FDR and the Great Depression

1. FDR and the Great Depression

2. Causes of the Depression • False sense of prosperity on the part of Americans • Approximately 60% of the population lived in poverty (earning less than $2,000 per year) • Americans were buying on credit; • Resulted in a demand for goods which caused overproduction • Speculation in the stock market • People bought stocks on margin: (10% of value) • Same as borrowing money to pay for stocks

3. Causes cont. • Speculation led to falsely high stock prices • Stock market began to tumble in the months leading up to the October 1929 crash AND • Speculative investors couldn’t make their margin calls

4. October 29, 1929 • AKA “Black Tuesday” • Day when the U.S. stock market crashed • Marked as the start of the Great Depression in America • Over a two-day period, the market lost 24% of its value • Other important dates were: • Oct 24, 1929 (Black Thursday) • Oct 28, 1929 (Black Monday)

7. Bank Failures • Run on America’s banks began immediately following the stock market crash of 1929 • Hundreds of thousands of customers began to withdraw their deposits • Banks had no money to lend • Loans went bad as businesses and farmers collapsed • By 1933, 11,000 of the nation’s 25,000 banks had disappeared

9. Unemployment • 1929, unemployment was at 3% • 1930, unemployment had jumped to 9%. • 1931, unemployment reached almost 16%. • 1932, unemployment climbed to 24% • 1933, unemployment reached almost 25%. (11 million people without work) • 1934-1937, rate drops to 14%

13. Hoovervilles • Nickname for the shantytowns that spread across the United States • Homeless Americans improvised with scraps, abandoned cars, and packing crates

15. Dust Bowl 1930-1936 • Farmers over the decades had overplanted and poorly managed their crops • Severe droughts plagued the Great Plains creating the “dust bowl” conditions • Soil turned to dust causing large clouds • Farmers lost their farms and migrated from rural areas to cities • Further complicating the unemployment crisis

19. FDR and the New Deal • FDR elected in 1932 • Defeats Herbert Hoover • Only 4 term president • Dies near the end of his 4th term • Overcame the challenges of polio • “Fireside chats” over the radio were reassuring to the American people

22. “The only thing we have to fear, is fear itself”

23. Vice-Presidents of FDR John Nance Garner Henry Wallace Harry Truman

32. Three R’s • Relief, Recovery, Reform • Short-range goals were relief and immediate recovery • Long-range goals were permanent recovery and reform of current abuses • FDR was inaugurated on March 4, 1933 • March 6-10,FDR declared a national banking holiday as a prelude to opening the banks on a sounder basis

33. Cont. • Hundred Days Congress/Emergency Congress (March 9-June 16, 1933) • Pass a series of laws in order to deal with the national emergency • Some of the laws expressly delegated legislative authority to the president

34. FDR and the Banks • Emergency Banking Relief Act of 1933: • Gave FDR power to regulate banking transactions and foreign exchange and to reopen solvent banks • Glass-Steagall Banking Reform Act: • Created the Federal Deposit Insurance Corporation (FDIC) • Insured individual bank deposits up to $5,000, ending the epidemic of bank failures

35. FDR Job Programs • Civilian Conservation Corps (CCC): • Provided employment for about 3 million men in government camps • Work included reforestation, fire fighting, flood control, and swamp drainage • Works Progress Administration (WPA): • Construction of buildings, roads, etc • Criticized for paying people to do "useless" jobs such as painting murals

39. Cont. • Public Works Administration (PWA): • Intended for industrial recovery and unemployment relief • $4 billion on thousands of projects, including public buildings and highways

40. Tennessee Valley Authority (TVA) • Created by the Hundred Days Congress • New Dealers accused the electric-power industry of gouging the public with excessive rates • 2.5 million of America's most poverty-stricken people inhabited Muscle Shoals, Alabama • Constructing a dam on the Tennessee River in Muscle Shoals did two things: • Put thousands of people to work with a long-term project • Reformed the power monopoly

41. Effects of the TVA • Brought full employment to the area • Cheap electric power • Low-cost housing • Restoration of eroded soil • Improved navigation and flood control • Area was being turned into one of the most flourishing regions in the United States

43. National Industrial Recovery Act (NIRA) • Designed to assist industry, labor, and the unemployed • Industries, through "fair competition" codes, were forced to lower their work hours so that more people could be hired • Minimum wages were established • Workers were formally guaranteed the right to organize and bargain collectively through representatives of their choosing

44. Schechter Poultry Corp. v. United States/1935 • AKA “Sick chicken case” • Supreme Ct. ruled that NIRA was unconstitutional • Court found that the president lacked the power to write the code • All legislative power belonged in the legislative branch • Congress did not have authority to grant the president that exclusive legislative power

45. Agricultural Adjustment Act(AAA) • Purpose was to balance supply and demand for farm products • Prices would support decent purchasing power for farmers • The concept was known as parity • AAA controlled the supply of seven "basic crops" – corn, wheat, cotton, rice, peanuts, tobacco and milk • Farmers received payments for taking some of their land out of farming by not planting a crop

46. AAA Cont. • Supreme Ct. ruled the Act unconstitutional • Violated regulatory taxation provisions • Soil Conservation and Domestic Allotment Act of 1936 gave payments to farmers for planting soil conserving crops • Second Agricultural Adjustment Act of 1938 gave payments to farmers if they obeyed acreage restrictions for specific crops

47. Federal Securities Act • AKA “Truth in Securities Act” • Protected the public against fraud • Requiring promoters to give the investor sworn information regarding the soundness of their stocks and bonds • Securities and Exchange Commission (SEC) • Acts as the watchdog of the stock exchange for illegal activity

48. Labor Issues • National Labor Relations Act of 1935 (Wagner Act) • Enacted in response to Sup. Ct. ruling the NIRA unconstitutional • Created the National Labor Relations Board • Reasserted the rights of labor to engage in self-organization and to bargain collectively through representatives of its own choice

49. Labor cont. • Congress passes Fair Labor Standards Act (Wages and Hours Bill) 1938 • Industries involved in interstate commerce: • Required to set up minimum-wage (about .25 cents) and maximum-hour levels • Labor by children under the age of 16 was forbidden

50. John L. Lewis Founder of the United Mine Workers And Congress of Industrial Organization (CIO) Claimed about 4 million members by 1940