Great Depression & New Deal Cheat Sheet Black Thursday



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Great Depression & New Deal Cheat Sheet

Black Thursday (October 24, 1929)

  • Initial date of New York Stock Market crash

Black Tuesday (October 29, 1929)

  • Stock market prices reach new lows

Reasons for the crash:

  • Americans purchased stocks on margin

  • Over speculation on property

  • Supply Side Theory (supply and demand.... later would lead to overproduction of manufactured goods)

  • Usage of credit (farmers buying expensive agricultural equipment

Effects of Crash

  • By January 1930, 4 million unemployed

  • There was no social security, no welfare or safety net, so the devastations of the crash were felt strongly.

  • Banks stop lending money

  • Agricultural surplus, leads to depressed prices

  • International retaliatory tariffs (largely a response to the Hawley-Smoot tariff)

Hoover's Response

  • Originally believed that Europe was at fault

  • Enacted the Hawley-Smoot tariff which increased the tax on imported goods to nearly 50%

  • It hampered international trade

  • Encouraged public works

  • Suspended bank activity

  • Unwilling to give direct relief to citizens, he believed it was up to private charities

  • Congress created the RFC (Reconstruction Finance Cooperation) in 1932

  • Gave loans that benefited banks, railroads, insurance companies.

Bonus Army

  • World War I veterans marched with families to the Capitol, demanding that Congress pay them.

  • Verterans and their families camped in Hoovervilles (large shanty towns) Hoover called in the army, which used both force and tear gas to remove the persistant verterans.  (2 protesters were killed).

  • The Bonus Bill was not passed.

Dust Bowl

  • By 1931, the rain had stopped in the Great Plains, and temperatures had risen in Iowa, greatly destructing crops.

  • Dust Storms in Kansas, Colorado, Okalahoma, Texas and New Mexico, land was literally blowing away.

  • Many farmers and families migrated to the central valley of CA, and lived in migrant camps, they were called Okies

Farmers' Holiday Association 1932

  • Midwestern farmers withheld crops from the market, also used road blockade to demonstrate their point

Franklin Delano Roosevelt

  • 32nd President

  • Term: 1933-1945, the only president to serve more than 2 terms

  • Democrat

THE NEW DEAL

  • The three R’s (relief, recovery, reform). In FDR's acceptance speech, he promised relief for the people out of work, Recovery for the business economy, and Reform for the American economic institutions.

  • Roosevelt relied on his Brain Trust, a group of university professors, to help him create the New Deal

  • The First Hundred Days: FDR eneacted numerous laws and agencies (more than any president)

  • Bank Holiday- March 6, 1933, FDR declared a bank holiday and all banks were closed so that the government could reorganize them.

  • Beer Wine Reenue Act/Repeal of Prohibition-led to more taxes that would help cash flow

  • Fireside Chats with FDR kept Americans hopeful and informed

  • New Deal “Alphabet” Agencies:

    • Federal Deposit Insurance Corp. (FDIC)- guaranteed individual bank deposits up to $5,000, reassured those who put their money in banks that they will get at least some of their money back should they ask

    • Home Loaners Corp. (HOLC)- provided refinancing of small homes to prevent foreclosures

    • Farm Credit Admin.- provided low-interest farm loans and mortgages to prevent foreclosures on the property of indebted farmers

    • Federal Emergency Relief Admin. (FERA)- provided grants of federal money to states and local govts. that operated relief programs for the jobless and homeless

    • Public Works Administration (PWA)- gave money to state and local govts. for building roads bridges, dams, other public works

    • Civilian Conservation Corps (CCC)- provided jobs on public/federal lands  to young men and paid their families

    • Tennessee Valley Authority (TVA)- hired people to build dams, operate electric power plants, control flooding and erosion, manufacturing fertilizer, sold electricity

    • Agricultural Adjustment Admin. (AAA)- encouraged farmers to reduce production to help increase prices with subsidies, later declared unconstitutional

    • Security and Exchange Commission (SEC)regulated the stock market and placed limits on speculative practices the were part of the cause of the stock market crash in 1929

    • Federal Housing Admin. (FHA)- insured bank loans for building new houses and repairing old ones for the contruction industry and homeowners

    • Works Progress Admin. (WPA)- one of the biggest relief programs, provided jobs

The Second New Deal

  • National Labor Relations Act or the Wagner Act 1935- labor law that guaranteed a worker's right to unionize and the union's right to bargain, outlawed unfair labor

    • led to the creation of the NLRB which enforced this law

  • Federal taxes- revenue act of 1935 increased taxes on the incomes of wealthy

  • Social Security Act- created a federal insurance program based on the collection of taxes from employees and employers throughout people's careers the money would then be put into a trust fund that would make monthly payments to retired persons over 65 yrs. old. Unemployed , disabled also recieved benefits

Opposition to New Deal

  • Socialists, extreme liberals saw new deal as doing too much for business and not enough for unemployed, also believed that FDR failed to fix problems surrounding ethnic minorities, women, elderly

  • Conservatives felt that the New Deal gave too much power to govt.

  • Demagogues

    • Father Charles E. Coughlin- Catholic priest over the radio wanted inflated currency and nationalizeing of banks

    • Dr. Francis E. Townsend- proposed a plan for guaranteeing a secure income

    • Huey Long "King Fish"- Share Our Wealth program, wanted to create a minimum annual income of $5,000 by taxing wealthy

  • Mainly conservative supreme court led FDR to attmept to reorganize the court

    • Proposed a Court-Packing Bill- president should be authorized to appoint to the Supreme Court an additional justice for each curret justice who was older than 70.5 yrs. old...REJECTED

    • Republicans and Democrats outraged, but several justices retired and Roosevelt was able to appoint more democratic justices

Unions

  • Many companies resisted union demands => strikes

  • General Moters Contoversy- workers insisted ontheir right to join a union by participating in a sit down strike => creation of United Auto Workers union, many union organizers were beaten and driven away

  • Fair Labor Standards Act- minimum wage, a maximum workweek and child-labor restrictions were declared

Weakened New Deal

  • Recession from 1937-1938,

  • Social Security tax took away from consumer spending

  • govt. reduced spending on relief

  • Keynesian economics told FDR that he was wrong in attempting to balance the budget, Deficit spending was needed to inititate economic growth

Did the New Deal Work?

  • The programs entailed by the first and second New Deal helped to create a significant number of jobs and to restart the economy. Arguably, the New Deal did little to satiate the economic turmoil of the Great Depression. However, with the great increases in productivity associated with the Second World War the American nation was able to make a complete turnaround to officially restart their economy.

  • The New Deal did result in the creation of many works and programs that directly benefited the American people. Works and programs initiated by the New Deal improved transportation, leisure and its accessibility, safety, and ownership opportunities. Possibly the most notable, the New Deal greatly improved morale. When Americans gained money to spend they regained their independence and their pride. The growth of the modern Welfare State represented a permanent restructuring of the Federal Government’s role in the economy.

Minorities and Women During the Depression

  • African-Americans faced difficulties finding jobs, due to discrimination

  • Eleanor Roosevelt and the New Deal assisted African-Americans in finding job

  • Fair Employment Practices

  • Indian Reorganization Act of 1934

    • Repealed the Dawes Act, returned land to federal reservations

  • Because of increased pressure on jobs in hard times and the resulting nativist backlash, many Mexican-Americans were deported.

  • Women had to care for children, many fathers left families due to shame.

  • Women who could find jobs entered the work force.


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