US History/Great Depression and New Deal

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The Stock Market Crash[edit]

Timeline of the Great Depression
Year Month Events
1929 October The stock market crashes, marking the end of six years of unparalleled prosperity for most sectors of the American economy. The "crash" began on October 24 (Black Thursday). By October 29, stock prices had plummeted and banks were calling in loans. An estimated $30 billion in stock values "disappeared" by mid-November.
November "Any lack of confidence in the economic future or the basic strength of business in the United States is foolish."—President Herbert Hoover
1930 March More than 3.2 million people are unemployed, up from 1.5 million before the "crash" of October, 1929. President Hoover remained optimistic however stating that "all the evidences indicate that the worst effects of the crash upon unemployment will have passed during the next sixty days."
November The street corners of New York City are crowded with apple-sellers. Nearly six thousand unemployed individuals worked at selling apples for five cents apiece,

The bill fell to defeat in the Senate, however, 62 to 18. The vets maintained their determination to stay camped out until they got their pay.

1931 January Texas congressman Wright Patman introduces legislation authorizing immediate payment of "bonus" funds to veterans of World War I. The "bonus bill" had been passed in 1924. It allotted bonuses, in the form of "adjusted service certificates," equaling $1 a day for each day of service in the U.S., and $1.25 for each day overseas. President Hoover was against payment of these funds, saying it would cost the Treasury $4 billion.
February "Food riots" begin to break out in parts of the U.S. In Minneapolis, several hundred men and women blew up a grocery market with some C4[citation needed] and made off with fruit, canned goods, bacon, and ham. One of the store's owners pulled out a gun to stop the looters, but was leapt upon and had his arm broken. The "riot" was brought under control by 100 policemen. Seven people were arrested.

Resentment of "foreign" workers increases along with unemployment rolls. In Los Angeles, California, Mexican Americans found themselves being accused of stealing jobs from "real" Americans. During the month, 6,024 of them were deported.

March Three thousand unemployed workers march on the Ford Motor Company's plant in River Rouge, Michigan. Dearborn police and Ford's company guards attack, killing four workers and injuring many more.
December New York's Bank of the United States collapses. At the time of the collapse, the bank had over $200 million in deposits, making it the largest single bank failure in the nation's history.
1932 January Congress establishes the Reconstruction Finance Corporation. The R.F.C. was allowed to lend $2 billion to banks, insurance companies, building and loan associations, agricultural credit organizations and railroads. Critics of the R.F.C. called it "the millionaires' dole."
April More than 750,000 New Yorkers are reported to be dependent upon city relief, with an additional 160,000 on a waiting list. Expenditures averaged about $8.20 per month for each person on relief.
May More than 300 World War I vets leave Portland, Oregon en route to Washington DC to urge Congress to pass the Bonus Bill. It took them eighteen days to reach Washington DC.
June Determined to collect their "bonus" pay for service, between 15,000 to 25,000 World War I veterans gather and begin setting up encampments near the White House and the Capitol in Washington, D.C. On June 15, the House passed Congressman Wright Patman's "bonus bill" by a vote of 209 to 176.

The bill fell to defeat in the Senate, however, 62 to 18. The vets maintained their determination to stay camped out until they got their pay.

July Hoover signs a $100,000 transportation bill to assist "bonus Army" demonstrators in getting home. Hoover set a July 24 deadline for the men to abandon their encampments. On July 28, when some "bonus Army" members resisted being moved from their camps. Violence erupted, leading to the deaths of two veterans. Hoover ordered Federal troops, under the command of General Douglas MacArthur, to assist DC police in clearing the veterans.
The Reconstruction Finance Corporation is authorized to lend needy states sums from the national Treasury. The money was to target relief and public works projects.
November Franklin Delano Roosevelt is elected President in a landslide over Herbert Hoover. Roosevelt received 22,800,000 popular votes to 15,750,000 for Hoover.
1933 March Before a crowd of 100,000 at the Capitol Plaza in Washington DC, Franklin Delano Roosevelt is inaugurated president. FDR tells the crowd, "The people of the United Slates have not failed. In their need they have registered a mandate that they want direct, vigorous action. They have asked for discipline and direction under leadership. They have made me the present instrument of their wishes. In the spirit of the gift I take it."

FDR announces a four-day bank holiday to begin on Monday. March 6. During that time, FDR promised, Congress would work on coming up with a plan to save the failing banking industry. By March 9, Congress passed the Emergency Banking Act of 1933. By month's end, three-quarters of the nation's closed banks were back in business.

On March 12, FDR delivers the first of what came to be known as his "fireside chats." In his initial "chat" he appealed to the nation to join him in "banishing fear."
April President Roosevelt. under the Emergency Banking Act, orders the nation off of the gold standard.
The Civilian Conservation Corps (CCC) is established. Designed as a relief and employment program for young men between the ages of 17 and 27, the CCC was envisioned by FDR as a kind of volunteer "army" that would work in national forests, parks, and federal land for nine-month stints. The first 250,000 young men were housed in 1,468 camps around the country- At its peak in 1935, the CCC would include 500,000 young men.
May The Federal Emergency Relief Administration is created by Congress. President Franklin Roosevelt appointed Harry L. Hopkins as its chief administrator. By the end of his first day on the job, Hopkins had Issued grants totaling more than $5 million.
The National Industrial Recovery Act is introduced into Congress. Under Title 1 of the act, the National Recovery Administration was designated to maintain some form of price and wage controls. Section 7(a) of the act guaranteed labor the right to organize and bargain collectively. As part of the act. The National Labor Board was set up to negotiate disputes between labor and management.
The Tennessee Valley Authority is created. A federally run hydroelectric power program, the TVA act was considered a huge experiment in social planning. The TVA also built dams, produced and sold fertilizer, reforested the Tennessee Valley area and developed recreational lands.

Opponents of the TVA called it "communistic to its core."

June Congress passes the Glass-Steagall Act, separating commercial from investment banking and setting up the Federal Deposit Insurance Corporation to guarantee bank deposits.
August With an eye toward organizing farmers into soil conservation districts, the federal government establishes the Soil Erosion Service. The creation of this service was made necessary by the years of drought and dust that plagued the Southwestern Panhandle states.
September In an effort to stabilize prices, the federal agricultural program orders the slaughter of more than 6 million pigs. Many citizens protested this action since most of the meat went to waste.
October The Civil Works Administration is established. Devised as a wide scale program that could employ up to 4 million people, the C.W.A was involved in the building of bridges, schools, hospitals, airports, parks and playgrounds- Additionally, C.W.A. funds went toward the repair and construction of highways and roads. Early in 1934, Congress authorized $950 million for the continued operation of the C.W.A.
1934 May A three-day dust storm blows an estimated 350 million tons of soil off of the terrain of the West and Southwest and deposits it as far east as New York and Boston. Some East Coast cities were forced to ignite street lamps during the day to see through the blowing dust.
November Father Charles E. Coughlin establishes the Union for Social Justice. Using the radio airwaves as his pulpit. Father Coughlin railed against "predatory capitalism." His criticism of the banking industry and disdain of communism soon dovetailed into a troubling gospel of anti-Semitism.
1935 April FDR signs legislation creating the Works Progress Administration. (Its name would be changed in 1939 to the Work Projects Administration). The program employed more than 8.5 million individuals in three thousand counties across the nation. These individuals, drawing a salary of only $41.57 a month, improved or created highways, roads, bridges, and airports. In addition, the WPA put thousands of artists — writers, painters, theater directors, and sculptors — to work on various projects. The WPA would remain in existence until 1943.
Business Week magazine announces that "Depression is a forgotten word in the automobile industry, which is forging ahead in production, retail sales, and expansion of productive capacity in a, manner reminiscent of the 'twenties.'"
June The National Youth Administration is set up to address the needs of young men and women (who were not allowed in the CCC). The NYA worked on two levels: a student work program and an out-of-school program. The student work program provided students with odd jobs that paid them enough to stay in school. The out-of-school program set young people up with various jobs ranging from house painting to cleaning local parks, and eventually came to include vocational training.
July FDR signs the Wagner National Labor Relations Act. The goal of the act was to validate union authority and supervise union elections.
August The Social Security Act of 1935 is signed into law by FDR. Among the most controversial stipulations of the act was that Social Security would be financed through a payroll tax. Historian Kenneth S. Davis called the signing of the act "one of the major turning points of American history. No longer could 'rugged individualism' convincingly insist that government, though obliged to provide a climate favorable for the growth of business profits, had no responsibility whatever for the welfare of the human beings who did the work from which the profit was reaped."

The US stock market crash occurred in October of 1929. The value of common stock and shares dropped by 40%, resulting in an unprecedented global depression.

At the beginning of 1929 Herbert Hoover had become president, but he himself had had little responsibility for the crash. The same formula that generated the profit of the 1920s triggered the depression. In the 1920s more middle-class people were buying stocks, traditionally a pastime for the rich. Investors bought shares on margin: instead of paying the whole amount, they only paid for a portion of the purchase, at the same time taking out a loan with their stockbrokers to pay for those shares. The investors hoped that by the time the shares were sold, they would make enough money to pay back the loan and interest, with some profit remaining for themselves. The banks financing the loans let investors use the stocks as collateral. As failing businesses stopped depositing money in banks, the expected credit for those loans no longer existed. Buying on margin led to an extremely unstable stock market. Investors' uncontrolled purchases on margin eventually led to a collapse of the stock market on October 24, 1929, also known as Black Thursday.

However, adding to the crash of '29 was the slowing economy. The desire for consumer durables (expensive items such as refrigerators, radios, and automobiles) went down as Americans could not pay for what they had. This was led by housing declines in 1928. The buying spree had been encouraged by short-term payment plans, a pattern begun by car companies. Instead of being paid for all at once, the item was paid for by installments from the purchaser's monthly paychecks. These plans allowed consumer debt services to absorb a greater part of that purchaser's income, resulting in corporate debt being diminished more quickly and effectively. Yet they did not allow for excess purchasing capacity -- lower production by the corporate producers -- which could have absorbed the surplus production more effectively. Now the "convenient payment plan" suddenly became inconvenient, and businesses repossessed partially paid-for items. The decline in the want for new durables in turn affected the companies and workers that produced these items. A downward spiral was set in motion.[1]

The general credit structure further weakened the economy. A panicking bank would call in loans and foreclose mortgages in a desperate attempt to stay afloat. Penniless farmers had had to finance the next year's crop by using their homes as collateral: now they lost them. Families lost not only their source of income but their life savings. Farm prices were plummeting, but farmers were already in deep debt, and crop prices were too low to allow them to pay off what they already owed. Banks failed as the contributing farmers defaulted on loans. Some of the nation's largest banks had failed to maintain adequate reserves and made unwise business decisions. The banking system was completely unprepared for a crash.

International influences also contributed to the Great Depression. Still paying off the debts of World War I, nations adopted the practice of Protectionism. This meant that foreign goods were subject to tariffs, or import duties, so that foreign products would cost more and local products would cost less. The reduced cost of local goods would then boost the local economy at the expense of foreign competitors. In reacting against this, and in response to its own isolationism, the United States had enacted extremely high tariffs. American businesses lost several foreign markets.

International credit structure was another cause of the crash. At the end of World War I, Germany and other European nations owed enormous sums of money to American banks. The countries were often unable to quickly repay these debts. The smaller American banks were crippled because farmers could not pay debts, while larger banks suffered because other nations could not pay debts. These international debts affected other nations.[2]

Overproduction, under-consumption, inability to collect debt, and the stock market crash all had a devastating affect on the economy. The Great Depression, the largest collapse of the economy in modern history, changed the lives of millions of Americans.

Depression[edit]

For many of the top forty percent of the nation, little changed. However, the farm failures and the closing of factories and businesses resulted in millions of jobs lost. Over eighty-five thousand businesses declared bankruptcy. The steep decline in purchase of manufactured goods resulted in more than 70,000 factories being closed by 1933. As car sales dropped from four and a half million in 1929 to one million in 1933, Ford laid off more than two thirds of their Detroit factory workers. By 1933, almost one fourth of industrial workers were unemployed, and average wages fell by one third. By 1932, unemployment had surged to twenty-five percent, while stock prices plummeted by over eighty percent.

Banks could not collect debt from bankrupt businesses and began to close, causing the loss of the savings of millions of Americans. Many Americans started pulling their savings from the banks for fear of losing it. Some started investing it in gold while others just simply kept it under their mattresses. Because many people were losing their money they formed crowds outside of banks to demand that the banks pay them their money that was rightfully theirs. These crowds outside of the banks were known as “Bank runs”.[3]

One result of the farm failure of the '20's was that farmers put more of their lands into farming, plowing deeper and using marginal land in an attempt to make a profit. These practices, combined with a Western drought beginning in 1930, resulted in The Dust Bowl. In large areas of the Southwest, wind storms would sweep the landscape, creating great clouds of dust known as "black blizzards." When a black blizzard arose, children had to wear dust masks as they walked to and from school. Sometimes parents refused to send them out, keeping them in their houses, and hanging wet sheets and rags over the windows in a futile attempt to keep out the dust. It was hard to walk, to eat, and even to breathe. Dust made people sick. It killed the crops The dust storms swept away the rich, black soil that plants could live in. The Dust Bowl combined with other economic factors to reduce farm revenue by fifty percent.

Many farmers went broke, moved to the cities, or were forced further West to find a livelihood. Some of these last had to become wandering farm workers, harvesting other people's crops for a tiny sum. This was when the term migrant labor came into being. “Migrant labor is a term applied in the United States to laborers who travel from place to place harvesting crops that must be picked as soon as they ripen.” Migrant labor is one of the most hazardous of all employments. Their housing and health conditions are the poorest of all occupational groups. Most migrant workers lived in dirty conditions next to irrigation ditches and did such miscellaneous jobs as bailing, picking, and cultivating and harvesting crops. [4] [5] [6]

People who had come to cities to find jobs, or had been evicted from city homes, had to find new places to live. Shanty towns began springing up in cities in 1930. These were often sardonically called Hoovervilles, after President Hoover. On city parks, trash heaps, and whatever free land existed, people would build houses out of anything they could find: lumber, cardboard, tar paper, glass, canvas, and more. There was very often no water, no bathrooms apart from outhouses, no heat, and no electricity. City police departments would regularly send police in to break up the Hoovervilles and arrest the occupants. The people living there, very often men, were poorly protected from the rain and the wind. Neglected by city health workers, they had no help when they fell ill. Many youths or men in Hoovervilles had left families behind, without their money or protection.

Hard times in the cities caused the resurgence of two reliefs of the depression of the 1880s, the soup kitchen and the bread line. At the end of the day, some bakeries would hand out the unsold loaves of bread to hungry people. Bread was starch and protein, something to stop a hungry belly. Some charitable organizations would hand out not only bread, but milk and other staples. In a day without government assistance for the unemployed, this was often the only food available to the jobless. A soup kitchen or a meal center was a place where people could come in to get a single meal. These places could hand out entire meals, but soup, hot liquid expanding any vegetables the kitchen had to create a savory meal, was the cheapest and easiest to make. For a great number of poor men, women and children, the meals they received from a soup kitchen would be their only meal that day. One soup kitchen in Chicago was sponsored by gangster Al Capone in an attempt to clean up his image.

Traditional "women's work," including nursing, was less affected by the Depression. Those businesses which were hiring were more willing to take on women, who had traditionally worked for lower wages, and especially to take on Black women. Yet these times also increased racism and other discrimination. Before the Depression women of all classes and races were barred from many jobs and were paid a lot less than men. Although the Depression was an extremely difficult time for White Americans, it was even worse for other races and especially for Blacks. In the south in 1930, one organization called the Black Shirts recruited about 40,000 people but made it known that no Blacks would be given a job. He started the slogan "No Jobs for Niggers Until Every White Man Has a Job!" Northern African-Americans suffered about as much as the southern ones.[7] Jobs that White workers had before considered “beneath them” began to seem more desirable. Black unemployment was at almost 50% by 1932. In the Southwest, there were claims that Hispanic workers were “stealing jobs” from Whites. The Labor Department deported 82,000 Mexicans between 1929 and 1935. Almost a half million more returned to Mexico, either voluntarily or after being tricked or threatened into believing they had no other choice. Many of these people had immigrated legally, but lacked the proper documentation to prove it. Officials also ignored that children born in the U.S. were citizens. There were also claims that women were stealing jobs from men. In a survey conducted in 1930 and 1931, 77% of schools refused to hire married women as teachers, and 63% fired female teachers who married while employed there.

Like other industries during the Depression, the movie business suffered. To counter the effects of the depression, individual theaters resorted to gimmicks: they would lower the price of a ticket to a quarter, give a cash prize to one lucky winner, and give away prizes such as dinner plates. These gimmicks were not the only reason why people kept going to the movies. They wanted to get away from the trouble in their lives for just a couple of hours. The local movie house was also a place where people could go simply to be part of a community. Movies had the reputation of being places where any child with the money could go unsupervised and spend a whole Saturday morning with his or her schoolmates.

The New Deal[edit]

Through all this, Republican President Herbert Hoover held to a platform of limited federal intervention. He had been the Secretary of Commerce under both Harding and Coolidge, and in this he had been holding to a time-honored administration strategy. His dictum, "The business of America is business," meant that he saw private-owned business as the mainspring of America, keeping it running. Governmental meddling would be ruinous for business, whether this interference came from regulation or support of workers. This meddling would cause a ruinous national debt. Hoover was not a doctrinaire "hands-off" official. When the Depression hit, Hoover put the Smoot-Harley tariff into effect, and advocated public works measures such as the project which would become the Hoover Dam. However, for a large number of the unemployed, the action he did was outweighed by what was seen as neglect. A group of unemployed veterans of World War I, who had still not received their bonuses, marched to Washington in the summer of 1932 asking for money and jobs. Hoover ordered the United States Army, led by General Douglas MacArthur, to evacuate them from their camp. Fires broke out. The resultant coverage in newspapers looked bad for Hoover. (In fact, the result swayed American public opinion so much that in 1936 Congress overruled Roosevelt's veto and gave them their bonuses.)

In contrast, Democratic candidate Franklin Delano Roosevelt supported direct relief payments for the unemployed, declaring that such governmental aid was a matter of social duty. He pledged a New Deal for the American People. After Roosevelt had been elected, a British economist named John Maynard Keynes sent him a copy of his book The Means to Prosperity. Keynes proposed that a national debt could produce prosperity. Public spending on relief in bad times would boost employment and increase morale. As people spent their money, the demand for durable goods would rise. Roosevelt liked this message, and exchanged a correspondence with Keynes.

People were desperate for a leader who would demonstrate some idea of what to do to begin to turn things around. Demonstrations of this desperation ranged from the Bonus Marches through grassroots actions by farmers facing foreclosure to sophisticated agitation by Nazi, Socialist and Communist activists. In a 1933 movie partially produced by William Randolph Hearst, "Gabriel Over the White House," a new president shoots all the gangsters, overturns unemployment, and ends American democracy with the approval of Heaven. As Roosevelt remarked to John Nance Garner, his Vice President, as they rode to the inauguration in January 1933, "I had better be a good president or I will be the last one."

After he took office, in a program called the Hundred Days, Roosevelt immediately began to take steps against the Great Depression. On March sixth, two days after taking office as President, he issued an order closing all American banks for four days. Throughout his Presidency he would show himself a master of the use of language: instead of calling it an "emergency bank closure," Roosevelt used the euphemism of "bank holiday." He then summoned Congress for a special session.

When Congress met, Roosevelt suggested the Emergency Banking Bill, which was designed to protect large banks from being dragged down by the failing small banks. This bill authorized the reopening of solvent banks strong enough to survive and the reorganization of banks which were not. This banking plan would only work, however, if people were confident enough to deposit their money into the banks that were reopened. On one of his "Fireside Chats," his regular, "confidential" lectures to the radio public, Roosevelt asked the American people to support this new plan and pledged that if they did it would “restore our financial system.” The next day, when the banks opened, people lined up to deposit their money into the banks. (The stability of banks was increased by the 1933 Banking Act, which created the Federal Deposit Insurance Corporation -- the FDIC -- which provided insurance to any monies deposited.) On the day after the passage of the Emergency Banking Act, Roosevelt sent to Congress the Economy Bill. The act proposed to balance the federal budget by cutting the salaries of government employees and reducing pensions to veterans by as much as fifteen percent.

Roosevelt warned that the nation would face a one billion dollar deficit if the bill would fail. Like the Emergency Banking Act, it passed through Congress almost instantaneously.

To protect American farmers, Congress passed the Agricultural Adjustment Act or AAA in May, 1933. Farm incomes, relative to the rest of the economy, had been falling for years. Most importantly, the AAA attempted to increase farm prices. Under the act, producers of seven agricultural products -- corn, cotton, dairy products, hogs, rice, tobacco, and wheat -- would set production limits on themselves. The AAA required the government to then tell individual farmers how much they should plant. The government rewarded farmers who complied by paying them for leaving some of their land unused. The Act was extremely controversial. People argued that it was inappropriate for the government to pay farmers to produce less while many people were starving due to the Depression.

After Roosevelt was elected President, the Emergency Relief Administration, which Hoover had created in 1932, was renamed the Federal Emergency Relief Administration (FERA). In November of 1933, the Civil Works Administration (CWA) was created under the auspices of FERA. By 1934, the CWA had hired four million construction workers on a temporary basis -- the program only lasted a few months, during the winter of 1933-34. These workers earned $15 a week, and constructed or repaired buildings and bridges. Another work relief program, the Civilian Conservation Corps (CCC), began in 1933. The CCC only hired unemployed, unmarried men between the ages of 18 and 25. The jobs provided were hard work – building dams and roads, constructing parks and creating trails, planting trees, fighting fires, and other outdoor manual labor, work which had often gone to poor Blacks in prison chain gangs who worked without pay. The CCC paid thirty dollars a month (or a dollar a day), and twenty-five dollars of that went to their parents. Minorities were hired and received equal pay, but the program was segregated. 200,000 African-American workers were hired, and there was a separate Indian division which hired 80,000 Native American workers. During the nine years the CCC existed, it employed around two-and-a-half million men.

Congress and the President created several new government agencies to combat the Great Depression. The Civilian Conservation Corps and the Public Works Administration provided employment for many Americans, hiring people to work on roads, buildings, and dams. The Civilian Conservation Corps offered to pay one dollar a day to unmarried men who would work hard labor. The Civilian Conservation Corps was segregated by race and women were not eligible for the program. It provided work for some 2.5 million men from different backgrounds.[8] The Tennessee Valley Authority (TVA) accomplished similar goals by building an infrastructure in the Southeast to provide electricity to rural, unpowered areas. TVA workers taught farmers ways to improve their crop yields through crop rotation and fertilizer use, replanted forests, controlled forest fires, improved wildlife habitats, and built hydroelectric dams to generate power. It was had authority to build power lines in new areas and set guidelines for electricity distribution. The TVA hired local unemployed white males for conservation, economic development, and such social programs as a library service. The TVA recognized the legitimacy of labor unions –- its blue collar employees were unionized, which was a breakthrough in an area known for corporations hostile to unions. Though women were not hired for construction work, the cheap electricity provided by TVA attracted textile mills which hired women. Electricity and new jobs created new purchasers for new machines. The TVA still exists today over most of Tennessee and parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina, and Virginia. The Securities and Exchange Commission regulated the stock market in an attempt to prevent another crash like that of 1929.

In June, 1933, Congress addressed the problems of the industrial sector with the National Industrial Recovery Act (NIRA). The NIRA established the National Recovery Administration (NRA), which attempted to stabilize prices and wages though cooperative "code authorities" involving government, business, and labor unions. The NIRA also established a national public works program, the Public Works Administration (PWA). The PWA was focused on large-scale public works projects, which were built by private companies who hired workers, rather than directly hiring the unemployed as the WPA did. Between 1933 and 1939 when the PWA was closed down, streets and highways were the most common construction projects, but the agency also funded and oversaw the construction of projects as large as airports, hydroelectric dams, Navy warships, and bridges. PWA projects also were responsible for the construction of seventy percent of new schools and one-third of new hospitals built during this time. Through the PWA, the NIRA lowered unemployment and created infrastructure still in use today.

Section 7(a) of the NIRA ensured the collective bargaining rights of workers, allowing them to unionize. These protections granted to workers led to large-scale union organizing, strikes, and violence on both sides. On August 5, 1933, the National Labor Board was established in order to handle labor disputes and enforce the protection of collective bargaining rights provided for by the NIRA. It was abolished on June 29, 1934 and replaced with the National Labor Relations Board (NLRB). The National Labor Relations Act (also known as the Wagner Act, named after the New York senator who proposed it) forced employers to deal with unions elected by their employees in elections overseen by the NLRB, in addition to prohibiting unfair labor practices. Over 3/4ths of these elections were won by either the American Federation of Labor (AFL) or the Congress of Industrial Organizations (CIO).

The NRA adopted a blanket code under which the businesses would agree to a minimum wage of twenty to forty cents per hour, a workweek of thirty-five to forty hours, and the abolition of child labor. (This last was described as a means to open jobs to adult males. It had been nearly one hundred years since the American Industrial Revolution had brought children en masse into the workplace.) Companies that voluntarily complied with the code were allowed to display the NRA "Blue Eagle." Blue Eagle flags, posters, and stickers, with the slogan "We Do Our Part," became common across the country, and were seen at the beginning and end of movies. In addition to blanket codes, codes specific to certain industries were also adopted.

BlueEagle.jpeg
NRA Blue Eagle

In an attempt to stimulate economic recovery, NIRA inadvertently promoted monopolies, allowing competing businesses to work together to create industry-wide regulations and establish standards like minimum prices for their goods, maximum work hours, and minimum wage. The goal was to eliminate competition between these businesses, in the hopes that it would no longer drive down prices or wages. However, these cartels were dominated by big businesses, which put their smaller rivals at a disadvantage. The NRA was tasked with supervising these groups, but NRA staff did not have the administrative skills or experience necessary to stand up to large corporations. Since the government helped set but did not enforce the NRA guidelines, it was already ineffective by the time it was found to be unconstitutional by the Supreme Court in 1935.

The Second New Deal[edit]

Immediately after Roosevelt passed the first New Deal he received a great deal of support from Congress. However, after the "First Hundred Days" a division was revealed throughout the nation. Many people encouraged the government to take so much control over the fight against poverty and inequality, while others argued that the government had too much power and wanted them to stop expanding even further than they already had. This created pressure from all sides for President Roosevelt, who consequently came up with the Second New Deal.[9]

The Works Progress Administration (later renamed the Works Projects Administration) was established after the Emergency Relief Appropriation Act (which Roosevelt called “the Big Bill”) was passed on April 8, 1935. The bill provided $4 billion in new spending, most of it intended to create public works programs. In addition to stimulating economic growth, the WPA put about 1/3 of unemployed Americans to work, who earned an average of $50 a month. These workers built 650,000 miles of roads and highways and 125,000 public buildings. In addition to this, they built bridges, parks, swimming pools, reservoirs, and irrigation systems, as well as teaching 1.5 million adults to read and write. The WPA also had cultural programs that provided jobs for about 40,000 unemployed artists. The Federal Writers Project put over 6,000 writers to work writing pamphlets and articles, as well as guidebooks showcasing the history, landscape, and culture of all 50 states. The Federal Art Project resulted in the creation of thousands of murals, sculptures, and paintings in public buildings. The Federal Theater Project sent actors and crews to perform plays in communities across the nation. Similarly, the Federal Music Project sent unemployed musicians across the nation to perform, teach, and conduct groups of amateur musicians.

In 1935, the Congress passed the Social Security Act. The Act provided for the creation of the Social Security System, under which the unemployed and the unemployable (such as senior citizens) received welfare payments from the government. All eligible workers were required to pay social security taxes on their wages and their employers also contributed an equivalent amount. The workers that paid into social security then received retirement benefits.[10] The Act also granted money to the states for use in their own welfare programs.A program that came about because of Social Security was called the Aid to Families with Dependent Children. This was a program that offered help to families that had children with certain needs and who also had no fathers.[11] Although the social security act did help many people out tremendously, it did have some drawbacks. One big drawback was that the law did not cover agricultural labor, domestic service, and casual labor not in the course of the employer's trade or business. This meant that most people of color who worked as farm laborers or in hospitals and such didn't receive any benefits. This also meant that teachers and nurses, mostly women workers were also not covered.Unemployment had decreased-but 9 million people were still without work. Also in 1935 enormous dust storms enveloped the Southern Plains, killing livestock and driving families like the Montgomery from their land. Millions of Americans still suffered. As their dissatisfaction mounted,so,too,did the appeal of various demagogues,who played to the prejudices and unreasoning passions of the people.[12]

The National Youth Administration (NYA), established in 1935, funded part-time jobs for 1.5 million high school students and 600,000 college students who were at risk of not being able to afford to stay in school. It also provided full-time employment and education to around 2.7 million youths that were not students.

The efforts of the Democratic President and Congress were opposed by a conservative Supreme Court. In 1933, the Court had ruled in favor of some state New Deal programs. However, by 1935, the Court had begun to rule against the New Deal. For example, the Court ruled in a case nicknamed the Sick Chicken Case that the National Industrial Recovery Act Code relating to the sale of "unfit" poultry, as well as all other codes under the act, were unconstitutional. In 1936, the Court ruled that the Agricultural Adjustment Act was also unconstitutional.

Roosevelt's Re-election[edit]

In 1936, Roosevelt won re-election in a landslide, losing only the states of Maine and Vermont. The press did not pick a winner early. They wanted to make it look like an even race even though Roosevelt was far ahead of his opponent. Landon, Roosevelt’s opponent, tried to make Roosevelt look like a dictator. Roosevelt however, did not attack his opponent. This made many people like Roosevelt even more[13]. Roosevelt and Congress proceeded by passing more New Deal legislation. This time, the Supreme Court did not oppose Roosevelt. The Second Agricultural Adjustment Act, for example, replaced the first Act. The Fair Labor Standards Act set minimum wages for workers in interstate industries. The Wagner Housing Act provided for the construction of homes for the poor.

Despite such programs, the New Deal did not end the Great Depression. Even stalwart adherents to Keynesian models admit that Roosevelt's accomplishments only provided much-needed relief to suffering Americans. The real end of the Depression was during the factory expansion of the Second World War, itself financed by Keynes's principles.

Sit-Down Strike[edit]

Sit-down strikes began among rubber workers in Akron, OH in the early 1930s, and became the method of choice by the mid-30s. This tactic had clear advantages over traditional (walk-out) strikes. Workers stayed in the factories and were able to prevent the use of strikebreakers by doing anything they could to keep the owners and/or police away which included throwing random objects out of windows. They also had shelter, and they weren’t isolated (as they would be in the picket line or working at their stations), often forming a community of sorts with other workers.

One of the most significant sit-down strikes of the era occurred in Flint, Michigan during the winter of 1936-1937. The United Automobile Workers (UAW), formed in 1935, learned that General Motors only had 2 factories that made the dies (industrial tools that use a press to bend, shape, or cut material) used to form their car body components, one in Flint and one in Cleveland. The UAW had planned to start the strike after the New Year, but when workers at the Cleveland plant went on strike on December 30, the UAW announced that they would not settle the Cleveland strike until an agreement covering all GM plants in the nation had been reached. When the UAW learned later that day that GM planned to move the dies out of the Flint plant, they called a meeting during lunchtime at the union hall across the street, explained the situation, and sent their members back across the street to begin the strike.

The local police attempted to enter the plant on January 11, but the workers on strike fended them off with fire hoses and thrown car parts. GM got an injunction against the strike in February, but instead of going along with it, the UAW spread the strike to another plant. GM finally got fed up with these sit-down strikes and so they obtained a court order to evict the workers but this did not work because the workers held their ground, risking fines and imprisonment. When this did not work, the Michigan governor was advised to send in the National Guard to end the strike but he refused. GM reached an agreement with the union on February 11 which established the UAW as the official representative for its members who were GM employees. Chrysler followed GM very soon in giving into the UAW's terms. Ford, however, held out until 1941 before they agreed to recognized the unions. The UAW’s membership skyrocketed in the next year. In 1936, there were 48 sit-down strikes. In 1937, there were 477.

Racism in the 1930's[edit]

In the 1930s, the Ku Klux Klan was declining after its rebirth in the '10s and '20s. Yet racism was still strong in the South. And the Northern Migration of African-Americans during World War I and the Depression exposed them to resentment in many Northern cities. They need not fear for their lives, as in the Mississippi or even rural Ohio, but they were given dangerous places to live, hired less often than their Caucasian co-workers, and could be fired at the blink of an eye.

Many New Deal programs gave black Americans opportunities they had often lacked in the past, while also helping to bring their daily struggles to light. Such federal programs as The Federal Music Project, Federal Theatre Project, and Federal Writers project enabled black artists to find word during the depression, often times creating art or stories which portrayed the historic and present situation of blacks in the South. Projects chronicling the lives of former slaves were also begun under the auspices of these programs. At the same time competition for WPA (Works Project Administration) jobs in the South during the thirties also brought to light the persistence of inequality even in the government.Since the WPA required that eligible employees not have refused any private sector jobs at the "prevailing wage" for such jobs, African-Americans (who were paid less on average then whites in the South) might be refused WPA jobs which whites were eligible for. Such discrimination often extended to Hispanic-Americans in the Southwest as well. Despite such difficulties, WPA head Harry Hopkins worked with NAACP leaders to prevent discrimination whenever possible resulting in general support for the programs (and the government) by the black community.

Black Americans also received increased visibility during this decade for less auspicious reasons, resulting in bitter political conflict within the Democratic Party. While the South had been solidly Democratic since the Civil War, the Roosevelt administration actively appealed to African-Americans to join their party, thus alienating many Southerners. The growing divide between Northern and Southern Democrats over the issue of race came to a head in April 1937, when a bitter fight over an anti-lynching bill took place in the House of Representatives. In the wake of a gruesome double lynching in Mississippi (only one of more than a hundred which had taken place since 1930)The House passed the anti-lynching resolution, despite the opposition of all but one Southern member. Declaring that the South had been "deserted by the Democrats of the North" former Roosevelt supporters in the Senate carried out a six week long filibuster which resulted in the withdrawal of the bill in February 1938. This bitter political fight was indicative of the racism and regional conflict still firmly entrenched in America in the 1930s.

Memorial Day Massacre[edit]

On Memorial Day in 1937, in Chicago, a group of workers and their families marched towards the Republic Steel Plant to support some strikers. However, the police stopped them en route. One of the workers threw something at one of the policemen and this gave the police reason to attack the workers and as a result 10 men were killed and 30 people (including women and children) were wounded. These people did not receive much sympathy from fellow Americans because they were tired of the violence. Instead the people praised the police force for stepping in and containing the disruptive group of people. [14]

The amount of lives lost because of all of the strikes and picket lines, organized labor gained a lot of ground in the 1930s. The National Labor Relations Board became very effective in reducing the violence. They mediated the disputes instead of letting the people take the matters into their own hands, as they had been doing for so long. The unionized workers made up about 23% of non-agricultural workers. Because of these changes they were able to raise their standard of living. By 1941 union workers were able to buy not only a new pair of shoes for each of their children every 2 years, but also a new coat for them and their wife every 6 years [15]

The Roosevelt Recession[edit]

Between 1933 and 1937, the U.S. economy improved slowly but surely -- total personal income of Americans rose from $38 billion in 1933 to $70 billion in 1937. In the same period, employment also rose from 27.9 million to just over 36 million, and unemployment dropped from 12.8 million (25.2% of the American labor force) to 7.7 million (14.3%). However, people were also much more cautious in their spending than in pre-crash years. This and a growing labor force resulted in more goods being produced than consumed, relegating large amounts of unsold goods to warehouse shelves.

In the months between his second inauguration and September of 1937, Roosevelt ordered a reduction in federal spending on emergency employment projects. The number of workers employed on WPA and other projects were cut from 3.7 million to 1.9 million. Funding for PWA projects was also greatly reduced during this period. Unemployment rose from 14.3% in 1937 to 19% in early 1938. In April of 1938, Roosevelt sent a new spending program to Congress totaling $3.75 billion, which they approved. More than $1.4 billion went to the WPA and almost $1 billion went to the PWA, with the rest being split among other federal programs. Although the economy recovered shortly thereafter, unemployment didn’t return to 1937 levels until World War II.

Questions For Review[edit]

1. Explain how foreign loans and domestic tariffs, payment plans, and buying stocks on margin contributed to the stock market crash.

2. Contrast Hoover's quote, "The business of America is business," with Keynes's theory of counter-cyclical spending. Describe the contrasting ideas behind the two thoughts. Were these ideas mission statements for two different administrations or merely markers of theory which were only sometimes adhered to?

Roaring Twenties and Prohibition · Spanish Civil War

References[edit]

  1. Norton, Mary Beth. A People and A Nation. Boston: Wadsworth, Cenage Learning, 2007, 2009.Print.
  2. http://www.english.illinois.edu/maps/depression/about.htm
  3. A People and A Nation Eighth Edition
  4. Migrant Workers. “Critical Role, Working Conditions, Migrant Stream…” Net Industries. 2011. Web. 3/27/11.
  5. Infoplease.com. “Migrant Labor.” N.p., n.d., Web. 2/20/22
  6. Report on Migrant Farm Worker Conditions. “Farm Worker Conditions.” N.p., n.d. Web. 3/30/2011.
  7. A People and A Nation-Eighth Edition by Norton, Sheriff, Katzman, Blight, Chudacoff, Logevall, Bailey. Page 718
  8. A People and A Nation Eighth Edition
  9. A People and A Nation-Eighth Edition by Norton, Sheriff, Katzman, Blight, Chudacoff, Logevall, Bailey
  10. "A People and A Nation" the eighth edition
  11. A People and A Nation
  12. "A People and A Nation" the eighth edition
  13. http://www.kennesaw.edu/pols/3380/pres/1936.html
  14. A People and A Nation-Eighth Edition by Norton, Sheriff, Katzman, Blight, Chudacoff, Logevall, Bailey
  15. A People and A Nation-Eighth Edition by Norton, Sheriff, Katzman, Blight, Chudacoff, Logevall, Bailey