The Great Depression and the New Deal

Over View

The Great Depression was a time when the American economy experienced a heavy decline in production and industrialism, that led to the collapse of the American Economy. Most students think that the Great Depression deals with only the economic side, but they might forget it also dealt with a cultural depression as well. The depression gave rise to the establishment of the Federal Reserve, the enactment of the New Deal, the construction of organized labor, such as the AFL-CIO. However, it was also a decade in which crippling unemployment and poverty gave rise to the feeling of hopelessness and despair to many.

The significance of the Great Depression was that it gave rise to the strengthening of the Federal Government and the creation of the welfare state. Although, the New Deal is given credit for getting the American Economy out of the depression, in reality it was the beginning of WWII that finally ended the crisis.

California High School Standards

11.6- Students analyze the different explanations for the Great Depression and how the new deal fundamentally changed the role of the Federal Government.

11.6.1- Describe the monetary issues of the late nineteenth and early twentieth centuries that gave rise to the establishment of the Federal Reserve and the weaknesses in key sectors of the economy in the late 1920’s.

11.6.2- Understand the explanations of the principal causes of the Great Depression and the steps taken by the Federal Reserve, Congress, and Presidents Herbert Hoover and Franklin Delano Roosevelt to combat the economic crisis.

11.6.3- Discuss the human toll of the Depression, natural disasters, and unwise agricultural practices and their effects on the depopulation of rural regions and on political movements of the left and right, with particular attention to the Dust Bowl refugees and their social and economic impacts in California.

11.6.4- Analyze the effects of and the controversies arising from the New Deal economic policies and the expanded role of the federal government in society and the economy since the 1930’s (e.g., Works Progress Administration, Social Security, National Labor Relations Board, farm programs, regional development policies, and energy development projects such as the Tennessee Valley Authority, California Central Valley Project and Bonneville Dam).

11.6.5- Trace the advances and retreats of organized labor, from the creation of the American Federation of Labor and the Congress of Industrial Organizations to current issues of a postindustrial, multinational economy, including the United Farm Workers in California.

Causes of the Great Depression

Historians to not agree on the causes of The Great Depression.

Unequal distribution of wealth.

International monetary problems.

The Legacy of WW1 and the Treaty of Versailles.

Overproduction.

Under consumption due to market saturation.

Buying on credit.

Weakness in the agricultural sector and farm foreclosures.

Bank failures.

Massive loans and investment in stock speculation.

Buying on margin.

Weakness in the real estate and the construction sector.

Significance: Students should be aware that there was no single cause of the Great Depression and historians disagree on the significance and priority of the major factors.
 

 

Monetary Issues

The main components disputed regarding monetary issues during the Great Depression which in turn led to the establishment of the Federal Reserve include:

The major boom in the Stock Market

People buying stocks and then using them as collateral to buy new stocks

Hoarding money

The Gold Standard

The Smoot Hawley Tariff

The Federal Reserve Board

Income inequality

Sig. Students should understand federal decisions helped spiral the economy into the depression.

 

"It has been twelve months of unprecedented advance, of wonderful prosperity. If there is any way of judging the future by the past, this new year will be one of felicitation and hopefulness."
 
Editorial: New York Times January 1, 1929
 
§Significance: Students should be aware that many influential people thought that prosperity had become permanent and that the good times would go on indefinitely on the eve of The Great Depression.
 

 

 

 

Black Tuesday October 29, 1929

Franklin Delano Roosevelt
President 1933-1945 Democrat

The Brain Trust and Cabinet

Progressive, outgoing, experimental.

The Bank Holiday

"Fireside chat" radio addresses
Significance:  FDR’s personality and approach were much different than Hoover’s.
 

 

I am certain that my fellow Americans expect that on my induction into the Presidency I will address them with a candor and a decision which the present situation of our people impel. This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days………………

Source: Franklin D. Roosevelt, Inaugural Address, March 4, 1933, as published in Samuel Rosenman, ed., The Public Papers of Franklin D. Roosevelt, Volume Two: The Year of Crisis, 1933 (New York: Random House, 1938), 11–16.

Significance: Students should understand that this speech was the prelude to the New Deal and was meant to instill a sense of confidence and hope.
 

 

New Deal

The New Deal

A. What did Roosevelt mean by relief, recovery and reform?

1. Relief - Immediate action taken to halt the economies deterioration.

2. Recovery - "Pump - Priming" Temporary programs to restart the flow of consumer demand.

3. Reform - Permanent programs to avoid another depression and insure citizens against economic disasters.

Sig. Students should Comprehend the importance of the three "R’s" because it tried to help propel the country out of the depression.

 

Relief

Relief Immediate action taken to halt the economies deterioration.

Bank Holiday Declared so that the panic would be stopped.

Emergency Banking Act Closed the insolvent banks and only reopened the solvent ones.

Federal Emergency Relief Act (FERA) Gave immediate help to those that needed it in the form of cash payments.

Civil Works Administration (CWA) Provided temporary jobs repairing roads and bridges.

Civilian Conservation Corps (CCC) Temporary jobs to unmarried single adults filling sand bags and helping out at disaster type situations. Participants lived in barracks type housing.

Sig. Students will comprehend the immediate programs that Roosevelt put into effect to launch the national economy.

http://www.fame.org/PDF/Emergency%20Banking%20Act%20of%201933.pdf

Recovery

Recovery "Pump - Priming" Temporary programs to restart the flow of consumer demand.

Agricultural Adjustment Act (AAA)Taxed food processors and gave the money directly to farmers as a payment for not growing food. This decreased supply so price would go up.

National Industrial Recovery Act (NIRA)Created the NRA (National Recovery Administration) a consortium of businesses organized by the government and given the power to set rules and regulations for the economy. Members of the NRA displayed a blue eagle.

Home Owners Loan Corp. Gave loans to home owners so they could pay their mortgages. This prevented people from going homeless and prevented banks from going under.

Works Progress Administration (WPA)Provided long term government jobs building schools and other public works projects.

Sig. Students will understand the programs put into effect that would potentially restart the economic flow again.

http://www.usnews.com/usnews/documents/docpages/document_page66.htm

Reform

Reform Permanent programs to avoid another depression and insure citizens against economic disasters.

Securities & Exchange Commission (SEC)Permanent Agency set up to monitor stock market activity and ensure that no fraud or insider trading was taking place.

Federal Deposit Insurance Corporation (FDIC)Permanent Agency designed to insure depositors money in savings banks. Originally insured up to $5,000 per depositor today it has increased to $100,000.

Social Security AdministrationPermanent agency designed to ensure that the older segment of society always would have enough money to survive. The key here is that they would then also be able to spend throughout their lives.

National Labor Relations Act and National Labor Relations Board (NLRA/NLRB)Otherwise known as the Wagner Act it helped unions and thus helped workers. This acted created the NLRB (National Labor Relations Board) which enforced labor law and made sure that fair business practices where upheld.

Sig. These programs were established to prevent another Depression of this caliber to happen again.

http://www.nlrb.gov/nlrb/legal/manuals/rules/act.asp

The 1936 Election
Roosevelt vs. Landon

Conservatives believed that the failure of the New Deal to end the depression meant that Americans were ready for a change.

The Left believed that the New Dealers failure to institute a socialist economy would foster votes to a more leftist candidate.

Roosevelt postured himself as the liberator of the common man from "economic slavery"

The Madison Square Garden Speech.

Outlined the latest proposed New Deal programs of Social Security, Works Progress Administration (WPA), and the Wagner Act.

The mobilization of New Deal voters.

FDR Captured 60% of the vote.

Significance:  Students should be aware of issues and consequences of the 1936 election.

 

Court Packing Plan

Court Packing Plan was submitted by Roosevelt to Congress, after his reelection.

It was motivated by the constant opposition of his New Deal Legislation was encountering in the Supreme Court.

Legislation as the National Industry Recovery Act, Agricultural Adjustment Act, were some of the legislation that where ruled unconstitutional.

The president proposed that the federal judiciary be expanded by adding one new judge for each judge that was over 70 for a total of 15 judiciaries would have been created. Including a maximum of 6 on the Supreme Court. The bill also included the other measures to stream line judicial action.

Ultimately the court packing scheme was not successful because of lack of support and the reluctance of the American public to alter the traditional balance of power provided by the Supreme Court.

Significance:  Students should be aware that FDR tried to change the balance of the Supreme Court in an attempt to further his New Deal agenda

 

Critics of the New Deal

Many Businessmen Felt that Roosevelt was leading the nation towards Socialism.

Communist felt that the Federal Government was not doing enough.

Father Charles E. Coughlin and Senator Huey P. Long "Share the Wealth" Program

Sig. Students will gain the perspective that there was strong opposition to the new deal, and it was not supported by most of corporate America.

The Second and Third New Deal

Projects Administration (WPA)

Massive work-relief program that funded large construction projects as well as employed artists, actors, and writers.

Federal Housing Administration (FHA)

Expanded home ownership to moderate income families.

Social Security Act

Guaranteed payments for retirement at age 65, unemployment insurance, care for dependant mothers and children, the handicapped, and public health.

National Labor Relations Board

Established a legal and procedural apparatus for collective bargaining.

Farm Security Administration

Granted loans to small farmers

Fair Labor and Standards Act (FLSA)

Established a minimum wage and a 40 hour work week for business engaged in interstate commerce.

Significance: The Second New Deal was more oriented towards social reform and social justice with a departure from cooperation with business.
 

 

Works Progress Authority

Authorized by congress in 1935, employed 3 million people a year.

Paid wages lower than private industry, responsible for many public works, such as bridges, airports, libraries, roads, and golf courses.

The WPA was controversial from the start, was charged of hiring communist.

"WE PAY FOR ALL"

Build schools, hospitals, and playgrounds

Sig. The Works Progress Authority was the first massive attempt to deal with unemployment.

 

Social Security

Social Security Act of 1935

Most important provision was old age and survivor insurance to be paid for by 1% on both employers and employees.

Established a cooperative federal state system of unemployment compensation.

National Association of manufacturers denounced social security as it would destroy individual self- reliance.

Sig. Established a immediate system that would take care of the elderly and help the unemployed and disabled.

Aiding the Farmers

Rural Electrification Administration

Lend money to cooperatives to generate and distribute electricity in isolated rural areas.

Resettlement Administration

Set out to relocate tenant farmers on land purchased by the government.

RA was not as effective because many feared it was establishing soviet-style collective farms.

Sig. R.E.A. was established to generate and distribute rural areas where farmers lived.

National Industrial Relations Act
(NIRA)

Enacted June 16, 1933 by FDR as part of the New Deal which set certain codes and laws

In turn, the NIRA created the National Recovery Administration (NRA)

Sig.: Illustrates the attempts made by the President to stimulate the economy and get the United States out of the Great Depression.

National Labor Relations Act
(NLRA)

United States Federal Law enacted in 1935, also known as the Wagner Act

Section 7a integrated into act

Primary Source: Los Angeles Times- Sept. 16, 1935

Sig.: Demonstrates the measures taken by the United States to ensure that workers where being treated fairly within the work place.

Congress of Industrial Organizations (CIO)

Originally founded by the Committee of Industrial Organizations in 1935 by 8 international unions within the AFL to pressure the AFL to change its polices

After failing to pressure the AFL to change its policies, John L. Lewis, along with 5 out of the 8 unions, split from the AFL to form the Congress of Industrial Unions in 1938

Sig.: Will demonstrate how the CIO was formed, the differing views it had in organizing unions, and how it became the rival of the AFL.

Advances of the CIO

Flint Sit-Down Strike, 1937

44 day strike against GM that ended February 11

Lewis played major role in negotiating agreement that ended strike

Sig.: Demonstrates how much of an impact the CIO had in attaining the demands of the GM workers, all the while illustrating the particular "sit-down" striking method that workers used in order to attain their demands.

Primary Source: Los Angeles Times article- February 12, 1937

Sig.: The use of these newspaper articles will give students a more in depth image of the struggle that the GM workers went through.

Effects of the Depression on the American People

Economics:

-Banks

-Unemployment Rate

-Pay cuts

-Welfare

Homeless:

-Rise in homeless population

-Hoovervilles

Families and Food

-Middle Class

-Malnutrition

-Education

-Desertion/ Divorce

Significance: Shows the type of conditions that the American People were faced with when the depression occurred.

Women and the Depression

Women in the Work Force

The need to work

80% of family income.

10.5 million women

Home

Discrimination in the Work Force

-In a survey 77% of men said that they refused to hire married women in 1930-31 taken by the National Education Association.

Types of jobs

Wages

One job per household

 

 

Significance: This is significant to see how the role of the women changed and how it opened up the doors for women today in the workforce. At the same time it also showed how many men still believed that women belonged at home with the children but because of such bad times the women had to work.

The Effect on other Races

Native Americans:

No relief

Undernourishment

Infertile Land

Disease

Mexicans:

No relief

Scapegoats

Voluntary immigration and Deportation

African Americans:

Jobs

No Relief

 

Significance: Americans needed someone to blame for the depression and lack of jobs and for this they turned against the minorities living in the country and discrimination against them grew because of this.

The Drought

-The drought effected:

Kansas, Colorado, New Mexico, Oklahoma, Arkansas, Texas.

Causes of the Drought:

Dry spells

Misuse of land

The Dust Bowl

The Dust Bowl got its name on April 15, 1935, the day after Black Sunday. The dust bowl lasted for four years. 1931- 1935

From 1935-1938 there were 241 storms that covered the plains.

The conditions of the dust bowl caused thousands to die of "dust pneumonia"

Primary source: Eyewitness to Dust Bowl


Significance: The students should understand that the drought heightened the bad conditions that created the dust bowl and that thousands of lives were ruined because of it.

Effects on Agriculture

During the Depression Farmer faced:

Drops in Prices

Overproduction and Under consumption

Foreign Demand

 

 

Migration:

Farmers were either evicted or had to abandon their homes.

350,000 of the people from the plains moved to California.

Those who migrated faced hostility by native Californians and were called "Oakies" and "Arkies"

 

Significance: Because of the misuse of the land the depression heightened and this caused farmers to move to the cities and out west to try and find better jobs.

 

Change in Politics

The election of 1936, in which he had campaigned against some anti-New Deal Democrats, along his proposal and political handling of judicial reorganization had secured him numerous enemies.

The energized conservative opposition succeeded in blocking much of his remaining domestic programs, and as his relations with Congress declined, so did the New Deal. Furthermore, while the New Deal was built on deficit spending, one of the pillars of FDR's economic policy was his belief in balanced budget.

As he cut federal spending, the nation fell into an economic recession, as bad as any it had experienced, that saw unemployment jump to 20 percent while production and industrial output declined. Although a few laws would be passed in 1938, the politics and economics of the last years of the decade brought the New Deal to a close. In his annual message to Congress in 1939, the president shifted his focus to the tense international scene and of his requested $9 billion budget, almost one-sixth would go to defense. Contrary to the style and energy with which it had arrived, the New Deal slipped out of the decade unnoticed.

Full economic recovery would come until World War II, but psychologically, the nation had recovered long ago.

Classroom activities

Flint Sit-Down Strike:

Students will write a news story regarding the strike, starting with an overview of the historical events that contributed to the result of the strike

Sig.: Activity will encourage students to do research on how important unions were to workers and how their striking methods affected the outcome of the strike.

Organizing a Union:

Students will organize a union. Next, they will make a logo for their union, state if they are a craft or industrial union, state what type of workers they are representing, and why they feel that this type of union fits best in representing their workers

Sig.: Activity will persuade students to understand the different ideas underlying within each type of union. It will also demonstrate the importance of unions in workers lives whom sought to be fairly represented in the workforce.