The Great Depression

History M25 - Krister Swanson - Moorpark College

Econ. Cond. in the late 20’s

• rich get richer

• 80% have no savings

• lots of personal debt (consumerism & credit)

• farms fail, leads to…

• small individual banks fail (no branch banking - 9 million people lose their life savings)

Stock Market

• rampant speculation in late 1920’s (buying on margin)

• Feb. 1928 Dow=191

• Sept 1929 Dow=381

• Starts to fall on 10/24

• Collapses on 10/29

• 11/13/29 Dow=196

• Continues to fall until 1932

Here’s the essence of the Conditions that were in existence at the moment…

• People can’t buy stuff

• Doesn’t make sense to make stuff (GNP falls 25% by ‘32)

• Don’t need employees if you’re not making stuff

• less people can buy stuff

• Etc., etc., etc…

Problems of the Depression

• Homelessness

• Truancy

• Crime

• Alcoholism

• Domestic Violence/running out on family

• Self help- "Rugged Individualism"

• Experience from WWI – he is the ultimate executive/engineer

• hands off Republican tradition

• 1930- Hawley Smoot Tariff (agricultural) makes things worse globally

• Balance budget, tight money, raise taxes

• Reconstruction Finance Corporation best effort to fix situation

The New Deal

• FDR’s Plan

• very progressive (start of welfare state?)

• "All we have to fear is fear itself"

• relief, recovery & reform

• fireside chats

"First Hundred Days"

• immediate action-FDR drives Congress

• Banking first: Pres. can regulate, FDIC, up gold reserve

• Pump Priming: CCC, FERA, CWA

• Relief: FCA, HOLC

Beyond the 1st 100…

• WPA: response to critics, public buildings & roads (9m jobs)

• NRA: min. wage, max hrs, blue eagle

• PWA: $4b on 34,000 projects

• AAA pays not to farm

• TVA: test fairness of rates, brings employment & power to poor in area, later spread to Rockies

• FHA- small loans to householders

And Beyond

• Social Security Act- benefits for elderly & disabled off a payroll tax (modeled from Europe)

• NRA gets toasted, NLRB protects labor, AFL-CIO Forms

• SC rejects parts of New Deal

• FDR tries to pack court (15 justices)

Outcomes of New Deal

• Gov’t responsibility for Agriculture, the aging, etc.

• gov’t regulation of financial institutions (banks, the stock market, etc.)

• Sets min. standards for life & labor

• gov’t participation in arts

• new levels of infrastructure (electricity, running water, etc.)

• regain control of our destiny

• Starts: struggling farms, inflated stocks & currencies

• Made worse: tariffs, hands off, Dust Bowl, increased taxes

• FDR & New Deal: big gov’t intervention (pub. works, arts, regulation, Soc Sec, etc.) court packing

• Gains for organized labor (Wagner Act, AFL & CIO)

• Resistance: Communism & Fascism, Long, Coughlin, etc.

1934-1936: Americans Look for Other Ways Out

• Socialism/Communism (USSR): workers control means of productionè equal wealth = social & political equality

• Fascism (Germany & Italy): strong gov’t control, all work for benefit of state, very anti-communist

Share the Wealth (1933-35)

• Coughlin: "radio priest", anti-banker(Jews), anti-communist, anti-New Deal pressure on Congress

• Long: Senator from Louisiana, every family gets $5,000 (from rich), fascist?

• Townsend: $200 a month for all over 60

• These critics push FDR toward 2^nd New Deal