The Great Depression

America`s future appeared to shine brightly for most Americans when Herbert Hoover was
inaugurated president in 1929. His personal qualifications and penchant for efficient planning
made Hoover appear to be the right man to head the executive branch.
However, the seeds of a great depression had been
planted in an era of prosperity that was unevenly
distributed. ln particular, the depression had already
sprouted on the American farm and in certain industries.
The Hoover term was just months old when the nation
sustained the most ruinous business collapse in its
history. The stock market crashed in the fall of 1929. On
just one day, October 29, frantic traders sold off
16,400,000 shares of stock. At year`s end, the
government determined that investors in the market had
lost some $40 billion.
Previous to the 1929 collapse, business had begun
to falter. Following the crash, the United States
continued to decline steadily into the most
profound depression of its history. Banks failed,
millions of citizens suddenly had no savings.
Factories locked their gates, shops were shuttered
forever, and most remaining businesses struggled
to survive. Local governments faced great
difficulty with collecting taxes to keep services
going.
Hoover`s administration made a bad mistake when
Congress, caving in to special interests, passed the
Smoot-Hawley Tariff Act in 1930. The measure would hike up tariffs to prohibitively high levels.
The president signed the bill into law over the objections of more than 1,000 economists. Every
major trading nation protested against the law and many immediately retaliated by raising their
tariffs. The impacts on international trade were catastrophic. This and other effects caused
international trade to grind nearly to a standstill; the depression spread worldwide.
Meanwhile, the president and business leaders tried to convince the citizenry that recovery from
the Great Depression was imminent, but the nation`s economic health steadily worsened. In spite
of widespread hardship, Hoover maintained that federal relief was not necessary. Farm prices
dropped to record lows and bitter farmers tried to ward off fore closers with pitchforks. By the
dawn of the next decade, 4,340,000 Americans were out of work. More than eight million were
on the street a year later. Laid-off workers agitated for drastic government remedies. More than
32,000 other businesses went bankrupt and at least 5,000 banks failed. Wretched men, including

veterans, looked for work, hawked apples on

sidewalks, dined in soup kitchens, passed the time in
shantytowns dubbed "Hoovervilles," and some
moved between them in railroad boxcars. It was a
desperate time for families, starvation stalked the
land, and a great drought ruined numerous farms,
forcing mass migration.
The Hoover administration attempted to respond by
launching a road-, public-building, and airportconstruction program, and increasing the country`s
credit facilities, including strengthening the banking system. Most
significantly, the administration established the Reconstruction
Finance Corporation (RFC) with $2 billion to shore up
overwhelmed banks, railroads, factories, and farmers.
The actions taken signified, for the first time, the U.S.
government`s willingness to assume responsibility for rescuing the
economy by overt intervention in business affairs. Nevertheless,
the Great Depression persisted throughout the nation.
Unemployment relief remained largely a local and private matter.
A thirst for change
The electorate clamored for changes. The Republicans renominated Hoover, probably feeling
that they had no better choice than their deeply unpopular leader. The Democrats nominated
Franklin D. Roosevelt. His energetic, confident campaign rhetoric promoted something
specifically for "the forgotten man" a "New Deal." Roosevelt went on to a decisive victory. At
his inauguration in March 1933, Roosevelt declared in his lilting style, "Let me assert my firm
belief that the only thing we have to fear is, fear itself needless, unreasoning, unjustified terror
which paralyzes needed efforts to convert retreat into advance."
The nation needed immediate relief from the Great
Depression, recovery from economic collapse, and
reform to avoid future depressions, so relief, recovery
and reform became Roosevelt`s goals when he took
the helm. At his side stood a Democratic Congress,
prepared to enact the measures he proposed.
Congress passed a historic series of significant bills,
most of which had originated in the White House, in
just shy of a whirlwind 100 days. Congress also
enacted several important relief and reform measures
in the summer of 1935 sometimes called the Second Hundred Days.
Significant legislation:

One act created the Federal Emergency Relief Administration to be administered by

Harry Hopkins. For relief or for wages on public works, it would eventually pay out
about $3 billion.
Three million young men found work in road building, forestry labor, and flood control
through the establishment of the Civilian Conservation Corps (CCC).
The Works Progress Administration (WPA) of 1935 would grow out of the previous two
agencies.
The Emergency Banking Act provided the president with the means to reopen viable
banks and regulate banking.
Another law insured bank deposits up to $5,000, and later, $10,000.
A new Home Owners Loan Corporation (HOLC) assisted homeowners.
Farmers who voluntarily decreased the acreage of specified crops could become
recipients of subsidies from the Agricultural Adjustment Administration (AAA), set up by
the government.
One particularly significant act created the Tennessee Valley Authority (TVA). The vast,
ambitious project, coupled with agricultural and industrial planning, would exploit the
great river basin`s resources with
government dams and hydroelectric
plants.
Progress was made on the labor front:
The National Recovery Administration
(NRA) came into being through a
significant measure in 1933. The NRA
attempted to revive industry by raising
wages, reducing work hours and reining in
unbridled competition. The NRA was
ruled unconstitutional by the Supreme
Court in 1935. However, the majority of
its collective bargaining stipulations
survived in two subsequent bills.
Employees were guaranteed the right to negotiate with employers through unions of
their choosing by the Wagner Act of 1935, and it established a Labor Relations Board as a
forum for dispute resolution. The act bolstered the American Federation of Labor, and
pointed to the inception of the Congress of Industrial Organizations (CIO), another labor
movement.
The Fair Labor Standards Act of 1938 promulgated a 44-hour workweek with time-anda-half for overtime and pegged a minimum wage of 25 cents an hour. The act also
provided that the the hours would drop to 40 and the wage would incrementally rise to 40
cents. In addition, the bill made child labor under the age of 16 illegal.
Relief, recovery and reform also affected the social welfare.
The U.S. government could reach out in the widest way to alleviate human misery from the
Great Depression such was the assumption implicit in the New Deal. Beginning in 1935,

Congress enacted Social Security laws (and later

amendments) that provided pensions to the aged,
benefit payments to dependent mothers, crippled
children and blind people, and unemployment
insurance.
To fund all the new legislation, government spending
rose. Spending in 1916 was $697 million; in 1936 it
was $9 billion. The government modified taxes to tap
wealthy people the most, who could take it in stride
most easily. The rich, conservatives, numerous
businessmen and those who were all three
vigorously opposed the New Deal. But the election of 1936 triggered a nationwide endorsement
of FDR, who carried every state except Vermont and Maine.
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