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Initial Prosperity • Under President Harding, the US economy was relatively strong. However, Harding died in 1923 and his VP, Calvin Coolidge took over. • Coolidge was elected to a full term the following year. He supported big business and believed in laissez-faire economics (the idea that gov’t should not regulate business or try to manipulate the market, but let the market take its natural course).
Initial Prosperity • New technology helped produce a booming economy in the 1920s. • Mechanization meant that products could be produced in far greater #’s and more efficiently. • This also meant that more people purchased cars, clothes, appliances, and other goods. • Consumerism (the practice of buying and consuming products) became normal and meant that people were spending more money than they saved.
Automobile Henry Ford’s assembly line = affordable cars 1920 – 8 million sold, 1930 – 23 million sold - auto accidents also increase, increased mobility encourages more hotels/motels, restaurants, growth of suburbs
Buy! Buy! Buy! Economy installment buying – paying for an item over time in small payments U.S. unemployment at 3% U.S. wages up 40% Booming Stock Market - stock values up 60% - Dow Jones Industrial Average (avg price of biggest stocks) up 40% GNP grows 30%
The Harlem Renaissance 1914-1930 African-American Migration North - population in Harlem increased from 14,000 to 200,000 Jazz Musicians Duke Ellington, Louis Armstrong, Writers like Langston Hughes help to encourage African-American pride
Herbert Hoover • Republican Herbert Hoover was elected president in the Election of 1928. • Hoover (like Coolidge) opposed too much gov’t interference in business.
Signs of Economic Trouble Rising Debt 1. Installment buying interest payments 2. Speculation in Stock Market “If a man saves $15 a week and invests in good stocks, at the end of 20 years he will have at least $80,000. He will be rich. And because income can do that, I am firm in my belief that anyone not only can be rich, but ought to be rich.” ~ John J. Raskob, leader of General Motors 1928 “get rich quick” mentality taking risks became popular buying on margin – borrowing $$ to buy stocks
Wealth Distribution 1. upper class = income up 60% 2. middle class = income up 8% 3. overall savings declining Credit was being maxed out, purchasing power down + negative savings rate Overproduction 1. warehouses were filled w/products Farming Problems 1. during WWI farmers bought new machinery 2. post war slump meant farmers couldn’t pay back bank loans 3. 6,000 rural banks closed
Overproduction & Underconsumption • Unfortunately, the good times did not last forever. • As manufacturers continued to produce goods at a faster rate than ever before, they turned out products faster than people could buy them. • When the market has more of a product than what consumers want it is called overproduction. • Consumers’ reluctance to buy all that has been produced is called underconsumption. • Both overproduction and underconsumption led to falling prices, which led to more problems.
Overproduction & Underconsumption • One group that dealt with this fact the most were the farmers. • Many bills created by Congress to help farmers were vetoed by Coolidge (remember, he did not think gov’t should interfere in the economy). • As a result, the agricultural industry was unable to recover and many farms went into foreclosure.
Overproduction & Underconsumption • Eventually, overproduction had effects on the environment as well. • Midwestern/Great Plains farmers unknowingly stripped much of the land and left it damaged by poor farming techniques. • This damage combined with massive droughts left the land very dry, exposed by a lack of crops, and easily swept away by winds.
The Human Impact of the Great Depression • Millions of people found themselves jobless, homeless, &penniless. • Hungry people lined up at churches & soup kitchens. • Many slept on park benches or in makeshift shelters (“Hoovervilles”)
Conditions • Thousands of men sneaked onto empty railroad cars and rode from town to town looking for work. • Psychological impact • Suicide rates soared during the 1930s.
The Human toll of the Great Depression • Dust Bowl (caused by severe draught) • Impact on commercial farming • Exodusters or “Okies”– uprooted farmers and families from the South and Midwest who moved to California. (800,000)
The Impact of the Great Depression: Culture • The Golden Age of Radio and Film • Programming • 1920s movies & radio – undermines establishment (gangsters) • 1930s movies & radio – good guys win; effort to show struggles of common people; return to traditional values
The Hoover Depression Program • No individual aid from government. • Wants private sector to solve problem. • Near the end of his administration he does begin limited public works programs (Hoover Dam) and lends money to states and financial institutions and agricultural coops. • Cooperation with private sector rather than direct government intervention.
Questions of Credibility Hoover eventually saw the limitations of his ideals and pushed for some direct relief, but his optimistic claims about the economy undermined his credibility with voters. Early on, when millions lost their jobs, he said the nation’s basic economic foundation was sound. Just a few months after the crash he announced, “I am convinced we have passed the worst,” and he spoke glowingly about the relief efforts. Millions of Americans did not share Hoover’s viewpoint. Questions of Compassion Many Americans came to question Hoover’s compassion. As economic conditions grew worse, his unwillingness to consider giving direct relief to the people became hard for most Americans to understand. When Hoover finally broke his stated beliefs and pushed for programs like the Reconstruction Finance Corporation, people wondered why he was willing to give billions of dollars to banks and businesses but not to individuals. The Nation Responds to Hoover
The Bonus Army • WWI veterans marched on Washington– wanted 1945 bonus (pension) early – Congress grants half now, half later. • “Bonus Army” cleared out by U.S. army Bonus Army Camp Library of Congress
Hoover’s opponent in the election was Democrat Franklin D. Roosevelt. • Harvard graduate • New York State senator • Assistant Secretary of the Navy • 1920 Nominee for Vice President • Polio survivor • Governor of New York
The Election of 1932 1932 election—Franklin D. Roosevelt (Dem.) beats Hoover (FDR uses radio during campaign)
Restoring Hope • His upbeat personality communicated joy and hope- as did his campaign song, “Happy Days Are Here Again.” • He was much more flexible and willing to experiment than Hoover. • “I pledge myself to a new deal for the American people.” - FDR President Roosevelt in Bismarck N.D. Library of Congress
Roosevelt Responds:New Deal • Two ways to view New Deal: radical or conservative; threat to capitalist system or preservation of system • Does not give in to communism or socialism. • New Deal is not cohesive, efficient, or well organized; no overall blueprint. • Two goals: Relief and reform
Together with his “Brain Trust,” Roosevelt moved quickly to carry out his promise of giving Americans a New Deal. • During his first 100 days in office, 15 bills were passed. • First New Deal • The legislation had three goals: relief, recovery, and reform.
The First New Deal(1933-1935) • First 100 days • Saving the Banks • Emergency Banking Act • 4-day Bank holiday – stabilizes system • Federal Deposit Insurance Commission • FDR’s “fireside chats” assured banks’ safety • “The only thing we have to fear is fear itself.” • Abandons the Gold standard to raise prices • Ends Prohibition • SEC (Securities and exchange commission) effort to regulate stock and bond market
The First New Deal(1933-1935) Relief for the Unemployed - Government relief (welfare) distributed through states
Key Programs • PWA – Public Works Administration; government agency that improved the nation’s infrastructure and created millions of jobs • TVA – Tennessee Valley Authority; government agency that built dams in the Tennessee River valley to control floods and generate electric power • NRA – National Recovery Administration; government agency that developed codes of fair competition in industry, including minimum wages and prices • CCC – Civilian Conservation Corps; government program that provided young men with jobs on environmental conservation projects
New Deal Critics • Charles Coughlin – Roman Catholic priest who accused FDR of not doing enough to end the depression. One of the first political leaders to use radio to reach a mass audience: during the 1930s, an estimated 30 million listeners tuned to his weekly broadcasts. He was forced off the air in 1939 because of his pro-fascist and anti-Semitic rhetoric. • Huey Long – was a Louisiana Senator and New Deal critic who began the “Share Our Wealth” movement in February 1934. Long was a left-wing populist and former governor of Louisiana. • Dr. Francis Townsend (1867–1960) was an American physician who devised the Townsend Plan, a popular proposal for state-funded old-age pensions. The plan promised to end the Great Depression by opening jobs for younger workers, while enabling seniors to retire and spend more money in the consumer economy.
The First New Deal(1933-1935) • Relief for the Unemployed • Work relief – Civilian Conservation Corps • Tennessee Valley Authority
Questions • What factors led to the collapse of the stock market in 1929 and the Great Depression that followed? • How effective was Herbert Hoover’s response to the depression – what ideas lay behind his response? • Discuss key examples of Franklin Roosevelt’s program for getting America back on its feet economically.
