Transcript GREAT DEPRESSION AND THE NEW DEAL

GREAT DEPRESSION
AND THE NEW DEAL
Hard Times in the 1930’s
What was the Great
Depression?
 The worst economic crisis of the century
 Over 13 million people unemployed
 That’s 35 % unemployment / 50% for AfricanAmericans and Latinos
 A crisis in the banking industry
 “Dust bowl” as a result of drought and poor
farming practices
 Farmers lost crops
 Many people lost their homes
 A social and psychological crisis
Three areas of problems
Consumer spending:
Credit
Banking industry:
Reckless practices
Farming Sector:
Dust Bowl
overproduction
normal business cycle
Great Depression
Business cycle
Business cycle since the
Great Depression: healthier
What caused the Great
Depression?
 Unequal distribution of wealth
 Stock market crash of 1929
 Industrial overproduction – farmers and
businesses were producing more goods than
could be bought and used.
 Easy credit
 Banks had made unwise loans
 Banks lent too much money
 People could not pay back their loans
Causes of 2008
“Recession”
 Deregulation of banking industry leads to
reckless home lending practices (ARM
loans) and to inflated home values
 Homeowners used equity in homes to take
out loans (used houses as ATM machines)
 Stagnant (low wage growth) wages
 Easy credit
 Jobs continuing to move overseas
 Unequal distribution of wealth
EFFECTS
Great Depression




Stock market crash
Bank failures
Loss of people’s money
Widespread unemployment
over 25%
 50% foreclosure rate on
existing mortgages
 Homelessness

divorce rate
 “Hoovervilles”
 Rise of movie industry
2008 “recession”
 Housing market collapse

foreclosure rates :
CA, NV, AZ

unemployment
 Rise of tent cities
 Banks / investment firms
bailed out before the
American people
 Budget cuts
 Tightening of credit
Presidential leadership
Early Depression era
2008
Hoover (R) 1929 – 1933
“Rugged Individualism”
Private charity
Some loans to help
business create jobs
 RFC – Reconstruction
Finance Corporation
 Bush (R) 2001 – 2009
 Bank bailouts

$250,000 amount
of money insured in
bank accounts

food stamps




Presidential leadership
 FDR 1933- 1944
 Relief, recovery,
reform
 Government created
jobs: New Deal –
specific individual
programs
 “Alphabet agencies” :
CCC, WPA, etc
Dealt with longlasting reformSocial Security, FDIC
 Obama 2009  Relief, only some weak
reform/ recovery efforts
 ARRA – American
Recovery and
Reinvestment Act
 Provides extended
benefits for unemployed
plus funds states can
apply for “shovel –ready
projects.”
 Short –term relief, hope
that private industry
will create jobs, but
that is not happening
Presidential leadership
FDR AND THE
NEW DEAL
1933- 1942
FDR + New Deal continued
Presidential leadership
2008 ARRA
ARRA in Kentucky
Causes: Unequal
Distribution of Wealth
 No middle class
 However, because of the
availability of credit, people
are “buying” goods
Buying on credit creates a
false demand for products
 Buying on credit created
false demand
 What happens to
demand when people
have reached their credit
limit?
 Remember that banks
have made some unwise
loans as well.
Industrial Overproduction = too many
products and not enough buyers
 WAGES NOT KEEPING UP WITH
INFLATION
 SUPPLY GREATER THAN DEMAND
Chain reaction
Demand
drops.
In order to
stay in business
companies cut
wages
People lose their
confidence &
start saving their
money
Fewer goods
are sold.
People lose
their jobs.
The Spiral
Of
Depression
Even more people
Lose their confidence
And spend less money
Demand
drops even
further.
Companies are
forced to cut costs
by laying people off
Stock Market Crash
 Many stocks
purchased
 Stock prices fell
 Huge sums of money
lost
Thursday, October 24, 1929
Black Tuesday
Black Tuesday
 Five days before the actual crash, (known as “Black Tuesday” or
the “Big Crash”) there was a major sell-off of stocks due those
falling prices. As the prices continued to fall, panic struck causing
even more calls to pour in to sell stocks. The brokers demanded
cash to cover their loans and when the investors couldn't come up
with the extra money, they had to sell their stocks leaving them at
a loss of money. The dumping of so many stocks on the market
jolted investors’ confidence and caused prices to plunge. The
plunge in those prices was wiping out the savings of millions of
Americans who had invested in the stocks. The Dow had lost over
500 points making the stock market finally crash on October 29,
1929. Prices sank to a shocking new low as investors dumped
over $16 million shares of stock on the market leaving
shareholders at a loss of some $30 billion. Then by November
13th, the prices had hit rock bottom. With all of this money loss
and panic, it was sure to cause more problems for the people in
the future that was soon to come.
“Migrant Mother”: The Face
of the Great Depression
The Results
 Bank Failures
The Results:
Unemployment
Unemployment
Dustbowl
A traveler noticed a nice new hat by the side of the road, and he stopped to pick it up.
Under the hat was a man, buried up to his neck in the dust! As he dug the poor fellow out,
the traveler asked if he wanted a ride into town. "No, I'll get there myself,"
the man replied, "I'm on a horse."
(Excerpt from THE DUST BOWL by Tricia Andryszewski, p. 33.)
Poor farming practices +
drought = Dustbowl
Dust clouds + high winds =
terrifying experience
What areas were affected
by the Dust Bowl?
OKIES: Refugees from the
Dust Bowl. They usually
went to California
The Results: HARD TIMES
 Loss of homes
 “Hoovervilles”
Here were all these people living in old
rusted-out car bodies. ... One family ...
[was]
living in a piano box. This wasn't just a
little
section, this was maybe 10 feet wide
and 10
feet long. People living in whatever they
The Results: Soup kitchens
The results:
People on “ relief ”
The results: Social Unrest: Fear
of a Socialist Revolution
The Results: Social unrest
and labor activity
 Depression
Depression
Depression
Did everyone suffer during
the Great Depression?
Two Presidents respond to the Depression: One
fails and the other changes the role of
government forever!
Hoover fails to respond
effectively to the Depression
 “rugged individualism”
 Thought government
relief would be bad for
people’s character
 Voluntary associations
 Charity
 Failed to recognize how
big the economic crisis
was
FDR and the New Deal increase the size
of the federal government and bring it
into our lives
Worldwide Depression leads
to social and political unrest
And the rise of dictators in
Europe and Japan
But many in the US are
burying their heads in the
sand….. AMERICA FIRST!
America First movement..
1933 – FDR TAKES OVER –
AND JUST IN TIME
The New Yorker Magazine’s
view of the inauguration!
Election of 1932
FDR: The nation’s only 4 term
President. Served through the
Great Depression and WW II
Families on Relief
“The only thing we have to
fear ….. is fear itself”
Franklin Delano Roosevelt
“Our greatest primary task is to put people to work”
FDR: “This generation of
Americans has a rendezvous
with destiny”
FDR inspires confidence
A New President
and a New Deal
 I NEVER FORGET
THAT I LIVE IN A
HOUSE OWNED BY
ALL THE AMERICAN
PEOPLE AND I
HAVE BEEN GIVEN
THEIR TRUST.”
FDR
Reversing the Spiral of
Depression
Alphabet
Agencies
More Jobs
More Spending
Government
Spending $
Cycle
Democrats called
thisof
Process
‘Pump Priming’
Prosperity!
Demand for
goods increases
More goods have
to be produced
More Pay =
More Taxes
More Jobs
More goods have
to be produced
Demand for
goods increases
More people with
Jobs = more pay $
More
Spending
FDR’s New Deal:
Relief, recovery, reform
 Relief for the needy
 Jobs provided
 Banking, Business and government reformed
FDR gets to work:
The First 100 days
 Emergency Banking
Act
 Bank “holidays”:
banks are ordered
closed on certain
days
 Glass – Steagall Act
creates FDIC:
Federal Deposit
Insurance
The Alphabet Agencies
FDR’s New Deal: Government grows
and takes over parts of the economy








AAA – Agricultural Adjustment Act
CCC – Civilian Conservation Corps
NRA – National Recovery Act
WPA – Works Project Administration
PWA – Public Works Administration
SSA – Social Security Administration
REA – Rural Electrification Administration
TVA – Tennessee Valley Authority
Fireside Chat: May 7, 1933
AAA
CCC: Employed young men
for outdoor work. Units were
racially segregated
WPA – Works Project
Administration
The WPA put artists to
work
WPA
Dorothea Lange documents
the Depression for the FSA
Her most famous photo:
Migrant Mother
(and how a photo –and a photographercan lie)
Dorothea Lange documents
Japanese internment 1942
Court – packing scheme: FDR
declares war on the Supreme Court
FDR’S SURPRISE MOVE TO ADD MORE
JUSTICES TO THE SUPREME COURT DIDN’T
WORK BUT SCARED IT INTO PASSING HIS
NEW DEAL LEGISLATION
Homework: A New Deal
for the Arts
 A NEW DEAL FOR THE ARTS WEBSITE
Problems and Criticisms
of the New Deal
 Some programs were wasteful
 Charges of socialism
 At first, the U.S. Supreme Court struck
down some of FDR’s New Deal programs
 FDR responds to this threat to his New
Deal with the court- packing scheme