Immediate Cause: Stock Market Crash of 1929
– Stock market lost $30 billion
– Beginning of the “Great Depression”
– Banks invested heavily in the market
– Collapse of market led to bank failures
– Many depositors panicked, leading to even more bank failures
– it was very risky because if the market crashed you would have to pay the banker back your loan
– Settlements of shacks inhabited by transients and unemployed
– Derisively named after President Hoover
– Many cities and towns had at least one
– Veterans camped near the Capitol to support the bill
– Bill failed in Congress
– Hoover’s removal of veterans made Hoover appear heartless
– Hoover (republican) was viewed as a “do-nothing president.” He believed that business should be self-regualting and he lacked political finesse
– Norman Thomas, the Socialist candidate, was viewed as a radical.
– Results: a landslide for Democrats and a mandate to use government as an agency for human welfare.
– the goal was to increase U.S. farmer protection against agricultural imports.
– Once other sectors caught wind of these changes, a large outcry to incrase tariffs in all sectors of the economy followed.
– The increase in this tariff added economic strain to countries during the Great Depression.
– Economists of the time signed a petition to urge President Hoover to not pass the act, but it was signed and passed anyway.
– 1930-1933: Nearly 10,000 banks closed
– Michigan governor ordered banking “moratorium” in state
– FDR changed wording to bank “holiday”
– Banks closed for four days for inspection
– Glass-Steagall Act created FDIC
(closed all banks; government then investigated banks and only those that were sound were allowed to reopen)
– Recovery: to get the economy back into high gear, “priming the pump”
– Reform: To regulate banks, to abolish child labor, and to conserve farm lands
– Overall objective: to save capitalism
(limited farm production to help raise prices; paid for by taxing food processors. Declared unconstitutional by the Supreme Court in 1936 [US vs. Butler]. 1938 – the AAA II created surplus controls, farm insurance, and soil conservation districts – paid farmers to not raise certain livestock or grow certain crops (tobacco, wheat, cotton, hogs, corn))
(provided jobs and relocation to young men (18-25) in rural settings under the direction of the U.S. Army to build parks, dams, plant trees and help with flood control under the direction of the US Army. They received about $30 about $22 went back to their families.)
(agency created to help bring electricity, irrigation and hydroelectric power to rural “pockets of poverty” that could not afford lines)
Federal Deposit Insurance Corporation Reform
(insured savings of bank depositors and monitored soundness of insured banking institutions)
– Created through Securities Act of 1933 and Securities Exchange Act of 1934
– Laws required truth in sales of securities and fair treatment of investors
– SEC’s purpose to provide market stability and protect investors
(regulated stock and bond trading; regulated exchanges where stocks and bonds are sold, and legislated requirements for disclosure of fair stock information)
(gave money to states to provide for unemployed, aged, dependent, and handicapped. Financed by FICA taxes paid by employee, matched by employer and Federal Government. It was a unemployment system, disability insurance, old age pension and child welfare benefit legislation.)
– Introduced legislation for revamping the judiciary
– Law would allow him to appoint one new judge for every Supreme Court member over age 70½
– Would increase Supreme Court to a maximum of 15 members
– Plan soundly defeated; FDR lost political support
– Court-packing battle ended as a draw
– Brought more women into government, and gave them more jobs and positions
– increased women’s visibility in national politics
– women in the work force rose
– The government attempted to stop women from gaining jobs: Economy Act of 1932
– New deal Programs didn’t exclude women but it left them incredibly uncovered and insured
– Indian New Deal: replaced boarding schools, established to enlighten Indians, with reservation schools
– increased spending on health and medical care
– Let the Indians govern themselves, as long as they abode by the state laws and constitution
– didn’t really listen to the Native Americans’ interests
– their labor demand decreased significantly, causing some of them to return to Mexico
– Others were forced out of the country
– Those that stayed worked in horrible condition
– The Wagner/Social Security Act didn’t apply to agricultural workers
– New Deal left them uncovered, many tried to be White/Mexican to gain more rights
– Black were given high government positions
– Brought attention to injustices: segregation, disenfranchisement
– Labor Standards Act excluded agricultural and domestic workers which left 60% of black men and 85% of black women uncovered
– this caused many to abandon their republican beliefs and start siding with democrats
– They believed that governments should not interfere with the economy, or use tax payers money to help the poor and unemployed.
– They said the New Deal only turned the unemployed into millions of government employees.
– They opposed Roosevelt’s interference, increased taxation to pay and attempts to improve worker’s rights.
– Business felt he was giving too much power to Trade Unions.
– Similar to Republican beliefs, many believed that the Federal government should not get involved in affairs of States.
– It was seen as intrusion by the Federal government to tell State governments how to deal with the Depression.
– The nine judges ruled that the NRA (1935) and the AAA (1936) were illegal as they interfered with individual States.
– The nine judges were mostly Republican.
Rooselvelt tried to add six new judges (making 15) to approve his laws but public opinion was against him.
Some felt Roosevelt wasn’t doing enough.
Francis E. Townsend, Father Coughlin, Senator Huey Long
Similar to the Social Security Act
Dr. Frances Townsend opposed the New Deal as it didn’t help enough.
He had a plan for the federal government to pay $200 per month to unemployed people over 60. The program would be financed by a 2% national sales tax and each pensioner would be required to spend the money in 30 days. This would stimulate the economy.
A controversial priest who had a radio show called the “Golden Hour of the Little Flower”.
He claimed there was an international bankers conspiracy and Jews were responsible. He advocated nationalization of banking and currency and national resources and demanded a “living wage.”
Senator Huey Long started his Share Our Wealth campaign (tax the rich to give every family $5,000 income. The deal was financed by taking money from people that made over $5 million per year.)
– Roosevelt introduced the Second New Deal.
– Wagner Act gave Trade Union rights.
– Social Security Act set up welfare system.
– Workers Progress Administration gave government $ for extensive improvement schemes.