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The Great Depression and New Deal

What was it like living during the depression?

What were the actions taken?

How did it happen?
How did we transition out of it?

Causes of the Great Depression included: insufficient purchasing power among the middle class
and the working class to sustain high levels of production; falling crop and commodity prices
prior to the Depression; the stock market's dependence on borrowed money; and wrongheaded
government policies, including high tariffs that reduced international trade and contracted the
money supply.

The ultimate effect of the Great Depression

It produced a major political realignment, creating a coalition of big-city ethnics, African
Americans, organized labor, and Southern Democrats committed, to varying degrees, to
interventionist government. It strengthened the federal presence in American life, spawning
such innovations as national old-age pensions, unemployment compensation, aid to dependent
children, public housing, federally-subsidized school lunches, insured bank depositions, the
minimum wage, and stock market regulation. It fundamentally altered labor relations, producing
a revived labor movement and a national labor policy protective of collective bargaining. It
transformed the farm economy by introducing federal price supports.

Greendale, Wisconsin was created during work relief programs

#1 Banks
-Easy Credit
The Installment Plan was another name for buying on credit during the 1920's. Buying on credit
is when one gives a down payment on a product to recieve it, then pays small amounts over a
long period of time to pay it off instead of paying the full price up front. "You'll furnish the girl,
we'll furnish the home" and "Enjoy while you pay" were two popular slogans used to describe i
nstallment buying during the 1920's. Because it was so easy to buy goods this way, too many
people did on too many items. Today, most of the goods purchased this way are cars and
furniture, but in the 20's, people bought stock this way in addittion to other smaller goods. To
many economists and business owners, this was a sign of major weakness in an apparently
booming, prosperous economy. And it was. It caused many Americans to not pay any attention
to the future. For example, some people would buy a car on credit, and when the next
installment was due, they didn't have enough money to pay, so they sold their stove for money
and then bought another one on credit. This complete disregard for the future is one of the
underlying causes of the Great Depression. People bought stocks on credit and then sometimes
couldn't pay for it one month; causing businesses and banks to lose money to an unrestricted
-October 24, 1929 Black Thursday, the stock market crashes.
-March 1933, FDR announces a four-day bank holiday to begin on Monday, March 6.
During that time, FDR promises, Congress will work on coming up with a plan to save
the failing banking industry.
-March 9, 1933, Congress passes the Emergency Banking Act of 1933. By month's end,
three-quarters of the nation's closed banks will be back in business.
The United States National Bank was among the first to reopen, on March 13
-April 1933, President Roosevelt, under the Emergency Banking Act, orders the nation
off of the gold standard.
-June 1933, Congress passes the Glass-Steagall Act that separates commercial from
investment banking and sets up the Federal Deposit Insurance Corporation to
guarantee bank deposits.

#2 Unemployed
A shantytown built by unemployed and destitute people. When the government failed to provide
relief, President Herbert Hoover (1874-1964) was blamed for the intolerable economic and
social conditions, and the shantytowns that cropped up across the nation, primarily on the
outskirts of major cities, became known as Hoovervilles.
-March 1930, More than 3.2 million people are unemployed, up from 1.5 million before the
October, 1929 crash.
- November 1930, New York City streets are crowded with apple-sellers. Nearly 6,000
unemployed individuals work at selling apples for five cents apiece.
- February 1931, Resentment of "foreign" workers increases along with
unemployment rolls. In Los Angeles, California, Mexican Americans are accused of
stealing jobs from "real" Americans. During the month, 6,024 Mexican Americans are
-January 1937, United Automobile Workers strike at the General Motors Plant in Flint,
Michigan. The strike turns violent when strikers clash with company-hired police.
-May 1937, At Republic Steel's South Chicago plant, workers and their families try to
combine a picnic with a rally and demonstration. Ten people are killed and a dozen more
are wounded in the "Memorial Day Massacre."

#3 Bonus Bill
-January 1931, Texas congressman Wright Patman introduces legislation authorizing immediate
payment of "bonus" funds to veterans of World War I. The "bonus bill" was passed in 1924. It
allots 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. Hoover was against this money spend.
-May 1932, More than 300 World War I veterans leave Portland, Oregon en route to
Washington, D.C. to urge Congress to pass the Bonus Bill. It will take them 18 days
to reach Washington, D.C.
-June 1932, Determined to collect their "bonus" pay for service, 15,000 - 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 passes Congressman Wright
Patman's "bonus bill" by a vote of 209 to 176. The bill falls to defeat in the Senate,
however, 62 to 18. The vets maintain their determination to stay camped out until they
get their pay.
-July 1932, President Hoover signs a $100,000 transportation bill to assist "bonus
Army" demonstrators in getting home. He sets a July 24 deadline for the men to
abandon their encampments.
-On July 28, when some "bonus Army" members resist being moved from their
camps, violence erupts, leading to the deaths of two veterans. Hoover orders Federal
troops, under the command of General Douglas MacArthur, to assist D.C. police in
clearing the veterans.

#4 Work
-April 1933, 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 is made up of
groups of young men who work in national forests, parks, and federal land for nine-month stints.
FDR envisions the program as a kind of volunteer "army." The first 250,000 young men are
housed in 1,468 camps around the country. At its peak in 1935, the CCC will include 500,000
young men.
-October 1933, The Civil Works Administration is established. Devised as a wide
scale program that could employ up to 4 million people, the C.W.A. is involved in the
building of bridges, schools, hospitals, airports, parks and playgrounds. Additionally,
C.W.A. funds go toward the repair and construction of highways and roads. Early in
1934, Congress will authorize $950 million for the continued operation of the C.W.A.
-April 1935, FDR signs legislation creating the Works Progress Administration. (Its
name would be changed in 1939 to the Work Projects Administration.) The program
employs more than 8.5 million individuals in 3,000 counties across the nation. These
individuals, drawing a salary of only $41.57 a month, will improve or create highways,
roads, bridges, and airports. In addition, the WPA will put thousands of artists -- writers,
painters, theater directors, and sculptors -- to work on various projects. The WPA will
remain in existence until 1943.
-June 1935, The National Youth Administration is set up to address the needs of
young men and women (who are not allowed in the CCC). The NYA works on two levels:
a student-work program and an out-of-school program. The student-work program
provides students with odd jobs that pay them enough to stay in school. The out-of-
school program sets young people up with various jobs ranging from house painting to
cleaning local parks, and eventually comes to include vocational training.

#5 Franklin Delano Roosevelt

-November 1932, Franklin Delano Roosevelt is elected president in a landslide over Herbert
Hoover. Roosevelt receives 22.8 million popular votes to Hoover's 15.75 million. During the first
100 days of his administration, Roosevelt laid the groundwork for his New Deal remedies that
would rescue the country from the depths of despair.
-March 12, 1933, FDR delivers the first of what came to be known as his "fireside
chats." In his initial "chat" he appeals to the nation to join him in "banishing fear."
-November 1936, Defeating Kansas Governor Alfred M. Landon, FDR is elected
to his second term as president, winning every state in the Union except
Maine and Vermont.
-March 1937, The slow economic recovery made possible by New Deal programs
suffers a setback as unemployment rises. FDR's detractors call it the start of the
"Roosevelt recession."
-November 1940, Franklin Roosevelt is elected to an unprecedented third term as
president, defeating Wendell Willkie. FDR's victory is seen as proof of the nation's
support of his war policies. Roosevelt lobbies Congress to pass the Lend-Lease Act,
which will aid Britain in its struggle to fend off Germany.

#6 Money Relief
-January 1932, Congress establishes the Reconstruction Finance Corporation. The R.F.C. is
allowed to lend $2 billion to banks, insurance companies, building and loan associations,
agricultural credit organizations and railroads. "the millionaires' dole."
-July 1932, The Reconstruction Finance Corporation is authorized to lend
needy states sums from the National Treasury. The money is to target relief and
public works projects.
-May 1933, The Federal Emergency Relief Administration is created by Congress.
President Franklin Roosevelt appoints Harry L. Hopkins as its chief administrator. By
the end of his first day on the job, Hopkins has issued grants totaling more than $5
-April 1938, FDR asks Congress to authorize $3.75 billion in federal spending to
stimulate the sagging economy. Economic indicators respond favorably over the next
few months. Still, unemployment will remain high and is predicted to stay that way for
some time.
-August 1935, The Social Security Act of 1935 is signed into law by FDR. Among the
most controversial stipulations of the act is that Social Security will be financed through a
payroll tax. Historian Kenneth S. Davis calls 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."

#7 Food Struggle
-Bread Lines/ Soup Kitchens
A breadline refers to the line of people waiting outside a charity. These charities gave out free
food such as bread and soup. There were so many homeless people that these lines stretched
across blocks, filled with desperate civillians struggling to get by.
-February 1931, "Food riots" begin to break out in parts of the U.S. In Minneapolis, people
smash the windows of a grocery market and make off with some food. One of the store's
owners pulls out a gun to stop the looters, but is leapt upon and has his arm broken. The "riot" is
brought under control by 100 policemen and some people are arrested.
-March 1932, Three thousand unemployed workers march on the Ford Motor
Company's plant in River Rouge, Michigan. Dearborn police and Ford's company
guards attack the workers, killing four and injuring many more.
-August 1933, 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.
-May 1934, 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 are forced to ignite street lamps during the day to see through the
blowing dust.

#8 The End
-November 1940, In little over a year, following Japan's December 1941 bombing of Pearl
Harbor, the U.S. will enter the war in the Pacific and in Europe. The war effort will jump-start
U.S. industry and effectively end the Great Depression.