BLACK THURSDAY

1. BLACK THURSDAY • Beginning in 1928, consumer spending declined and new construction slowed down • Manufacturers began to reduce production and lay off workers • By beginning of 1929, the U.S. was in the middle of an economic contraction • Hoover knew the economy was in trouble but he didn’t say anything • Then the stock market, which had been declining for the previous few weeks, crashed • October 24, 1929 (Black Thursday) • $9 billion of investments wiped out in one day • Market would continue to drop for the next 2 ½ years, wiping out $70 billion more of investments

2. UNEMPLOYMENT SKYROCKETS • Severe economic slump followed the crash • Unemployment jumped from 500,000 to 4 million by 1930 • Increased to 15 million by spring of 1933 (33% of entire workforce) • Millions more were reduced to part-time work

3. BIG TROUBLE (1) More than a million unemployed people took to wandering around the country looking for work, hitching rides or hopping freight trains Breadlines and soup kitchens sprang up in every large city

4. BIG TROUBLE (2) Hundreds of thousands of farmers declared bankruptcy, causing hundreds of rural banks to fail. The failure of rural banks pulled down urban ones. By 1931, 5000 banks had failed, wiping out over 9 million savings accounts People were forced to invent their own housing. On the outskirts of every large city, shacks made of loose boards, packing crates, tin sheets, and cardboard sprung up on vacant land. These shanty-towns were nicknamed “Hoovervilles”

5. UNEMPLOYMENT • Worst in large cities, among unskilled blue collar workers, and among nonwhites • White collar workers fared slightly better • Unemployment rate for women was lower than that for men • But as male unemployment increased, discrimination against women grew • Many felt that married women who worked were taking jobs away from unemployed men • When layoffs occurred, married women were the first to be let go

6. MEXICAN-AMERICANS • Some employers and workers insisted that whites be given preference in employment • Mexican-Americans hardest hit by this attitude • Mexican-Americans had made up the majority of the agricultural workforce in California during the 1920s • But many growers laid them off in the 1930s and replaced them with ruined Anglo farmers from Oklahoma, Texas, and Nebraska who had flooded into California • Several states barred Mexican-Americans from public works projects and gave them one way tickets to Mexico when they applied for aid

7. AFRICAN-AMERICANS • Black workers were almost always laid off before white workers • At the same time, unemployed whites began to seek and get low status jobs that blacks had once monopolized • Sometimes drastic measures were used to force black workers from their jobs so that whites could get them

8. SCOTTSBORO BOYS • Nine black young men were falsely accused of raping two white women on a freight train near Scottsboro, Alabama • 1931 • 8 defendants sentenced to death after unfair trial • Their case was first taken up by the Communist Party and then by the NAACP and became an international scandal • Death sentences were eventually over-turned but 5 defendants still served long prison terms for a crime that never happened

9. Some places were turned into deserts—crops, livestock, and a whole way of life were destroyed Many victims left their homes and farms forever and move elsewhere—especially California—in search of new opportunities. Known variously as “Okies” or “Arkies,” their strugglewas immortalized in John Steinbeck’s The Grapes of Wrath Dust storms began in 1932 and continued to the end of the decade. Storms sometimes lasted several days, often accompanied by thunder, lightning, and powerful winds Worst hit area was the so-called Dust Bowl: parts of Kansas, Oklahoma, Colorado, New Mexico, and the Texas Panhandle.

10. HOOVER’S RESPONSE • Hoover was convinced that a collapse in public confidence had caused the slump and tried to be optimistic in order to restore confidence • But what was needed was a large public works program that would put people to work and put money in hands of consumers • Hoover believed that aid should come from private charities and local government • Did not see that both were overwhelmed by the the crisis • Only federal government had resources to deal with the disaster • Hoover refused to commit those resources

11. RENT PARTIES • Given lack of initiative by government, people took matters in their own hands • Originally invented by African-Americans on the South side of Chicago, people began to organize “rent parties” • Where neighbors would raise money to prevent a friend from being evicted

12. BONUS MARCHERS • Thousands of WWI vets marched on Washington to demand cash bonus they had been promised for fighting in the war • Called themselves the Bonus Expeditionary Force • June 1932 • Hoover refused to meet with them and ordered Douglas McArthur to peacefully disperse marchers from the camp they had set up • He exceeded his orders and attacked their camp, injuring over 100 vets and killing two babies

13. THINGS GET UGLY • Desperate farmers in Midwest used violence to prevent foreclosures, dumped milk and slaughtered livestock rather than sell them at prices below production costs • Hungry and desperate men looted stores and robbed delivery trucks • Ford workers strike to demand jobs for laid off workers • Police attacked strikers with machine guns, killing 4 and injuring over 60 • March 1932

14. ON THE BRINK • Dramatic increase in membership in Communist Party • Angry people denounced capitalism as the cause of Depression and as a cruel and inhuman system • It is possible that despair might have let to the establishment of Communist or, more likely, a right-wing dictatorship if the country had had to endure four more year of Hoover • But the democratic system of government continued to work despite the severe strain it was under

15. FDR • Democrats nominated Franklin Delano Roosevelt for president in 1932 • Wealthy former governor of New York and Secretary of the Navy under Wilson • Polio victim • Charismatic, out-going and dynamic man who surrounded himself with astute political advisors • Republicans re-nominated Hoover

16. 1932 ELECTION FDR and the Democrats won easily Hoover warned that all FDR would do is make the country’s problems worse But no one was in the mood to listen to him anymore and he was greeted with catcalls and hostile demonstrations everywhere he went FDR was vague as to precisely what he would do to end the Depression but he did promise to increase aid for the unemployed and take other steps to ease the nation’s suffering

17. FDR’S INAUGURATION SPEECH • Made ending the Depression his top priority • Proposed a program of federal public works programs, measures to support agricultural prices, an end to home and farm foreclosures, and closer regulation of banks and the stock market • Gave Americans hope • Told them they “had nothing to fear but fear itself” • Gave them the feeling that they had a strong leader who cared about them and who would help them

18. BRAINS TRUST • FDR only had a vague idea about how he was going to do what he promised • But he did recruit a group of very talented advisors who did quickly supply him with the programs and innovations that he needed to get the U.S. back on its feet • The “Brains Trust”

19. THE 100 DAYS • Launched the “100 Days” • A whirlwind assault on defeatism and decline • Often marked by confusion and contradiction and it did not end the Depression • But it did stop the country from declining further and restored a sense of forward motion to the American people • Main purpose was to get the economy rolling again by increasing the rate of private investment and consumer spending • Only way to do this was for the government to spend large sums of money to encourage these activities

20. AGRICULTURAL ADJUSTMENT ACT • Main goal was to raise farm prices by creating artificial scarcity • Paid cash bonus to farmers who agreed to cut their production of seven basic commodities • Based on assumption that prices rise when supply of a commodity drops • Hoped this artificially induced reduction of farm output would raise crop and livestock prices and improve farm incomes • Some problems with this program but it did eventually help raise farm income • Probably saved the small farmer from complete oblivion

21. MORE PROGRAMS • Reconstruction Finance Corporation • Loaned money to needy businesses at low interest rates and extended repayment periods to keep them afloat • Home Owners Loan Corporation • Gave millions to Savings and Loan institutions so that they could refinance mortgages at lower rates of interest

22. STILL MORE PROGRAMS • Works Progress Administration • Created public works jobs for the unemployed • Put them to work building new schools, city halls, sewage treatment plants, hospitals, libraries, etc • Civilian Conservations Corps • Employed 2 ½ million unemployed young men • Worked in conservation and beautification projects such as planting trees, cleaning beaches, building forest ranger stations, restoring historic landmarks, etc.

23. SOME PROGRESS • Programs did push GNP upward for the first time since 1928 and cut unemployment • But it did not end Depression • FDR introduced reforms designed to correct abuses that had caused Depression • Securities and Exchange Commission • Regulated Stock Exchange in order to end worst abuses • Federal Deposit Insurance Corporation • Designed to make the banking system more stable by insuring savings deposits and thereby preventing panic withdrawals

24. GROWING CRITICSIM • In the beginning, Congress gave FDR almost everything he asked for without looking too closely at the cost or even the wisdom of his proposals • But by 1935, opposition began to grow against the New Deal from both ends of the political spectrum • Conservatives charged that his programs interfered too much in the private sector, cost too much money, and tended towards socialism • The Left argued that his programs had not gone far enough • Socialists, for example, wanted government to take over ownership of large industries and run them in such a way that workers, not absentee shareholders, would benefit the most

25. NEO-POPULISTS (1) • Huey Long • Senator from Louisiana • In order to build a base from which to challenge FDR for presidency in 1936, he came up with “Share Our Wealth” plan • Wanted government to confiscate all wealth above a certain level and then use it to give every American $5000 in cash and a guaranteed annual income of $2000

26. NEO-POPULISTS (2) • Father Charles Coughlin • Catholic priest from Detroit who had a radio show with 30 million listeners • Demanded that the government take over control of production, profits, and working conditions throughout the private sector • Francis E. Townsend • Retired doctor from California • Proposed that all people over the age of 60 be given government pensions of $200 a month if they agreed to retire • Would remove tens of thousands of older people from the job market and inject millions of dollars of fresh purchasing power into the economy

27. SECOND NEW DEAL • FDR ignored attacks by conservatives • But he did worry that the Neo-Populists might cost him public support in his 1936 re-election bid • Therefore launched “Second New Deal” in 1935 to undercut Neo-Populists and at the same time weaken to power of big business, equalize opportunity, and increase economic security

28. NATIONAL LABOR RELATIONS ACT • Also known as Wagner Act • Protected the right of unions to organize and gave new life to labor movement • Which had been declining since the 1920s because of the hostile attitude of previous Republican administrations • Union membership increased 23% after 1935 • Gave unions the numbers to achieve positive benefits for their members

29. SOCIAL SECURITY ACT OF 1935 • Established national system of unemployment insurance, financed by a payroll tax • Also set up a pension system for retired people over the age of 65 and their survivors • Provided federal funds to states to help them take care of the destitute, handicapped, and orphans • Although conservatives criticized it as “creeping socialism,” it did respond to a crying need in American society and allowed FDR to steal much of the thunder from Neo-Populists

30. 1936 ELECTION Not only did traditional Democrats (white southerners and urban Catholics) vote for him, but so did African-Americans, Mexican-Americans, intellectuals, and union members FDR easily won re-election over Alf Landon of Kansas Democrats also won huge majorities in the House of Representatives and Senate Created the so-called “Roosevelt Coalition” that would re-elect FDR for as long as he was alive

31. TROUBLE WITH THE NEW DEAL • In second inaugural address, FDR promised to extend the New Deal to meet the needs of the “1/3 of the nation that is still ill-housed, ill-clothed, ill-nourished” • And he did pass the Fair Labor Standards Act in 1938 to establish the minimum wage • But the New Deal seemed to run out of steam and was virtually dead by 1939 • Because the Depression refused to go completely away despite all the New Deal efforts • Damaged New Deal morale in the long run • Solidarity within the Democratic Party began to weaken and northern liberals and southern conservatives began to fight among themselves

32. PROBLEMS WITH SUPREME COURT • Supreme Court had a majority of very conservative justices appointed by the Republican administrations of the 1920s • Ruled in 1937 that several of FDR’s first New Deal programs were unconstitutional • FDR resented this and worried that, in the future, they would rule against his Second New Deal programs • Especially Social Security

33. “COURT-PACKING” • FDR asked in 1937 for the power to appoint six additional justices, thereby allowing him to overcome the current conservative majority • Conservatives criticized this as an attempt to undermine constitutional system of checks and balances • But even many liberals was it as a potentially dangerous attack on the judicial branch • When the court reversed its stand on several key New Deal-related cases, all support for FDR’s proposal disappeared

34. END OF THE NEW DEAL • Confidence in FDR gradually declined after 1937 • As Southern Democrats increasingly voted against him • In Congressional elections of 1938, Democrats retained control of Congress • But still lost 81 seats in the House and 8 in the Senate • Suggests that Americans had lost confidence in the man and party they had elected in 1932 to save them • FDR would be re-elected two more times and would continue to be admired by many • But for all real purposes, the New Deal was dead by 1938