Transcript 1930s

The Great Depression
1929-1941
Stock Market Crash (1929)
• In the days prior to the crash there were some
warning signs – but most people ignored them
and continued speculating
• Investors started to dump their investments and
look for something more secure
• On October 29, 1929 “Black Tuesday” people
sold over 16 million shares in an attempt to
salvage some money
• Stockbrokers sold stock they held for buyers who
could not meet their margin calls
• President Hoover tried to calm the people by
saying everything was fine
• In a few months stockholders had lost over $40
billion
• By 1930 over 4 million were out of work; banks
collapsed; people lost their savings; farms were
foreclosed
• The crisis seemed to feed on itself as more and
more people lost their jobs
• Most people were saved from starvation by soup
kitchens
Causes of the Crash and Depression
• 1. The country had been producing more than it
could sell
• 2. Profits had gone to a small, wealthy group and
not to the workers who would have spent the
money and probably prevented the crisis
• 3. Credit was too easy to obtain and for too little
security
• 4. The Hawley-Smoot Tariff of 1930
• 5. In 1930 a terrible drought ruined many
farmers
• By 1933 over 13 million were out of work, others
worked for reduced wages and/or shorter hours
• People created shelters called “Hoovervilles”
• People made shelters from cardboard and used
newspapers “Hoover blankets” to keep
themselves warm
• Many just abandoned everything, became hobos
and traveled the country by “riding the rails”
• Treasury Secretary Mellon and Hoover both
believed the economy would cure itself
• Both asked business owners to keep factories
open
• Gradually Hoover realized more needed to be
done – he rushed through government contracts
• Hoover asked the Federal reserve to make credit
more available, while Congress passed a small
tax cut
• The Hawley-Smoot Tariff (1930) raised duties to
an all-time high to protect American
manufacturers – but other nations retaliated and
it ultimately hurt the economy
• Economist asked the president to remove the
tariff, but it was an election year so he refused
• In 1931 the failure of Austria’s largest bank put
even greater pressure on European economies
and even less likelihood for the payment of war
debts
• In 1932 Congress established the Reconstruction
Finance Corporation to allow loans to banks,
mortgage associations, railroads, and insurance
companies
• In the first six months they issued $1.2 billion in
loans
Bonus Army March (1932)
• In some areas farmers took the law into their
own hands and formed the Farmers’ Holiday
Association calling on farmers to strike and block
delivery of farm products
• There was even some talk of revolution
• In the Spring of 1932 over 15,000 veterans
formed the Bonus Expeditionary Force and
marched on Washington demanding payment of
a war bonus approved in 1924
• The House passed the bill, but when the Senate
refused most marchers went home
• Those that stayed camped near the Capitol
• Congress offered to pay their fare home if they
left – some did
• In a scuffle in July a policeman opened fire and
killed two veterans
• Hoover ordered General MacArthur aided by
Dwight D. Eisenhower and George Patton to
disperse the crowd
• The soldiers forced the veterans to leave, but
injured many and killed one (an eleven year-old
boy)
• The administration claimed the Bonus Army was
full of Communists and troublemakers intent on
revolution
The Election of 1932
• Hoover had won the election in 1928 by
promising a “chicken in every pot”
• The Republicans re-nominated Hoover for 1932,
but he had little interest
• The Democrats nominated Franklin D. Roosevelt
(a distant cousin of Theodore)
• Roosevelt was well-educated and well-spoken, he
had also held many important positions in past
administrations, but had suffered from polio
which left him wearing leg braces
• During the campaign Roosevelt promised a New
Deal for America, but did not elaborate
• He blamed Hoover and the Republicans for the
Depression and gradually elaborated on his New
Deal – a balanced budget, regulation of utilities
companies, and a promise to repeal Prohibition
• Roosevelt won the election 472-59
• In the Winter of 1932-3 the situation continued to
get worse
• At the inauguration in March the people
expected action
• Roosevelt claimed “the only thing to fear is fear
itself”
• The first plan was to relieve the conditions of the
unemployed
• Second part was to stimulate industry
• Third part was pay farmers for reducing their
crops which would ultimately raise the price of
commodities
• Roosevelt called Congress to meet for a special
session and then closed the banks for a four day
holiday
• Immediately Congress passed the Emergency
Banking Relief Act which allowed sound banks to
reopen and provided managers for those in
trouble
Fireside Chats
• On March 12, Roosevelt talked to the nation in
the first of his “fireside chats”
• He told the people to keep their money in the
banks and reassured the nation that he was
working to solve the problem
• Congress passed the Economy Act which granted
the president power to cut federal salaries and
they passed the Beer-Wine Revenue Act which
amended the Volstead Act and permitted the sale
of low levels of alcohol
• The Twenty-First Amendment was passed in
December ended Prohibition
The Hundred Days
• From March 9 to June 16 was known as the
Hundred Days
• Congress received and enacted 15 major pieces of
legislation
• After solving the banking problems the
administration focused on helping the farmers
and homeowners
• Roosevelt created the Farm Credit
Administration to consolidate all farm credit
agencies and to offer refinancing at lower interest
rates
Financial Help (1932)
• In April the country abandoned the gold
standard
• The Federal Securities Act required full
disclosure of information about stocks and bonds
• The Home Owners’ Loan Act allowed
homeowners to refinance mortgages at lower
rates
• The Glass-Steagall Banking Act created the
Federal Deposit Insurance Corporation to
guarantee bank deposits up to $5,000. It also
increased the power of the Federal Reserve to
regulate credit
Relief for the People
• Congress created the Civilian Conservation
Corps (CCC) which was intended to create work
for the unemployed and unmarried men between
18 and 25. The program employed nearly 3
million young men
• The workers were paid about $30 a month and
spent their time building roads, campgrounds,
and planting trees
• The Federal Emergency Relief Administration
(FERA) sent money through state agencies in the
form of grants to create education programs as
well as direct cash payments to individuals
• The first federal attempt at work relief was
through the Civil Works Administration – the
CWA provided federal jobs for those who could
not find work. The CWA was dissolved in the
spring of 1934, but immediately afterwards the
number of unemployed skyrocketed
• Roosevelt advocated giving people jobs as
opposed to financial hand-outs
• In 1935 Roosevelt asked Congress for $4.8 billion
in the Emergency Relief Appropriation Act to
pay for the programs
• Congress created the Works Progress
Administration (WPA) to manage the programs
Relief for Farmers
• With the drop in the price of farm commodities
in the late 1920s, many farmers could not afford
to plant crops
• The Agricultural Adjustment Act of 1933
planned to pay farmers to destroy their crops in
an attempt to raise prices
• Eventually animals were slaughtered as well as
crops destroyed
• The decline in supply did increase the prices, but
the shortage was as much due to the “dust bowl”
which wiped out many farms on the Great Plains
between 1932 and 1935
• In 1936 the Supreme Court ruled in United States
v. Butler the AAA’s tax on food processors as
unconstitutional
• Congress responded by passing the Soil
Conservation and Domestic Allotment Act which
removed quotas, but still provided funds for
farmers who took land out of production
• In 1938 Congress passed the Second Agricultural
Adjustment Act
Industrial Relief
• The National Industrial Recovery Act (NIRA)
• The act had two parts: one dealt with economic
recovery, the second created the Public Works
Administration (PWA)
• The NIRA also created the controversial National
Recovery Administration (NRA) to help
businesses by setting wages and prices and to
create more jobs
• The symbol of the NRA was the “Blue Eagle” and
the words “We do our part” started to appear in
windows and on products
• Unions worried about the loss of their power and
about the ability of companies to fix prices
• In response the NRA changed to allow workers to
form unions
• Problems started when larger companies began
to dominate industries and eliminated
competition
• The legislation was terminated by the Supreme
Court in 1935 because it was deemed
unconstitutional in the Schechter Poultry
Corporation v. United States case
• Although the act was a failure it did establish the
forty-hour work week and ended child labor
The Tennessee Valley Authority
• One of the largest and most successful programs
was the creation of the Tennessee Valley
Authority (TVA)
• The Tennessee Valley was a very underdeveloped
and impoverished area
• The idea was to build a series of dams on the
Tennessee River. The result would be more
industry, better schools and libraries, and cheap
hydroelectric power
New Deal Critics
• Not everyone approved of the New Deal
legislation and attacks from all sides
• H. L. Mencken complained that Roosevelt was
creating a welfare state
• Father Charles Coughlin “the radio priest”
preached to millions every week via his radio
show. In initially he supported the New Deal and
blamed the Depression on wealthy bankers, but
by 1934 he had turned against Roosevelt – calling
the president a liar
• Dr. Francis Townsend suggested that all people
over 60 receive $200 a month, the money could be
raised through a sales tax. The plan was for the
older people to spend the money in the same
month and thereby generate far more purchasing
power
• Needless to say the plan attracted plenty of
followers
• The most vocal critic was Huey Long, once
governor and senator of Louisiana
• Long was nicknamed the modern-day Robin
Hood for his “share our wealth” plan
• Long proposed to make “every man a king” by
limiting the amount of money the wealthy could
possess
• The government would take control of all
incomes over $1 million and estates over $5
million. This money would then be distributed to
the less fortunate
• Long and Coughlin both appealed to the mass
through populist movements that feed on
dissatisfaction and disappointment
• In 1935 Long was assassinated and while the
movement continued it did not thrive without
Long
• The Communist party attacked the New Deal for
being too conservative
• While it communism never really attracted a
mass appeal it did became especially appealing to
Hollywood people
The Second New Deal
• With opposition from Congress and the Courts
Roosevelt launched his Second New Deal in
which he demanded legislation must be passed
• Congress passed the legislation, but some of it
proved very controversial
• The National Labor Relations Act (Wagner Act)
gave workers the right to negotiate through
unions of their choice. It also prevented
employers from interfering with union activities
• The Social Security Act (1935) included pensions
for retired workers
• The act also created a federal-state
unemployment insurance program
• These programs initiated the belief that the
federal government is responsible for the welfare
of those people who can not be employed
• A major problem was the Social Security payroll
tax was regressive – a fixed fee was paid by all,
regardless of earnings. The tax also took money
out of circulation
The Election of 1936
• By 1936 the New Deal and its supporters held the
advantage
• The Republicans had trouble finding anyone who
even wanted to run for president. They ended up
with Alfred Landon of Kansas
• Landon was a moderate and even approved of
some of the New Deal legislation
• Roosevelt won in a landslide (523-8)
The Court-Packing Plan
• After winning the election, Roosevelt believed he
had a mandate for his New Deal
• However many of his plans had been thwarted by
the Supreme Court – none of whom had been
appointed by Roosevelt, but six were older than
70
• Roosevelt could not wait for time to change the
Court
• Roosevelt asked Congress to allow him to appoint
an extra Justice for each one who was over 70
who would not retire. (But never more than 15)
• Roosevelt claimed the Court needed new blood
and help with extra cases
• Congress, and the nation immediately rebuked
the president for trying to “pack” the Supreme
Court
• After the court-packing scheme the Court
became more sympathetic to New Deal legislation
• Ironically, before he left office Roosevelt was able
to appoint nine Justices
• Attempts to pack the court seriously backfired on
the president and cost him a great deal of support
The End of the New Deal
• In 1937 the short-term benefits of the New deal
were disappearing as the country faced another
severe economic downturn
• Early indications had seemed to promise
recovery as unemployment declined and
industrial output increased, but so did the deficit
• To help stop the deficit Roosevelt cut back on
federal spending, which precipitated a new
recession
• Nearly 4 million workers lost their jobs – causing
heated debate in the administration about how to
cure the problem
• The debate was over either limiting regulation on
businesses and cutting spending or increase
government control through regulation
• Eventually Roosevelt decided to use consumer
spending to end the Depression
• His ideas came from the book The General
Theory of Employment, Interest, and Money
(1936) written by British economist John
Maynard Keynes
• The main idea was that government should spend
its way out of a depression regardless of trying to
maintain a balanced budget
• Roosevelt increased spending but recovery was
still slow
• The public turned against Roosevelt and the
Democrats
• Roosevelt made matters worse when he promised
to rid the party of those who opposed the New
Deal – the Republicans made huge gains in the
1938, midterm election
• By the end of 1939 the New Deal was practically
dead as people demanded a more conservative
approach
• However, events in Europe were about to shape
the next period of American history
Foreign Policy
• During the 1930s the nations of western Europe
the United States were too busy with their own
problems to interfere with the political events in
Germany or China. The Americans adopted a
policy of increasing isolationism
• In 1931 the Japanese occupied Manchuria and
made it a puppet state
• The occupation violated the Nine-Power Treaty
and the Kellogg-Briand Pact. When China asked
the League of Nations for help they received
nothing
• In 1932 Secretary of State Henry Stimson issued
the Stimson Doctrine: the United States refused
to recognize any treaty, or agreement that
violated American treaties or the Open Door
policy with China – the doctrine had no effect on
the Japanese
• 1933 Japan withdrew from the League of Nations
• Soviet Union - In 1933, forced by the need to
increase trade, America recognized the Soviet
Union. In return the USSR promised not to
interfere in American affairs
• In November 1933 the United States formally
recognized the Soviet Union and renewed
diplomatic relations
• In 1934 the Platt Amendment was repealed. The
navy kept a base at Guantanamo Bay
• Buenos Aires Conference (1936) - American
states promised to consult each other if
threatened or remain neutral if aggression was
between any two of them
• The Neutrality Act of 1935, signed by Roosevelt it
promised to keep America out of any wars and it
prohibited the sale of weapons and ammunition
to all warring nations
• Weeks after the treaty was signed Italy invaded
Ethiopia
• Mussolini did not need to buy arms but he did
need oil, which was not part of the Neutrality Act
• In 1936 Adolf Hitler ordered German troops into
the Rhineland in violation of the Versailles
Treaty
• Also in 1936 General Franco led an uprising in
Spain
• In 1937 Congress passed another Neutrality Act –
prohibited Americans from traveling on ships of
nations at war, prohibited the sale of arms and
loans, and prohibited the arming of American
merchant ships trading with warring nations
• By 1939, with help from Hitler and Mussolini,
Franco had established a fascist dictatorship in
Spain
• In 1937 Japan and China embarked on a fullscale war.
• In December 1937 Japanese planes attacked and
sank the American gunboat Panay which had
been anchored in the Yangtze River, China.
They also attacked 3 American oil tankers
• The Japanese government apologized and paid
reparations
• Declaration of Lima (1938) - 38 American nations
would resist threats to their peace
• 1938 Hitler forced the Anschluss (union) with
Austria. Later the same year he invaded the
Sudeten region of Czechoslovakia
• Still support for isolationism was strong
• Roosevelt became openly supportive of European
nations fighting fascism and asked to be able to
sell material to Britain and France on a cashand-carry basis. His request was refused
• When Germany invaded Poland on September 1,
1939, Roosevelt called a special session of
Congress and asked to amend the Neutrality Act
Aid to Britain
• The Neutrality Act of 1939 allowed Britain and
France to send their own planes to the United
States to pick up supplies that had been
purchased with cash
• By 1940 only Britain remained free from German
control and the while Winston Churchill
promised to never surrender they did need
supplies
• Roosevelt order an increase in military
production
Undeclared War
• In 1940 Roosevelt created the National Defense
Research Committee to coordinate the war effort
and examine the possibility of developing atomic
weapons
• Britain negotiated a secret deal with the United
States in which they would receive 50 “old”
destroyers in return for a 99 year lease on bases
in various locations
• Congress also authorized the first peacetime
conscription which required all men between 21
and 35 to register for service
The Election of 1940
• The Republican choice was Wendell Wilkie, a
former Democrat, who supported aiding the
Allies
• Roosevelt probably would not have wanted a
third term but when war broke out he felt he had
no other choice. He kept silent about his
intentions to join the fight
• Roosevelt won a third term (449-82), but it was
the closest margin of all his victories
Lend-Lease
• Britain informed the United States that they were
running out of money, but they still needed the
supplies
• The Johnson Act of 1934 prohibited loans to
belligerent nations – Roosevelt needed another
way to keep Britain supplied but not violate any
laws
• In a fireside chat he told the American people of
the Lend-Lease Bill that had been introduced
into Congress
• America was to be the “Arsenal of Democracy”
• The Bill authorized the president to sell, transfer,
exchange, lend, or lease any equipment necessary
to continue the defense the United States
• The Bill was hotly contested for several months
before being passed
• By 1941 the Germans and their allies had taken
invaded Greece, Yugoslavia, and Egypt
• Hitler now seemed destined to gain the whole
Middle East region
• In the summer of 1941 the Germans suddenly
invaded Russia, in violation of their nonaggression pact with the Soviets
Atlantic Charter (1941)
• In August 1941 Churchill and Roosevelt met at
Newfoundland to issue the Atlantic Charter:
It called for self-determination for all people
equal access to raw materials
freedom of the seas
economic cooperation
• By September 15 nations endorsed the Charter
• On September 4, the first attack on an American
ship took place. The destroyer Greer was
attacked by a German submarine – Roosevelt
ordered American ships to shoot any German or
Italian ships
Pearl Harbor (1941)
• In September 1940 Germany, Italy, and Japan
signed the Tripartite Pact – each nation promised
to declare war on any other nation that declared
war on any of the three
• The Germans wanted the Japanese to attack
Russia from Manchuria, but in 1941 the
Japanese signed a non-aggression pact with the
Soviet Union
• The Japanese were more interested in the natural
resources of the Pacific – especially oil, rubber,
and iron
• In July 1941 the Japanese declared a protectorate
over all of French Indochina
• Roosevelt:
A) froze Japanese assets
b) restricted oil exports to Japan
c) joined the army of the Philippines with the
United States army under the command of
General MacArthur
• The Japanese, desperate for oil, formulated a
plan to capture Dutch and British colonies in the
Pacific
• The Japanese underestimated the determination
of the United States, a move that eventually cost
them the war
• The Japanese planned a surprise attack on the
American base at Pearl Harbor – the purpose
was to sink the aircraft carriers
• Even while both nations negotiated the Japanese
prepared for war
• On the morning of December 7, 1941 the
Americans decoded a Japanese message ordering
the diplomats to break off negotiations at exactly
1 p.m. Eastern time (7:30 a.m. Honolulu time).
The message was not received in Hawaii in time
• Japanese planes attacked Pearl Harbor for
almost two hours with little resistance
• Over 2,400 servicemen and women were killed
• Fortunately the American carriers were all at sea
and so they remained in tact
• Now there was no issue of neutrality
• The next day Roosevelt asked Congress for a war
resolution against the Japanese
• December 7, he said would be “a date which will
in infamy”
• On December 11, Germany and Italy both
declared war against the United States