Chapter 22

Hard Times, 1929-1939

I. The Echoing Crash

A. Wall Street Crash in October 1929 on “Black Thursday” the 24^th was straw that broke the nation's economic back.

1. Did not cause Depression, which resulted from long-term economic weaknesses.

2. Crash undermined consumer confidence and destroyed economic initiative.

3. Four-year upward trend in stock prices had resulted in serious overvaluation.

4. Federal Reserve raised interest rates to cool speculation.

5. Banks called in loans and demanded margin payments in full.

6. Massive selling spree began as investors sold to pay their debts.

-13 million shares changed hands, bringing record breaking declines with 3 billion

7. Vicious circle began.

8. By mid-November, stock prices had dropped $30 billion.

-by 1932 $74 billion was lost.

9. Credit was tightened; consumer spending dropped; inventories piled up.

B. Weaknesses of the banking industry exacerbated the financial crisis.

1. Small banks failed as farmers failed to pay their mortgages.

-over 500 small failed each year in the 1920s.

2. Larger banks had invested in stocks and faced huge losses.

3. U.S. also ensnared in European economic problems because of reparations and debts.

-US was the world’s major creditor nation.

-European banking system collapsed in 1931

-when depositors tried to remove their savings, 6000 banks closed taking 20 billion with them.

4. Lack of consumer purchasing led to business failures.

5. Hawley-Smoot Tariff of 1930 raised duties--and prices; further retarded purchasing.

-went against his economists (Hoover).

6. Federal Reserve rate hike in 1931 to deter speculation; really just shrank money supply.

- Bank Suspensions chart 1927-1933

C. As the economic crisis deepened, unemployment soared.

1. Before the Crash, 1.5 million workers were idle.

2. Climbed to 3 million two months later.

3. By 1933, 13 million out of work; represented 25 percent of workforce.

-even in “years of recovery” 1934, 11.4 million; 1935 10.6 and 1936 9 million; 1937 rose again to 19 percent and in 1940 was 15 percent.

4. Statistics failed to record unemployables, transients, or dependents on the jobless.

-hobo jungles - 1 million lived in camps under bridges etc., outskirts of town.

5. Thousands died of starvation each year.

-malnutrition end lives of countless others:

-rickets, pellagra, gum inflammation and tooth decay

-apple shippers association - offered apples on credit, unemployed people appeared on every street corner in every city selling apples for a nickel, stark evidence of self-sufficiency and desperation.

6. People tended to blame themselves for their plight, not the system. chart unemployment 1927-1933

D. American families were facing a terrible crisis.

1. Men lost self-esteem and status in their homes as wives and children went to work.

2. Working wives met with public disapproval, especially if their husbands had jobs.

-a survey of 1,500 public school districts found that 7 percent did not hire married women, over 60 percent dismissed women who married.

-Federal government also fired 1,600 married women and to avoid cheating ruled in 1933 that women employees had to take their husband’s name.

3. As white women took domestic jobs, black women were displaced.

E. Finding relief was not easy.

1. Private assistance was woefully inadequate to meet the need.

-private agencies were overwhelmed. By 1932 in Chicago private assistance had increased by over 700 percent over pre 1929 period, covering two-thirds of relief expenditures.

-local resources overwhelmed, property tax delinquency reduced available funds

2. Few states had welfare programs, and there was no national welfare agency.

-at a time when 300,000 were unemployed in New York, the city provided temporary jobs for one-tenth of the needy.

-in some areas officials denied assistance to African Americans, Mexican Americans and other “alien” groups.

-by 1932 Detroit and Buffalo bankrupt

F. The federal government finally took action in 1931.

- Hoover only acted once Democrats had returned to office in 1930 election and threatened to cut further into his party’s machinations.

1. Funded a $2 billion public works program to provide jobs.

-buildings, bridges, and dams (including Colorado river project later named for president)

2. Rejected all thought of direct assistance to the needy.

-but supported ‘inflationary measures’ to stimulate business expansion

3. Home Loan law in 1931 provided money through mortgage companies to assist in home buying.

4. Norris-LaGuardia Act (1932) protected workers' rights.

-prohibited the use of court injunctions to end strikes, picketing, and boycotts.

5. Reconstruction Finance Corporation (1932) was first attempt to confront Depression issues.

a. Made credit available to banks, insurance companies, railroads, etc.

b. Designed to expand business activity.

c. Aid to business, not individuals.

G. Emphasis on business recovery did nothing to help farmers.

-one third of the nation’s workers were still farmers

1. Prices were below cost for oats, barley, corn, and hogs.

-they had fallen through the 1920s, and depression cut sales by another 30 percent

-cotton slid from 18 cents in 1929 to 5 in 1933; 2 dollar wheat sold for a quarter.

2. Tenancy and bankruptcy were on the rise.

-land values dropped by half between 1920 and 1930 and half again by 1935

3. Overproduction remained main farm problem.

4. Exacerbated by loss of European markets and environmental disasters.

-Dust Bowl, Texas to the Dakotas

- in a single day in 1934 western winds lifted 350 million tons of topsoil and darkened skies as distant as Boston, NY, Washington.

- in cotton regions of Texas and Oklahoma, infestations of boll weevils added to the afflictions.

5. Farmers sought to limit production in order to boost prices.

-the CPUSA in Alabama helped form almost all black Share Croppers Union (1931), for food advances, fair contracts, and reduced interest payments.

- In Mid-West dairy farmers organized the Farm Holiday Association (1932) - better prices, barricading highways to prevent delivery of milk, dumping barrels in the ditches.

-Bonus Expeditionary Force - march on Washington in 1932 by veterans of WW, demanding early payment of war bonus’ that congress had already approved.

-general Douglas MacArthur disbanded their protest shantytown leaving 1000 wounded, having fired tear gas, wielded bayonets, etc.

H. Great public outcry over rise of chain stores.

1. Seemed to be destroying small businesses.

-by 1931, controlled 45 percent of retail grocery sales and 18 percent of all retail transactions.

2. Cared nothing about their customers. (*perhaps)

3. Nationwide anti-chain movement emerged by 1930.

-in 1931, 300 anti-chain organizations and two dozen anti-chain newspapers were defending the individual merchant, the “natural man” against the “unnatural monster”

II. Economic Crisis and Race

A. The economic crisis exacerbated problems for minorities.

. -community interests could draw groups together and tear them apart

-1930 census comprise a new category of “race”, namely “Mexican” of which there were some 640 in US. - word allowed no distinction between aliens and citizens, resident born in Mexico or US.

1. Mexican immigrants and others accused by Hoover of "stealing" jobs from Americans.

2. Thousands were deported to Mexico, many of whom were U.S. citizens – 1/3rd or 400,00

-unemployment for them ran twice as high as for whites and they were routinely denied welfare benefits and relief.

3. Japanese and Chinese fared better, as they lived in self-sufficient communities.

-Nisei formed the Japanese American Citizens League in 1930, 50 chapters, promote self-help and assimilation.

-same set of double pull of cultures, anxious to become Americanized yet denied access to education, jobs or social life.

-Japanese/ Chinese war of 1931 heightened feelings in communities.

4. Filipinos faced discrimination and laws prohibiting intermarriage with whites.

-as a US territory Filipino’s had access to US.

- In 1934 Congress passed the Tydings-McDuffie Act, which established the Philippine Islands as a commonwealth and promised independence in 10 years. The measure protected domestic sugar producers from Philippine competition and permitted restrictions of Filipino immigration.

. B. African Americans confronted racially based economic restrictions.

-Chicago Republican Oscar De Priest first Northern African American elected to Congress.

1. Lost even their traditional low status jobs to desperate whites.

-desperate whites became garbage collectors, street sweepers, bellhops, and elevator operators.

2. Migration northward continued, though at a slower pace.

-during the decade 400,000 went north.

3. Racial violence was fact of life in the south.

-Scottsboro Trial prime example – after an interracial fight aboard a freight train, an Alabama sheriff rounded up nine African American youths, and charged them with raping two white women. An all white jury convicted them, sentenced to death – Supreme court eventually reversed the conviction on the grounds that blacks were excluded from the juries.

-helped to push for strong movement against lynching but Southern politicians prevented such a law.

III. Mr. Roosevelt Goes to Washington

A. A culture of fear had gripped the country by 1932.

-heightened racial conflict just one component

1. Marriages were postponed; family size declined.

-necessity reinforced a movement for birth control.

-US vs One Package of Japanese Pessaries -permitted sale and lifted ban on dissemination of birth-control legislation

2. Birth rate fell below replacement level for first time in U.S. history in 1933.

-21 births per 1000 in 1929; average fell to 18 in 1933

-fear also inspired comedy: comic strips, comic books and growth of Walt Disney; Superman – a cartoon of the decade created by two Cleveland students – made things right.

B. Election of 1932 revealed depth of nation's disgust with Hoover.

- FDR had triumphed over Polio attack in 1921 left him crippled.

-concealed his infirmity from the public lest it undermine his image as a strenuous leader

-the country demands “bold, persistent, experimentation” he asserted

1. Franklin D. Roosevelt scored decisive victory with 57 percent of popular vote.

2. Carried Democratic majorities into both houses of Congress.

- more than Al Smith 4 years earlier FDR solidified the support of urban ethnic vote, who formed the basis of a new Democratic coalition that would last for four decades.

3. Long delay between election and inauguration inspired Twentieth Amendment. – November to March

-20^th day January, and terms of Senators and Representatives on 3 January.

-drew much interest in popular press. FDR on New Yorker

C. FDR's inaugural soothed public anxieties: "Only thing we have to fear is fear itself."

1. Appealed for public confidence.

2. Promised vigorous action.

3. Master of the media: 998 press conferences, two dozen radio addresses.

-famous Fireside Chat

4. FDR's vision of recovery demanded broad federal powers.

5. Genius was flexibility and willingness to move in several directions at once.

6. New Deal constituted a political attitude that sought real remedies and strove to restore confidence in government.

– had a so-called alphabet soup of reform agencies

- also even before inauguration, congress took first steps to repeal prohibition (in 1933 recognizing need as a revenue generator for feds).

D. Solving the nation's banking problem was FDR's first order of business.

1. Bank holiday established to stop run on shaky institutions.

2. Emergency Banking Act (1933) assured federal scrutiny and helped banks in trouble.

3. Glass-Steagall Act separated commercial and investment banking to limit speculation

-and created Federal Deposit Insurance Corporation to protect investors and restore confidence.

-Federal Deposit Insurance Commission (1934) provided government guarantees of bank deposits, a program that still protects individual savers up to a certain sum.

4. Other reforms dealt with problems with the stock market.

– formal reporting of stock information and held corporate officials responsible for illegal activities.

- Securities and Exchange Commission (1934)– oversaw stock-trading practices.

chart “Key New Deal Programs and Legislation”

E. New Deal next turned to problem of personal misery.

1. Home Owners Loan Corporation (1933) government bonds to refinance mortgages, saved 1 million residences from default.

2. Federal Emergency Relief Administration (1933) provided money to states and cities to aid the jobless; pumped 500 million into economy; eventually dispersed 4 billion in stipends and work projects assisting 20 million people.

3. Civil Works Administration (1933) hired 4 million idle workers to undertook public construction projects.

4. Civilian Conservation Corps (1933) provided jobs for 2.5 million young men (virtually no projects for women) aged 16 to 24.

-reforestation, land reclamation and other ecological efforts.

F. Other programs were designed to help rural areas.

1. Tennessee Valley Authority (1933) provided flood control and electrical power.

-twice blocked by Republicans in the 1920s, it resulted in the construction of nine dams in a seven-state region along the Tennessee River to provide flood control, reservoirs and electrical power for nitrate factories and rural customers.

2. Agricultural Adjustment Act (1933) tried to prop up prices by decreasing supplies.

-theory that reduced farm output would end surpluses and increase prices.

-“kill every third pig” proposed the AAA, “plow every third row under”

-criticized for its waste, supreme court also eventually ruled that special taxes levied to finance the program were unconstitutional.

-Soil Conservation Act (1936) which took land out of cultivation for environmental reasons eventually served same purpose.

3. Resettlement Administration (1935) educated farmers about land use but made few gains

4. Farm Security Administration (1937) sought to help landless farmers, but lacked funding to make significant impact.

5. Despite all of these measures, the plight of farmers remained desperate.

- in the mid-west, New Deal assistance too little, too late, as Steinbeck’s novel The Grapes of Wrath (1939) vividly captured the plight of hundreds of thousands who abandoned the parched fields and headed west.

- Dust Bowl Map – Man made versus Natural? Worster etc.

G. Problem of industrial recovery seemed equally insoluble.

1. National Industrial Recovery Act (1933) offered two-pronged approach.

a. Public Works Administration program allocated money for major building programs.

b. National Recovery Administration was created by the law to standardize business prices and practices and relations within industries.

-companies were granted immunity from ‘anti-trust’ laws, allowed each industry to draft its own codes

-led to price fixing, refusing wage guarantees, etc.

c. Secretary of Labour -Francis Perkins , first women to hold a cabinet position, introduced a federal ban on child labour as well as NIRA Section 7a which affirmed workers' right to organize unions for collective bargaining.

2. Supreme Court declared NIRA unconstitutional in 1935 in the Schecter case when the court ruled that the law exceeded Congress’s power to regulate business within separate states.

IV. Critics, Visionaries, and the Second New Deal

A. When recovery was slow to arrive, FDR met with all sorts of opposition.

-rise of fascist groups in Europe Hitler, Mussolini, propelled communists to form anti-fascist groups.

1. Communists such as YCL attacked from left, saying New Deal wasn't going far enough.

- by 1934, the CPUSA had 50,000 members, half of whom were unemployed.

2. Other radical movements called for welfare, pensions for the elderly, socialism.

-Upton Sinclair won governorship of California in 1934

-Dr. Francis Townsend, captured national attention with a revolving pension plan that proposed to give away $200 a month to retired people over 60 provided they spent the entire sum.

-Father Charles Coughlin ran a weekly radio broadcast show from Royal Oak Michigan, and lavished venom on “banksters” – he organized National Union for Social Justice called for mishmash of monetary reforms.

4. Louisiana's Huey Long called for redistribution of wealth – “every man a King” – southern Democrat and Roosevelt rival who renewed populist strand.

-Elected to the Senate, Long broke with Democratic leadership and organized 27,000 “Share Our Wealth” clubs

-like Townsend and Coughlin, Long drew support not from destitute, but from marginal farmers, local business owners, and lower m-c.

-before battle really commenced Long was shot dead by a personal enemy in Louisiana state capital in 1935.

-Corporate conservatives also attacked New Deal (such as NAM and below)

5. American Liberty League of businessmen hoped to defeat FDR in 1936.

-led by Al Smith, the former Democratic candidate, who attacked New Deal for instigating class hatred.

B. FDR announced new policy directions in Second New Deal of 1935.

- to off-set challenge from right such as Smith; also to pacify criticism from Left. 1. Works Progress Administration worked to rebuild nation's infrastructure.

- did not close its doors until 1943, by then it had built 572,000 miles of rural highways; 78,000 bridges, 8,000 parks, 350 airports, 67,000 miles of city streets and 40,000 public buildings including post offices, sewer systems etc.

2. Also supported artists, writers, composers, other intellectuals.

3. National Youth Administration provided vocational training to students.

-stipends to “needy” high school and college students

4. Social Security Act (1935) provided unemployment insurance and old age pensions.

C. Administration also worked to protect workers' rights within unions.

1. Endorsed Senator Robert Wagner’s National Labor Relations Act after Supreme Court invalidated NIRA in 1935.

a. Confirmed right to unionize and to bargain collectively.

b. Created National Labor Relations Board to oversee and mediate., union elections, investigate charges of unfair labour practices, and outlawed anti-union practices such as spying and black-listing.

c. Called "magna charta" of labor relations.

2. Congress of Industrial Organizations (1935) mobilized unskilled workers ignored by AFL. - J.L. Lewis, goal to “organize the unorganized”

D. Changes also occurred in federal policy toward Native Americans.

1. Indian Bureau softened policy on religious freedom for Native Americans.

-hired anthropologist John Collier to head interior Dept’s Indian Bureau, administration backed programs that respected traditional tribal cultures such as peyote ceremonies, also curtailed the presence of Christian missionaries who sought to convert souls.

2. Indian Reorganization Act (1934) abandoned allotment programs – which had permitted individual ownership of tribal lands since 19^th century and reduced native holdings by millions consequently.

V. Building the Second Roosevelt Administration

A. Election of 1936 was referendum on Roosevelt himself.

1. Republicans ran Alfred Landon former Governor of Kansas.

2. Pundits and polls predicted FDR would lose.

-two-thirds of nation’s papers backed Republicans

3. Roosevelt ended up winning all states except Maine and Vermont.

-Roosevelt earned 60 per cent of popular vote.

4. FDR scored big with urbanites, union members, and African Americans.

- city votes first won for Democrats by Al Smith in 1928 were shored up and became a bastion of Democratic power

B. FDR's reelection gave hope of a New Deal for African Americans.

1. Administration ensured that New Deal programs were open to blacks.

2. Unwilling, though, to push civil rights for fear of angering southern Democrats.

3. Symbolic gestures, like putting Booker T. Washington on a stamp.

4. Real gains would have to wait for a changed political climate.

C. Despite his landslide win, FDR was not all powerful.

1. Faced significant conservative opposition in Congress.

2. Key New Deal programs under attack by Supreme Court.

-Social Security, also the Wagner Act

3. Introduced plan to reorganize the Court, but it generated tremendous opposition.

-add new judges for each overworked judge over 70 (did not follow through, but persuaded several to retire and protected Social Security and Wagner etc).

4. Only served to unite the president's enemies.

D. Economy suffered a severe slump in 1937.

-industrial production fell 40 percent

-corporate profits dropped 80 percent

1. Stemmed from cutbacks in relief programs, made after declines in unemployment.

2. After four years, the economic crisis was still not resolved.

3. Crisis eased by emergency appropriations for relief programs.

4. Chose deficit spending over higher taxes or stricter business regulation.

5. Fiscal policy boosted consumer spending rather than restructuring nation's economy.

6. Not much accomplished after 1936; strong opposition in Congress.

-Fair Labour Standards Act (1938) - minimum wages, maximum hours/ joined other legislation that gave guarantees to unions and protected workers from arbitrary employers and ended child labour

7. FDR effort to eliminate his enemies in 1938 failed miserably.

- they did launch committee in House of Representatives in 1938 to investigate “unAmerican” activities.

E. New Deal was watershed in U.S. history.

1. Broke new ground in stabilizing economic and social relations.

2. Short-term measures to meet economic crisis.

3. Long-term reforms of banking, stock market, labor system.

4. Made no attempt to redistribute wealth.

5. Posed no challenge to states' rights.

What it did do:

-Resurgence of Patriotic Themes in literature (Gone With the Wind (1937) – Civil War heritage of triumph over adversity; and film Mr. Smith Goes To Washington (1939) – praised virtues of common people.

6. Acceptance of government responsibility for social welfare.