The Great Depression

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The Great Depression

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Title: The Great Depression

1
The Great Depression

1929-1941

2
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

4
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 Austrias 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

8
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

10
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

13
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

14
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

15
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

16
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

18
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 AAAs 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

20
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

22
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

23
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

27
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

29
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)

30
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

32
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

35
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

41
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

42
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

43
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

44
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

46
Atlantic Charter (1941)

In August 1941 Churchill and Roosevelt met at
Newfoundland to issue the Atlantic CharterIt
called for self-determination for all
peopleequal access to raw materialsfreedom of
the seaseconomic 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

47
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
RooseveltA) froze Japanese assetsb) restricted
oil exports to Japanc) 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 (730 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