The Depression

1
The Depression

• Hoover and FDR

2
Herbert Hoover

• Elected in 1928 primarily because the Republicans
  were associated with prosperity
• Believer in individualism, free enterprise, and
  laissez-faire

3
Conditions which helped produce or intensify the
Depression

• Overproduction
• Unequal distribution of wealth
• Overexpansion of credit
• The depressed condition of agriculture
• Stock Market speculation buying on margin
• Unwise government policies
• High tariff, no curbs on Stock Market

4
Hoover Policies

• Calls for voluntary cooperation
• Asks leading industrialists not to cut pay,
  production, or workers
• Asks labor leaders to discourage demands for
  strikes and higher pay
• Asks governors and mayors to spend more on public
  works to create jobs
• But economy continues to tumble

5
Hoover

• Optimistic prosperity just around the corner

6
Agricultural Marketing Act

• 1929
• To help farmers help themselves, largely through
  producers cooperatives
• Established Federal Farm Board which had no real
  power to reduce production.

7
Hawley-Smoot Tariff

• 1930
• Increased prices on foreign-made goods
• Intended to increase buying of American-made
  goods
• European countries responded with tariffs on
  American-made goods.
• Not successful.

8
FDR and the New Deal

• I pledge you, I pledge myself, to a new deal for
  the American people.
• Election of 1932 ushered in an era of a different
  kind of a politician.
• Master politician intelligent, confident,
  charming
• Master communicator fireside chats

9
Preparing to Lead

• The Cabinet Frances Perkins was the first woman
  to hold a Cabinet post (Labor).
• The Brain Trust Informal group of advisors
  consisting of intellectuals, lawyers, and
  economists
• Humanitarian wife Eleanor had a great deal of
  influence.

10
New Deal in Action

• RELIEF for those people who were suffering.
• RECOVERY for the economy so that it could grow
  again.
• REFORM measures in order to insure against future
  depressions.

11
Stages of the New Deal

• 1933-1935 dealt with relief and recovery most
  passed in the First Hundred Days
• 1935-1936 The Second New Deal focused more on
  social reform
• 1936 election high point of the N.D.
• 1937-1938 recession due in part to New Deal
  cutbacks in spending
• 1938 N.D. ended to opposition in Congress and
  WWII

12
New Deal Strategies

• Use of commerce and elastic clauses of the
  Constitution to take direct government action.
• Fiscal action to stimulate economy and lower
  unemployment by lowering taxes and increasing
  government spending.
• Government responsibility for the general welfare
  of citizens.
• Increase regulatory role over banks, businesses,
  and the stock exchange.
• Deficit spending Keynesian Economics

13
Relief Legislation

• Emergency Banking Act (1933)
• Federal Emergency Relief Act (FERA) (1933)
• Public Works Administration (PWA) (1933)
• Civilian Conservation Corps (CCC) (1933)
• Works Progress Administration (WPA) (1935)

14
Recovery Legislation

• National Industrial Recovery Act (NIRA) 1933
• Home Owners Loan Corporation (HOLC) 1933
• Federal Housing Administration (FHA) 1934
• First and Second Agricultural Adjustment Acts
  (AAA) (1933 and 1937)
• Tennessee Valley Authority (TVA) (1933)

15
Reform Legislation

• Glass-Steagall Banking Act (1933) created the
  FDIC
• Securities Exchange Act (1934)
• Social Security Act (1935)
• National Labor Relations Act (1935) also known
  as the Wagner Act collective bargaining
• Fair Labor Standards Act (1938) set a minimum wage

16
Reactions to the New Deal

• FDR built up a New Deal coalition
• Solid Democratic South
• new immigrant workers
• Big cities
• African-Americans
• Organized labor
• Elderly
• Business people
• farmers

17
Criticism to the New Deal

• Strongest opposition came primarily from Big
  Business
• American Liberty League attacked FDR for using
  too much power free enterprise was being
  attacked
• Dr. Francis Townsend provide government pensions
  for the elderly
• Father Charles E. Coughlin blamed business
  owners, especially Jewish ones, for the economic
  crisis
• Senator Huey Long income and inheritance taxes
  on wealthy to give each American a 2500 income,
  a car, and a college education

18
Supreme Court Reacts to New Deal

• NIRA declared unconstitutional in Schecter
  Poultry Corporation v. United States (1935) law
  illegally gave power to Congress to regulate
  intrastate commerce
• United States v. Butler (1936) ruled that AAA was
  unconstitutional on grounds that agriculture was
  a local matter

19
FDR Reacts to New Deal

• Court-Packing FDR asked Congress to increase
  the number of judges from 9 to 15
• Aimed at making the S.C. approve the N.D.

20
Andrew Mellon

• Secretary of the Treasury
• Believed course of depression had to be run
• Depression a good thing because values would be
  adjusted, people will work harder