US History AP Notes Chapter 24 ? The Great Depression and the New Deal, 1929-1940 -Hard Times -The Bull Market -Stock trading in the late 1920?s captured imagination of broad American market; during bull market of 1920?s stock prices increased at roughly twice the rate of industrial production -Paper value far outran real value -By end of the decade stocks that had been bought mainly on the basis of their earning power, which was passed on to stockholders in the form of dividends, now came to be purchased only for the resale value after their prices rose -Only about 4 million Americans owned any stock at all though. Total population was 120 million -Many stock buyers had been lured into market through easy-credit, margin accounts ? Margin accounts allowed investors to purchase stocks by making a small down payment (as low as 10%), borrowing the rest from a broker, and using the shares as collateral, or security, on the loan -Investment trusts, similar to mutual funds, attracted many new investors with promises of high returns on their managers? expert knowledge on market -Corporations with excess capital found that lending money to stockbrokers was more profitable than using money to develop new technologies -The Crash -Wall Street crash of 1929 was in reality a steep slide -Bull market peaked in early September and prices drifted downward -On October 23rd, Dow Jones industrials lost 21 points in one hour, and many investors considered boom to be over; boom itself rested on expectations of continually rising prices, once those expectations began to melt, the market had to decline -On October 28th Dow lost 28 points, or 13% of value, and on October 29th, ?Black Tuesday,? bottom seemed to fall out, more than 16 million shares were traded as panic selling took hold, for many stocks no buyers were available at any price -Situation worsened, and markets fragile system of credit, based on the margin debt, quickly crumbled -Many investors with margin accounts had no choice but to sell when stock values fell, and since the shares themselves represented the security for their loans, more money had to be put up to cover the loans when prices declined -At the end of 1929 hardly anyone was predicting a depression would follow the stock market crash -Underlying Weakness -The Great Depression ? The nation?s worst economic crisis, extending through the 1930?s, producing unprecedented bank failures, unemployment, and industrial and agricultural collapse -Resulting ?sickness? following stock market crash revealed economic weaknesses of the 1920?s -First, workers and consumers by and large received too small a share of the enormous increases in labor productivity -Rise in productivity itself had encouraged overproduction in many industries -Most important weakness in the economy was the extremely unequal distribution of income and wealth -Stock market crash undermined the confidence, investment, and spending of businesses and the well-to-do; manufacturers decreased production and began laying off workers, and layoffs brought further declines in consumer spending, and another round of production cutbacks -A large proportion of the nation?s banking funds were tied to the speculative bubble of Wall Street stock buying; many banks began to fail as anxious depositors withdrew their funds, which were uninsured; thousands of families lost savings -Mass Unemployment -At a time when unemployment insurance did not exist and public relief was completely inadequate, the loss of a job could mean economic catastrophe for workers and their families -Unemployment made workers depressed, many blamed themselves -Unemployment upset the psychological balance in many families by undermining the traditional authority of the male breadwinner; because women worked for less, it was easier for them to hold onto their jobs -Hoover?s Failure -The enormity of the Great Depression overwhelmed traditional sources of relief; private agencies and government units lacked money, resources, and staff to deal with the worsening situation -Hoover failed to provide the relief needed to counteract the Depression -Hoover resisted the growing calls from Congress and local communities for a greater federal role in relief efforts on public works projects -President?s Emergency Committee for Unemployment, established in 1930, and its successor, the President?s Organization for Unemployment Relief, established in 1931, did little more than encourage local groups to raise money to help the unemployed -Hoover?s plan for recovery centered on restoring business confidence -Administration?s most important response to Depression was the Reconstruction Finance Corporations (RFC), established in 1932, designed to make government credit available to ailing banks, railroads, insurance companies, and other businesses thereby stimulating economic activity; RFC managed to save numerous banks and other businesses from going under but approach did not hasten recovery -Protest and the Election of 1932 -By 1932, desperate mood of many Americans was finding expression in direct, sometimes violent, protests that were widely covered by press -?Bonus Army? ? Unemployed veterans of World War I gathering in Washington in 1932 demanding payment of services bonuses not due until 1945 -In 1932 Democrats nominated Franklin D. Roosevelt, governor of New York, as their candidate; stressed need for reconstructing nation?s economy with New Deal ? The economic and political policies of the Roosevelt administration in the 1930?s -Democrats won in a landslide, defeating Republicans and Hoover -FDR and the First New Deal -FDR the Man -Roosevelt born to wealthy aristocratic life -Stricken with polio in 1921, could not walk again, transformed him -Continued political career, elected governor of New York in 1928 -Set sights on White House, assembled group of key advisers known as the ?brains trust,? made up of Columbia Law School professor Raymond Moley, economists Rexford G. Tugwell and Adolf A. Berle, and attorneys Samuel Rosenman, Basil O?Connor, and Felix Frankfurter -?Brain trusts? believed in power of experts to set economy right and a basic belief in government-business cooperation -Restoring Confidence -Fireside Chat ? Speeches broadcast nationally over the radio in which President Franklin D. Roosevelt explained complex issues and programs in plain language, as though his listeners were gathered around the fireside with him; gave courage to Americans, restored confidence in government; began on March 12th, 1933 -Emergency Banking Act ? 1933 act that gave the president broad discretionary powers over all banking transactions and foreign exchange; provided for greater federal authority in managing affairs of failed banks -By mid-March, nearly 50% of banks were open again; bank crisis passed -The Hundred Days -From March to June 1933 ??the Hundred Days?- FDR pushed through Congress an extraordinary number of acts designed to combat various aspects of the Depression -What came to be called the New Deal was no unified program to end Depression, but rather an improvised series of reform and relief measures -Five measures particularly important and innovative: -Civilian Conservation Corps (CCC) ? established in March as an unemployment relief effort, provided work for jobless young men in protecting and conserving nation?s natural resources -Federal Emergency Relief Administration (FERA) - $500 million authorized by Congress in May to create administration, half of money went as direct relief to states, rest was distributed on the basis of a dollar of federal aid for every three dollars of state and local funds spent for relief; directed by Harry Hopkins, who would emerge as key figure administering New Deal relief programs -Agricultural Adjustment Administration (AAA) ? set up to provide immediate relief to nation?s farmers; established new federal role in agricultural planning and price setting -Tennessee Valley Authority (TVA) ? Federal regional planning agency established to promote conservation, produce electric power, and encourage economic development in seven southern states; proved to be one of the most unique and controversial projects of New Deal era -National Industrial Recovery Act ? 1933 act that was meant to be a systematic plan for economic activity; in theory each industry would be self-governed by a code hammered out by representatives of business, labor, and the consuming public; many people grew unhappy with NRA?s operation; Public Works Administration (PWA) authorized $3.3 billion for construction of roads, public buildings, and other projects, idea was to provide jobs -Left Turn and the Second New Deal -Roosevelt?s Critics -Criticism came from right and left -On right, Republican newspapers and American Liberty League, group of conservative businessmen organized in 1934, held Roosevelt administration responsible for what they considered attack on property rights, growing welfare state, and decline of personal liberty; some denounced New Deal as ?socialistic? -Some of Roosevelt?s early supporters turned critical, like Father Charles E. Coughlin, who founded the National Union for Social Justice and believed New Deal as communist -On the left, many people found New Deal too timid in its measures -Huey Long, until his assassination, was a major threat to Roosevelt -Rejuvenated and militant labor movement also became large threat -The Second Hundred Days -In early 1935, to combat popularity of political leaders preaching further social measures enacted by government, Roosevelt and closest advisers responded by turning left and concentrating on a new program of social reform -Three major goals: strengthening the national commitment to creating jobs, providing security against old age, unemployment, and illness, and improving housing conditions and cleaning slums -Emergency Relief Appropriation Act ? Act created in April that allocated $5 billion for large-scale public works programs for the jobless -Social Security Act of 1935 ? Act establishing old-age pensions and unemployment insurance; established crucial principle of federal responsibility for America?s most vulnerable citizens -National Labor Relations Act ? Act passed in July, 1935, establishing federal guarantee of right to organize trade unions and collective bargaining; also prohibited unfair labor practices by employers -Resettlement Administration (RA) ? produced one of the most utopian New Deal programs, one designed to create new kinds of model communities; helped destitute farm families move to more productive areas; was not successful because of under funding -Labor?s Upsurge: Rise of the CIO -One of key events of Depression era was turnaround in labor unions -At 1935 AFL convention, group of more militant union officials led by John L. Lewis and Sidney Hillman formed Committee of Industrial Organization (CIO); goal was to organize mass-production workers by industry rather than by craft; wanted to include all workers -In 1938, CIO unions withdrew from AFL and reorganized themselves as the Congress of Industrial Organizations ? An alliance of industrial unions that spurred the 1930?s organizational drive among mass-production industries -The New Deal Coalition at High Tide -Election of 1936 served as basis to see if Americans supported Roosevelt -Republicans nominated Governor Alfred M. Landon of Kansas, campaign served as lightning rod for all those who opposed Roosevelt?s decisions -Roosevelt won in a landslide victory -?New Deal Coalition? ? Coalition that included traditional-minded white southern Democrats, big-city political machines, industrial workers of all races, trade unionists, and many Depression-hit farmers -The New Deal in the South and West -Southern Farming and Landholding -During 1930?s crop prices were at rock bottom because of surpluses -AAA succeeded in boosting prices by paying farmers to ?plow under?-take land out of production, but particularly in South, these federal subsidies went overwhelmingly to large landowners, who controlled local county committees charged with administering AAA programs -Southern Tenant Farmers Union (STFU) founded in 1934, emerged as important voice of collective protest against AAA policies, protested evictions, challenged landlords to give tenants fair share of subsidy payments -Many landowners used money to buy labor saving machinery, cut jobs -New Deal did little to help landless, while aided landholders to prosper -Rural Electrification and Public Works -Tennessee Valley Authority and Rural Electrification Administration helped millions of southern households move into modern era by making electricity available for first time, perhaps most important aspect of New Deal for South -The Dust Bowl -Drought in Great Plains region caused violent dust storms, consequence of stripping landscape of natural vegetation -Dust storms devastated farms and crops, many families forced to move -Several federal agencies intervened directly to relieve distress -Federal government also pursued longer-range policies designed to alter the land-use patterns, reverse soil erosion, and nourish the return of grasslands -Department of Agriculture sought to change farming practices -Soil Conservation Service (SCS) ? conducted research into controlling wind and water erosion, set up demonstration projects, and offered technical assistance, supplies, and equipment to farmers engaged in conservation work -Many Okies migrated to California in search of jobs -Americans became hostile toward Mexicans because of jobs -Water Policy -New Deal ushered in era of large-scale water projects designed to provide irrigation and cheap power to prevent floods -Key government agency in this realm was Bureau of Reclamation of the Department of the Interior, established under National Reclamation Act of 1902 -Bureau?s original responsibility was to construct dams and irrigation works and thereby encourage growth of small farms in arid regions of West -At first it wasn?t very important, but that changed when it focused on building huge multipurpose dams designed to control entire river systems -First of these projects was Boulder Dam, later named Hoover Dam; supposed to harness Colorado River and generate electricity for West; completed in 1935, generated huge amounts of electricity -Los Angeles and neighboring cities built a 259-mile aqueduct to channel water to growing populations -Success of Boulder Dam transformed Bureau of Reclamation into a major federal agency with huge resources as disposal -All-American Canal built in 1938, 80-mile channel connecting Colorado River to Imperial Valley, with 130-mile branch to Coachella Valley; opened up millions of acres of desert land to cultivation -In 1935 bureau began Central Valley Project, completed in 1947 CVP stored water and transferred it to drier regions of California (North to South), also provided electricity, flood control, and municipal water -Largest power and irrigation project of all was Grand Coulee Dame, in Washington; completed in 1941, designed to convert power of Columbia River into cheap electricity, and to irrigate previously uncultivated land, thereby stimulating economic development of Pacific Northwest, brought huge amounts of jobs to area, industrialized entire state -Technological marvels came at large environmental and human cost -A New Deal for Indians -New Deal brought some changes and limited improvements to Indians -In 1933 Roosevelt appointed John Collier to bring change to corrupt Bureau of Indian Affairs (BIA) -Collier wanted to end the wronging of Indian people -Supported Indian Reorganization Act (IRA) of 1934, which reversed allotment provisions of Dawes Severalty Act of 1887, which had weakened tribal sovereignty by shifting distribution of land from tribes to individuals -IRA sought to restore tribal structure by making tribes instruments of federal government -Under Collier?s tenure, BIA became much more sensitive to Indian cultural and religious freedom -Depression Era Culture -A New Deal for the Arts -Depression hit America?s writers, artists, and teachers just as hard as blue-collar workers -Federal Project No. 1, an umbrella agency covering writing, theater, music, and the visual arts, proved to be one of the most innovative and successful New Deal programs -Federal Writers Project, Federal Theater Project, and Federal Music Project, and Federal Art Project greatly improved the conditions of their respective fields in the U.S., employing desperate workers and allowing these arts industries to thrive once again -The Documentary Impulse -During the 1930?s an enormous number of artists, novelists, journalists, photographers, and filmmakers tried to document the devastation wrought by the Depression in American communities -Also depicted peoples struggles to cope with, and reverse, hard times -?Documentary impulse? became a prominent style in 1930?s cultural expression and most direct and influential expression of documentary style was the photograph -Waiting for Lefty -For some, the capitalist system itself, with its enormous disparities of private wealth amid desperate poverty, was the culprit responsible for the Great Depression -Communist ideas had wide influence on 1930?s thought and writing -Many intellectuals during the time period became members of the Communist Party, including several African American leaders -Waiting for Lefty (1935), a production by the Group Theater, depicted a union organizing drive among taxi drivers, and at the play?s climax the audience was invited to join the actors in shouting ?Strike!? Offered perhaps most celebrated example of radical, politically engaged art -Left-wing influence reached its height after 1935 during ?Popular Front? period; Communist movement began supporting those against fascism -Film and Radio in the 1930?s -Despite the Depression, the mass-culture industry expanded enormously during the 1930?s -Mass culture played a more integral role than ever in shaping the rhythms and desires of the nation?s everyday life -Movies became extremely popular and were attended quite often -Movie musicals, gangster films, and comedies were popular -Hollywood avoided confronting controversial social and political issues -Some 1930?s filmmakers expressed highly personal visions of core American values, such as Walt Disney -Radio broadcasting emerged as most powerful medium of communication in the home, profoundly changing the routines of everyday life -Federal Communications Commission, established in 1934, continued long-standing policies that favored commercial broadcasting over other arrangements, such as municipal or university programming -Depression helped radio to expand -Radio news arrived in the 1930?s, showing the medium?s potential for direct and immediate coverage of events -The Swing Era -One measure of radio?s cultural impact was its role in popularizing jazz -Benny Goodman became key figure in ?swing era? -The Limits of Reform -Court Packing -May 1935, in Schecter Vs. United States, the Supreme Court found the National Recovery Administration unconstitutional in its entirety -In early 1836, in Butler Vs. United States, Court invalidated the Agricultural Adjustment Administration, declaring it an unconstitutional attempt at regulating agriculture -Court made mostly of Republican appointees, FDR looked for way to get friendlier judges on the high court -February 1937 FDR asked Congress for legislation that would expand Supreme Court from nine to a maximum of fifteen justices, and president would be empowered to make a new appointment wherever an incumbent judge failed to retire upon reaching age of seventy; Newspapers denounced FDR?s ?court-packing bill? -Even more damaging was the determined opposition from a coalition of conservatives and outraged New Dealers in Congress -Court upheld constitutionality of some key laws from Second New Deal -FDR backed off plan and accepted compromise bill reforming lower court procedures but leaving Supreme Court untouched -The Women?s Network -Great Depression and New Deal brought some significant changes for women in American economics and politics -Percentage of working women grew during era -New Deal brought measurable, if temporary, increase in women?s political influence; New Deal offered possibilities for reform -Eleanor Roosevelt became a powerful political figure, actively using prominence as First Lady to fight for liberal causes she believed in -Frances Perkins, secretary of labor, becomes first woman cabinet member -A New Deal for Minorities? -African Americans had a difficult time finding and holding on to jobs -Roosevelt administration made little effort to combat racism and segregation entrenched in American life; did not want to offend southern Democrats who were key in political coalition; many New Deal programs accepted segregation -FDR issued executive order in 1935 banning discrimination in WPA projects -FDR appointed several African Americans to second-level positions in administration, became known as the ?Black Cabinet? -Hard times especially trying for Mexican Americans, as thousands were deported because of racial prejudices and the thought that Mexican deportation would decrease unemployment; AAA did not aid Mexican farmers -Majority of black voters, by 1936, switched political allegiance to Democrats, meaning they supported directions taken by FDR and New Deal -The Roosevelt Recession -Nation?s economy had improved significantly by 1937, focus turned to national debt, many people supported reducing federal debt, Roosevelt called for large reductions in federal spending -Retrenchment brought about steep recession -Stock market collapsed in August 1937, industrial output and farm prices plummeted, large increase in unemployment -1938 Fair Labor Standards Act ? Act that established the first federal minimum wage (25 cents an hour) and set a maximum workweek of forty-four hours for all employees engaged in interstate commerce -National Housing Act of 1937 ? funded public housing construction and slum clearance and provided rent subsidies for low-income families
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