysler and the company agreed to similar
    demands.
  • An attempted strike at Ford was less successful.

51
Trouble with the courts
  • The Supreme Court consisted of conservatives who
    felt that many New Deal programs were
    unconstitutional.
  • Struck down the NIRA because it gave the
    president powers over interstate commerce that
    only Congress legally had. FDR and Congress had
    to come up with an alternate version of section
    7a on labors rights, ultimately called the
    Wagner Act.
  • Struck down AAA as well, forcing FDR and Congress
    to create a revised version.

52
Court Packing
  • In the wake of his resounding success in the 1936
    election, FDR felt he had a mandate to go after
    that thorn in his side The Supreme Court.
  • There is no mention in the Constitution as to how
    many Supreme Court justices there had to be.
  • FDR proposed adding six new justices as well as
    replace about fifty other federal judges in the
    judicial system. This would ensure a sympathetic
    court system.

53
Backfire!
  • FDR did not consult Congressional leadership on
    this.
  • Even FDR supporters felt that it was an attempt
    to consolidate power. In a time when Hitler was
    increasing his influence in Germany, this was not
    a pleasant thought to contemplate.
  • The bill never made it through Congress, several
    of the older justices retired shortly thereafter
    but FDRs once solid relationship with Congress
    and even the public was tarnished from then on.

54
Aftermath
  • The New Deal Coalition starts breaking down, a
    trend that eventually lead to white southerners
    and westerners breaking from the Democratic
    Party.
  • Although not as far reaching as some hoped, civil
    rights for African Americans and support for
    organized labor confirmed those groups long ties
    to the Democratic Party.

55
The Result
  • The New Deal did not get the United States out of
    the Depression. World War II did that.
  • However, many historians believe that FDRs
    efforts prevented a revolution along communist or
    fascist lines from coming to power.
  • Many parts of the New Deal such as state parks,
    hydroelectric dams, electricity in rural areas,
    farm subsidies, and Social Security are still
    part of society today.

56
Historians debate
  • Some historians argue that FDR was a progressive
    visionary who dramatically reformed society,
    moving the United States away from laissez faire
    capitalism.
  • Others argue that in spite of his reform
    rhetoric, FDR was basically seeking to make
    enough changes to maintain the existing
    capitalist system without changing the underlying
    structure.
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