rising stock market symbol of prosperity during 1920s “conspicuous prosperity” paper wealth...
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Rising stock market symbol of prosperity during 1920s “conspicuous prosperity”
Paper wealth (credit) masked rot in American Economy
Before crash: Unemployment already high due
to mechanization in factories Housing starts feel in 1927 Internationally production up
and demand down
Stocks steadily increased from March 1928 to September 1929
September 3, 1919 the Dow Jones Industrial Average of major stocks reached an all-time high of 381
Black Thursday October 24, 1929 Unprecedented volume of
selling 13 million shares
Stock prices plunged Next day, bankers bought
millions in stocks to stabilize prices Led by J.P. Morgan Jr.
Black Tuesday October 29, 1929 Bottom fell out Investors wanted to sell stock
16 million shares By November average down
to 198, in three years hit all time low of 41 Wealth “vanished”
America survived through other depressions b/c people lived on farms and could provide for themselves
This depression different since America was now urbanized
Uneven distribution of income Wages rose little
compared to productivity and corporate profits
Stock market speculation Get rich by “playing”
market mentality Buying on the margin
Excessive use of credit Belief that boom
would last
Overproduction of goods
Weak farm economy Prosperity of 20s never
reached farmers
Government policies Little business regulation High tariffs
Hurt US farmers and trade
Global economic policies War reparations crushing
Europe’s economy
GNP Dropped from $104 billion
to $56 billion in four years
Nation’s income Declined over 50%
Banks 20% closed
Not that uncommon Rural banks with low funds
the problem 10 million savings
accounts wiped out
Unemployment 1933 = 13 million people 25% of the workforce
Thought prosperity would return Urged Americans to
exercise voluntary action and restraint “best education in the world
for wandering men, women, and children traveling around the world”
Urged businesses not to cut wages, unions not to strike, etc.
Didn’t ask Congress for legislative action until summer of 1930 Believed in self-reliance
1931- called for tax increase Feared budget deficit
Hawley-Smoot Tariff 1930 Schedule of tariff rates Highest in history 31 to 49% on foreign
imports Thought it would protect
U.S. business Europe responded Trade declined for ALL
Debt Moratorium No more payment of
Dawes plan
Federal Farm Board Created 1929, powers
expanded 1931 Authorized to help stabilize
prices To modest to handle
massive overproduction
Reconstruction Finance Corporation (RFC) Created early 1932
(election year) Went against Hoover’s
conservative beliefs Measure to prop up
faltering railroads, life insurance companies, etc.
Gave emergency loans to major economic institutions $1.2 billion
Suicide rate 30% in 1932
Unrest on farms Farmers banded together to stop
banks from foreclosing farms Farm Holiday Association
Bonus march Summer 1932
One of the worst years of depression 1,000 unemployed WWI vets
marched to Washington to demand payment of bonuses Bonuses scheduled to be paid in 1945
Joined by thousands more Violent clash MacArthur called in to “disperse”
crowd 1,000 troops Eisenhower, Patton there
Negative pubic reaction More than 100 casualties 2 babies
Depression’s worst year
Republicans Re-nominated Hoover
Promised to repeal prohibition, keep tariff high, balance budget
Warned Dem. victory would worsen depression
Democrats Nominated NY governor
Franklin D. Roosevelt Barely, lots of criticism
Exuded confidence Pledged a “new deal”
Repeal Prohibition Aid for unemployed
Public works, aid to farmers Cuts in government spending
Only real issue to voters the depression
60% choose Roosevelt ticket
Congress won large democrat majority in both houses
Hoover a “lame-duck” 20th amendment
passed to shorten time between election and inauguration
The Man Only child
Wealthy background Experienced politician
NY legislator U.S. assistant to Navy 1920 Dem. Nominee for
Vice President Suffered from Polio as an
adult Couldn't walk unaided
Strengths Warm personality Gifted speaker Ability to inspire people
Eleanor Most active first lady in
history Social conscience
Wrote newspaper column
Philosophy Three R’s
Relief: for people out of work Recovery: for business and
economy Reform: of U.S. economic
institutions The Brain Trust
Group of advisors from NY Louis Howe
Chief political advisor Professors
Rexford Tugwell Raymond Moley Adolph A. Berle Jr.
Appointments Most diverse in U.S. history African-Americans, Catholics,
Jews, and women Frances Perkins
1st female cabinet member Secretary of labor
Sworn in March 4, 1933
Called congress into a special 100-day long session March 9- June 16 Congress passed every
law
Laws Bank Holiday
1st act of business Banks closed March 6
Nationwide, holiday 1st fireside chat
Banks would reopen after governments reorganized
Emergency Banking Act Permitted healthy banks to
reopen Procedures for failed banks
Repeal of Prohibition Beer-Wine Revenue Act Repealed 18th amend.
Fireside chats Started March 12, 1933 Reassured Americans Explained legislation
Financial recovery Emergency Banking relief Act Federal Deposit Insurance
Corporation Designed to protect savings up to
$5,000 Home Owners Loan Corporation
Refinanced loans, prevented foreclosures
Farm credit Administration Loans to farmers
Relief for the unemployed Federal Emergency Relief
Administration 1st welfare program Grants of federal money to
states and local governments for soup kitchens, other relief $500 million to state and local
agencies
Public Works Administration Money to build roads, bridges,
dams, other pubic works
Civilian Conservation Corps Employed young men on
projects on federal lands (18- 25)
Worked relief with environmental programs
By 1935- 500,000 employed
Tennessee Valley Authority Hydroelectric power program
Industrial recovery National Recovery
Administration 1933 1st National Recovery Act
Government control of production, labor and costs
NRA would enforce it Attempt to guarantee
reasonable profits for business and fair wages and hours for labor
Gave workers right to organize Used by Frances Perkins to ban
child labor
Farm production control Agricultural Adjustment
Administration Encouraged to reduce
production, raise farm prices Paying farmers not to plant
Civil Works Administration Created jobs Hired laborers for
temporary construction projects for government FDR worried about
creating a permanent underclass dependent on welfare
Securities and Exchange Commission 1934 Created to regulate the
stock market and to place limits on speculative practices that led to crash in “29 Placed Joe Kennedy in
charge Would know all the tricks
Federal Housing Administration Gave construction industry
and homeowners a boost by insuring bank loans for building new houses and repairing old ones
Off the Gold Standard Looked at in an effort to
halt deflation (falling prices)
NRA Lots of violations,
complaints 1935 Supreme court
declared unconstitutional in Schechter v. U.S. Regulatory powers
belonged to Congress not President
NRA regulated commerce within states
AAA Did not help farm
laborers/ migrant workers
Found unconstitutional in 1936 Illegal use of the
governments power to tax
Democrats re-elected to congress in 1934 Increased congressional
majorities
New legislation focused on relief and reforms
Relief Works Progress
Administration Spent billions to provide jobs
Work not handouts 1st year employed 3.4 million
Total over 8 million Construction, writing, art Offered youth money to stay
in school
Resettlement Administration 1935 Picked up slack of AAA provided loans to
sharecroppers, tenants and small farmers
established migrant worker camps
Reforms National Labor Relations
(Wagner) Act 1935 replaced NRA guaranteed right to join union
Rural Electrification Administration loans to electric cooperatives
Federal taxes Revenue Act 1935 increased
taxes of wealthy few
Most important of all new deal laws
Drafted by Frances Perkins
Created federal insurance program based on automatic collection of taxes from employees and employers throughout working career
Caused brief recession in 1937
Trust fund would pay monthly payments to retired over age 65
Establishe the principle of federal responsibility for social welfare
Laid foundation
Also receiving benefits under law: Unemployed Disabled Dependent children and
mothers
Economy had improved but still weak and unstable
Democrats Re-nominated F.D.R. Enormously popular among
workers and small farmers “one issue, its myself, and the
people must either be for me or against me”
Republicans Nominated Alf London
Supported by Business Part of American Liberty League
Group of business leaders that opposed F.D.R.
Fiscal conservative
Results Landslide victory for
F.D.R. Greatest asset ability to
restore confidence New coalition of
democratic voters African-Americans VERY important!!
Liberal Critics Socialists, extreme
liberals Clifford Odet -Waiting for
Lefty 1935 Said N.D. did too much for
business and too little for unemployed and working poor
Conservative Critics Thought government had
too much power Relief programs bordered
on Socialist American Liberty League
Al Smith
Demagogues Father Charles Coughlin
Weekly radio broadcasts From Detroit
Wanted to nationalize banks Called F.D.R. the “great
betrayer” and a liar Dr. Francis Townsend
Hero to senior citizens Proposed 2 % federal sales
tax to pay retired $200 a month Required to spend $ within 30
days Huey Long
“Kingfish” Gov. from Louisiana
“Share our wealth” 100% income tax over 1 million
dollars Everyman would be a King
Ran for Presidential nom. Attempted assassination
Most difficult challenge in F.D.R.’s first term Killed NRA and AAA
Plus 9 other measures All conservative judges
Court-Reorganization Thought re-election
meant he could solve court problem
Proposed bill 1937 President be allowed
to appoint additional justice for each justice over age 70.5
Reaction Called “court-packing”
bill Both Republicans and
Democrats upset 1st major congressional
defeat Opened floodgates
Aftermath Negative reaction Court already changing
views before bill 1937 upheld Wagner Act
and Social Security Act
National Industrial Recovery Act 1933 and Wagner Act 1935 Legalized unions Membership
increased
Formation of C.I.O. Committee of
Industrial Organizations 1935 Leader John L. Lewis Broke off from A.F.L. Welcomed all workers
in a particular industry regardless of gender, skill, or race
Strikes Automobiles
GM Plant Michigan 1937 Sit-down strike, organized by
CIO Strike successful United Auto
Workers union organized Not so lucky at Ford plant
Steel 1936 Memorial day 1937 Chicago
Republic Steel Company
Fair Labor Standards Act Minimum wage, max
workweek of 40hrs, child-labor restrictions
New deal slowed down
Recession 1937-1938 Causes
Government policy Social Security reduced
consumer spending Withdrew $2 billion from
circulation Keynesian Economics
Mistake trying to balance budget
Deficit spending needed to initiate economic growth
Worked- late 1938 Unemployment declined,
industrial output increased
Weakened New Deal Economy improved but:
Court-packing left distrust with congress and people
New coalition formed to block new deal legislation
Fears of Nazi Germany
Women Added pressures More women sought work
More government positions Still paid less than men
Dust Bowl Farmers Severe drought early
1930s Region became a dust bowl
“Black rollers” Called “dirty thirties”
Neighbors came together to try and save each others farms Called “penny auctions”
Thousands of “Okies” migrated to California John Steinbeck’s “The Grapes
of Wrath” Also called “exodusters” or
“Arkies”
African Americans Discrimination continued
Unemployment rate higher Often excluded from relief
programs Racial tensions in South
Anti-lynching bill defeated Scottsboro 8
Nine teenage boys accused of rape in Alabama
Framed, all-white jury Improvements
WPA, CCC = jobs Government positions
Fair Employment Practices Committee Executive order 1941 F.D.R. appointed African-
Americans to government positions
Native Americans Granted citizenship and
voting rights in 1924 Indian Reorganization
Act 1934 Repealed Dawes Act of
1887 Returned lands to control
of tribes and supported preservation of native culture Enabled natives to buy
back land John Collier
Commissioner of Bureau of Indian Affairs 1933 Improved life on
reservations Conservation and CCC
projects to employ natives
Mexican Americans Two million in U.S. Suffered from
discrimination Principal source of labor
in 1920s During depression high
unemployment and drought caused dramatic growth in white migrant workers
Thousands returned to Mexico 500,000 Voluntary and forced
Popular Actors Shirley
Temple Clark Gable Carol Lombard Mae West
Comedians Jack Benny George Burns
Literature Grapes of Wrath-
Steinbeck Music
Gershwin- “Porgy and Bess”
Swing dancing, music
What ended the depression?
FDR’s 1st term Annual growth up 9% Unemployment down
from between 25-33% TO 9-14%
2nd term Unemployment up
again Would not go down
until after 1941