The Great Depression 1929-1940. BACKGROUND. Economies historically pass through good and bad periods that regularly repeat themselves These periods of business activity are referred to as the “business cycle” The bad times are called recessions or depressions, depending on the severity
Economies historically pass through good and bad periods that regularly repeat themselves
These periods of business activity are referred to as the “business cycle”
The bad times are called recessions or depressions, depending on the severity
Depressions are characterized by business failures, high unemployment, and falling prices or inflation
The Great Depression was the worst depression in our nation’s history
What were the causes of the Great Depression?
Why was Herbert Hoover unable to cope with the Great Depression?
What were the effects of the Great Depression?
How did the New Deal offer a new approach to confronting the Great Depression?
prices began moving
market prices to try to
stop the rapid decline
A series of droughts, in the Great Plains, in the early 1930s dried up crops and topsoil, turning the soil to dust
Lasting for a decade, heavy winds carried topsoil across hundred of miles, burying homes and destroying harvests
Farmers were forced to abandon their farms
Many moved west to California (over 1M were forced from their land)
The Immigration Acts of the 1920s had restricted European immigrants, but not Mexican
Many Mexicans had come to the U.S. to escape the turmoil of the Mexican Revolution (pass medical & literacy tests & pay a small tax)
Many settled in “barrios” in California, Texas or other southwestern states
Worked long hours for low wages at hard labor
Many faced prejudices (segregated schools, etc.)
With less demand for labor during the Depression, white Americans sought jobs filled by Mexican-American immigrants
Hostility grew toward Mexican immigrants
It was more difficult to enter the U.S.
Hoover authorized the Mexican Repatriation Act to send Mexican-Americans back to Mexico (over half a million were forcibly returned, rather legal or not)
Remained true to laissez-faire capitalism, despite the spiraling economic problems
Rejected demands for the government to provide unemployment to the needy
Believed this would reduce the incentive to work
Believed private organizations should provide emergency relief, not the government
The Federal reserve made matters worse by reducing the money supply, not increasing it
He believed that when prices dropped low enough, people would begin buying again, but a lack of aggregate (total) demand prevented this from happening
Eventually cut taxes, increased federal spending on public projects, and directed a federal agency to buy surplus farm crops
Established the Reconstruction Finance Corporation to give emergency loans to banks and businesses
These policies were seen as too little, too late
His lack of leadership frustrated most Americans
Shanty towns of homeless families and the unemployed became known as “Hoovervilles” and sprang up on the outskirts of many cities
By the end of Hoover’s term, about 100,000 businesses failed and unemployment reached 13 million (25%)
Considered the Great Depression as a national emergency
Created the “Brain Trust” made up of talented people from leading universities to develop new and creative strategies to deal with the crisis
Addressed the nation by radio addresses known as “fireside chats” where he explained his policies in simple conversational terms
Presented himself as an optimist
His experiences in overcoming polio helped him meet the challenges of the Depression
Eleanor Roosevelt – became the eyes and ears of the president by traveling throughout the country, and later around the world. She was a political activist and spoke for women’s rights, the cause of peace, and the poor
Frances Perkins – first female member of the U.S. Cabinet (Secretary of Labor in 1933), serving for 12 years. She oversaw the Civil Conservation Corps and the Public Works Administration and helped pass the Fair Labor Standards Act, Nat’l. Labor Relations Act, and Social Security Act.
Roosevelt told the American people that the “only thing we have to fear is fear itself.”
Blamed the selfishness of bankers and financiers for the crisis
Called a special session of Congress to push through legislation what would have been difficult to pass in less critical times
Congress passed almost all of the important bills Roosevelt submitted in his First Hundred Days in office
Posed the greatest threat to the New Deal
Ruled that both the NIRA and AAA were unconstitutional
In Schechter Poultry v. U.S. (1937), the Supreme Court ruled that even during a national crisis, Congress can not give the President more powers than those granted in the Constitution
Fearing the court might declare other New Deal legislation unconstitutional, FDR proposed a plan to allow the President to add a new appointment to the Supreme Court for each justice over 70 ½ years old.
The plan, if adopted, would have given FDR the right to appoint 6 Justices, giving him control over the court.
It was viewed by many as an attempt to upset the traditional separation of powers
Despite his popularity, the public condemned this move and Congress rejected it
After this challenge to the court, the justices generally stopped overruling New Deal legislation
Power of federal government increased
Government had a positive responsibility to make sure the national economy ran smoothly and efficiently and made it possible to control citizens’ private actions
Taxes rose dramatically to fund new gov’t programs
States implemented their own versions of New Deal policies
Established a legacy of gov’t. agencies, regulations, and procedures that remain with us today