The Great Depression

QuestionsWhat caused the crash of 1929?

Why did it last for so long?

What is the First and Second New Deal?

Who benefited and in what what ways die they change American culture?

ID/TermsJohn Maynard KeynesThe Economic Consequences of Peade (1920)Downward Spiral of SpendingFranklin Delano RooseveltThe First New DealThe Second New Deal

1. Global Issues at the end of WWI

A. Economic concerns over “peace”

John Maynard Keynes infuriated by terms of Treaty of Versailles

Failure of victors to develop adequate economic rehabilitation plan for Europe

Economic Consequences of Peace

Dangers of governments not dealing more directly with economic recovery in Europe.

Internal Productivity – Falling dramaticallyInternal transport & exchange broken down

Markets, supply & demand non-functional

PredictionsLast phase of war and afterwards

Governments responded incorrectly to inflation

printing more paper money, failed to regulate supply of essential commodities

Conditions persisted Only rich would have purchasing power

Consequence:“An inefficient, unemployed, disorganized Europe faces us, torn by internal strife and international hate, fighting, starving, pillaging and Lying”

B. Economic Outcomes of Europe’s predicament

Western World began to work on credit

U.S. Europe’s creditorIn favor first, by 1920’s against

Potential investors began to lose confidence in the economic system

High levels of credit & slow-to-recover productive capacity

Creditor RelationshipGermany found it impossible to recover economically

U.S. loans to Germany to pay reparations to Britain and France

C. Political OutcomesUncertainty & political discontent

What model to follow in Europe – capitalist or socialist?

National Survival becomes primary goal – no matter what…

D. Post-Developments in U.S.

“Roaring Twenties”

Optimism & Prosperity prevailed

Reality – longer term pattern emerging

Optimism a shallow veneer

What happened next:By mid –1920’s 5% of population received 1/3 of all its incomeSome people getting wealthy quicklyWages for majority stagnating

Wages kept lowUnions discouraged

Repressive political period

A shortage of purchasing power

II. Results: Great Depression Begins

A. Downward spiral of SpendingDecline of income – decline in demand & spending In response – decline in productionLed to – decline in employmentIncome further depressed, spiraling downward in that pattern

Affecting investors confidence

B. Stock Market CrashOctober 29, 1929

Black Tuesday

12 million shares traded – prices plummeted – chaos

Loss of 75% of investmentsSuicides began

Keep In MindCrash was not the cause of the depression

Overall economic situation of the world post WWI

III. The (in)human side of the Great Depression

Bank FailuresLabor Market ChaosFarm ForeclosuresHomelessnessBreadlinesWar veteran’s & Unemployed Worker’s protests

The OkiesDrought & Dust storms

An 18 Year Old Mother in a CampFormer Tenant Farmers at a CampA Refugee Camp Along a Highway

An Ex-Migrant Farmer at HomeAn Ex-Migrant Farmer & Her Son at

Home

A Mother & Baby On the WayTo California

Ex-Cotton Migrant At Home

IV. Global Effects Devastating

International banking collapsedEuropean Industries shut downBritain 1929-1931

Unemployment 25%

German 1930-1932Unemployment 50%44% decline in production

V. ResponsesA. United StatesFranklin D. Roosevelt elected 1932Campaign of “New Deal”

The federal government would intervene to stop the depression by

Creating jobs to stimulate demandRaising income taxes on the richest

A. First “Hundred Days”1933 – FDR Persuaded congress to pass 15 major pieces of legislation to help

BankersFarmersIndustrialistsWorkersHomeownersUnemployed & Hungry

Examples:Emergency Banking Act

Federal loans available to private bankers

Economy ActCommitted Government to balancing the budget

Unemployment Relief Act Civilian Conservation Core – 2 million single men

Federal Emergency Relief ActNational Relief System – Civil Works Administration- 4 million/400,000 small scale government projects

B. Populist CriticsBanking ReformsAgricultural Adjustment Act –

Reduced cultivation and supply, tenant farmers and laborers out of work

Public Works AdministrationInternal improvements, Infrastructure3 large dams constructed

Favored Large economic interests, not the ordinary citizen

Huey P. Long“not a single thin dime of concentrated, bloated, pompous wealth, massed in the hands of a few people has been raked down to relieve the masses”

“Break up the swollen fortunes of America and …spread the wealth among our people.”

Guarantee a $5,000 estate for every family

“Radio Priest”Father Charles Coughlin

Appealed to anxious middle class and privileged groups of workers afraid middle class status was slipping away.

Admired Benito Mussolini and Adolph Hitler“Dictate to Preserve Democracy”

C. Rebirth of Labor Shared working class experienceLabor Unions: workers fired for joining a union in violation of laws. Corporation not held accountable.Pleas unansweredStrikes – full scale riots – deaths and millions of dollars of property damageTook it to the Polls

Rise of Radical 3rd PartiesVoters prepared to abandon democrats who refused to endorse a more socialist or at least comprehensive program of reform

Growing appeal for socialism and communist Party

D. 2nd New Deal Roosevelt in response to Labor unrest of 1934 sought to reinvigorate appeal among poorer Americans and turn them away from radical solutions.Social Security Act

Foundation of American Welfare state

National Labor Relations Act – right to join a union, obligation of employers to bargain in good faith.

Re-election 1936Roosevelt campaigned with a populist bent, against corporations and on behalf of the common man.

Called on voters to strip corporations of their power.

Greatest landslide victory in history Won democratic party its reputation as the party of reform and of the “forgotten American”

Mobilized voters6 million people voted for the first time

Many of them ethnics – 5 million voted for RooseveltAmong the poorest, he received 80% of their voteBlack voters deserted the Republican party for the “party of the common man”

Rhetoric Vs. RealityPromises radical, legislation conservative and on the side of corporations, the wealthy, and white supremacy

Holding Companies he promised to break up, remained in tactTook Considerably less taxes from wealthy and estates than promisedLittle effort to protect basic civil rights or restore black suffrage

Nations Poor Did not benefit from Social Security act or other legislation that promised to help the poor

Farm workersAfrican American Share croppersChicano farm workers

Set Backs for WomenJob Competition

Women seen as taking jobs

Legislation against hiring married womenBlamed women for unemployment of men

Solution: fire 10 million working women and give those jobs to the men

International RelationsRoosevelt , 1933, first to recognize Soviet Union & establish diplomatic ties with its communist leadersInaugurated “Good Neighbor Policy” towards Latin America

Formally renounced American rights to Intervene in affairs of other nations

(Did not give up influence there)

OverallEfforts slowed depression, did not stop itReinvigorated DemocracyCreated beginnings of a welfare stateBroke with Laissez-faire policyIncreased military spending and mobilization for war Responses by European countries

Ultra-nationalistic, fascist, depended on mobilization to create jobs and boost economy