Chapter 25: The Great Depression and the New Deal, 1929-1939

Chapter 25: The Great Depression and the New Deal, 1929-1939

1. What caused the Crash of 1929, and why did the ensuring depression last so long?

Although America had experienced several panics and depressions none had endured to the severity of caliber of the crash of 1929. Dow jones industrial average had doubled in only two years and as a result investors had become greedy and arrogant. They speculated that the market would continue a 400% increase and only put up 10% margin of their stock prices, borrowing the rest from brokers and banks. Despite the success and profit this had created, creditors began to demand their loans repaid. Essentially market speculation crashed the market, and the poor decision making of the Federal Reserve Board, the Hawley-Smoot tariff that succeeded the depression, and the vast concentration of wealth in the rich allowed it to endure. Wealth was not being distributed evenly, the wealthy got richer and the impoverished became poorer. The Hawley-Smoot tariff raised agricultural and industrial products tariffs and angered the foreign governments who retaliated by raising their tariffs, the already weakened international trade had almost vanished. Where they should have been expanding the money supply, the Federal Reserve Board tighten down the money supply and raised interest rates making it more difficult to obtain loans. Thus it became nearly impossible for investors to get loans to repay creditors and the depression endured.  

2. What were the similarities and differences between the First and Second New Deals?

Both were similar only in the quantity of legislation Congress had passed or evaluated. However the Second New deal created a vast amount of spending on debt. Essentially, the economist believe that this would increase the demand while decreasing supply and therefore increasing price and revenue. The First new deal focus on short term relief and did not truly solve much of the remaining issues efficiently where the Second New Deal established and expanded on several agencies to appropriately reform and invest on the industrial and agricultural aspects that were in deficit. 

3. In what ways did the Great Depression and New Deal shape American culture?

There was a vast centralization in governmental power, the power of the president had significantly increased, democrats became the majority, and the federal government provided the American People with service.

4. Which Organizations were created through the New Deals and what was their function?

AAA:

Roosevelt established the Agricultural Adjustment Act. The economists believed that the demand for scarce goods would exceed that of supply, thus raising the prices and revenue. Furthermore, they believed that this would result in the investment of newer technology and employment of more workers for Farmers. 

PWA:

Sponsored international improvements to strengthen the nation's infrastructure of roads, bridges, sewage systems, hospitals, airports, and schools. This would reduce the amount of unemployment, and justified the economic investment over short-term relief. They also built three major dams.  

SOCIAL SECURITY ADMINISTRATION:

Provided the elderly with pensions and aid for retirement collected from tax revenues made from the youth. 

Terms:

Hawley-Smoot Tariff Act:

The tariff act of 1930 deepened and allowed the Depression to endure. It was originally implemented to raise the tariff's to compensate for foreign competition, raising it to a record breaking 32-40%. However it also raised tariffs a buy a similar percentage on 925 manufactured products. Angry foreign governments also raised their tariffs, the already weakened International trade took a severe hit when it needs a boost the most. 

Glass-Steagall Act:

Under Hoover's presidency, the failing economy also directed the discovery that associationalism had also failed to perform it's function. As a result, Hoover secured a one year old on European loan payments, and allowed the conversion of US currency to Gold. 

Reconstruction Finance Corporation:

In order to ease the financial crisis at home, Hoover inserted $2 billion in loans available to failing banks and corporations that were willing to build low-cost housing, bridges, and other public works.  

It became known as the biggest federal peacetime intervention. 

Bonus Army:

In 1924 Congress authorized a bonus of $1,000 for all army veterans. However some impoverished veterans, frustrated with the failing economy sought out to march in Washington to demand early payment. On the way to Washington the march swelled to 20,000 including wives and children. Unfortunately the Senate turned them down and federal troops led by George Patton set their campsite ablaze. 

Fireside chats:

Under Roosevelt's presidency, he established and reformed much legislation to allow recovery from the depression. He also launched a series of radio addresses where he spoke comfortingly to the distressed and discouraged. In his first chat he explained the banking crisis simply without condescension. Due to rhetoric and voice, many Americans were moved and the White house received 500,000 letters to the president. People were hanging Roosevelt's portrait on a wall next to Jesus or the Madonna. 

Emergency Banking Act:

Upon the first days of his presidency, Roosevelt immediately ordered all national banks to close, Congress then rushed though the EBA that made federal loans available to private bankers and succeeded with the Economy Act that committed the government toward balancing the budget. 

AAA:

Reasoning that reducing the extent of production in agriculture and Industries, Roosevelt's economists concluded that such action would restore the balance of normal market forces. As a result, Roosevelt established the Agricultural Adjustment Act. The economists believed that the demand for scarce goods would exceed that of supply, thus raising the prices and revenue. Furthermore, they believed that this would result in the investment of newer technology and employment of more workers for Farmers. 

NRA:

The National Recovery association was authorized under the National Industrial Recovery act. Roosevelt chose General Hugh Johnson to persuade industrialists and businessman to agree to raise wages 30-40 cents per hour and to reduce hours to 30-40 hours a week. These limitations sought to achieve the goals originally established by the AAA to offset demand and supply. Furthermore they sought to gain industrial and Agricultural recovery to stimulate the economy. 

PWA:

The NRA then launched the Public Works Administration to sponsor international improvements to strengthen the nation's infrastructure of roads, bridges, sewage systems, hospitals, airports, and schools. This would reduce the amount of unemployment, and justified the economic investment over short-term relief. They also built three major dams. 

TVA:

The Tennessee Valley act, a piece of legislation passed during Roosevelt's first New Deal, called for government to promote economic development as opposed to private corporations. They controlled flooding on the Tennessee river, harnessed the waters power to generate electricity, developed local industry, improved river navigability, it essentially developed over 20 dams.

Huey Long:

Senator of Louisiana who moved many with his radio addresses emphasizing the discrepancy of wealth distribution. He demanded that a $5,000 estate be given to all middle class Americans and inspired many to join share the wealth clubs. 

Charles Coughlin:

Known as the Radio priest for his radio address, Father Coughlin moved many in the South and Midwest. He appealed to the anxious middle class and believed that the middle classes’ status was slipping from their grasp. He believed bankers ran the New Deal and the NRA only desired to maximize capital in corporations, disregarding the working class. Coughlin called for a strong central government to compel capital, labor, agricultural, professionals to do their bidding. He also founded the National Union of Social Justice as a precursor of a political party to challenge democrats.  

EPIC:

Upton Sinclair's organization, End Poverty in America, came closer to winning governorship than any other party. It was one of the radical third parties.  

Social Security Act:

The act implemented by Roosevelt to enable pensions and funds for the old and retired to be paid by the young. This essentially collected $2 billion in taxes to aide the retirement of the elderly. 

National Labor Relations Act:

An act by Congress in 1935 forbidding Employer interference in the formation of Labor unions. However, the farmers were very frustrated to find that were not cover under the NLRA or the Social Securities act. 

WPA:

The Works Progress Association built and improved thousands of schools, playgrounds, airports, and hospitals. WPA crews cleaned the streets by raking leaves, and landscaping the cities. They also expanded on several agencies, and built 100's of thousands of roads, bridges, and public build, founded a vast program of public art and fostered the production of intellectual thought. 

Court-Packing Scheme:

Okies:

A group of neglected rural poor, tenant farmers and sharecroppers who had left their homes in 1935, piled their belongings in jalopies and took route 66 to California. A majority of them were from Oklahoma.