Trabocco - March 18th, 2009 - Chapters Xxiii And Xxiv Notes

THE GREAT DEPRESSION •

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PRESIDENT HERBERT HOOVER Hoover still enforced the laissez-faire policies. In other words, the government was quite “hands-off” in terms of economic dealings. It was to make people more self-reliant. DEBT People began to amass debt due to overproduction in the economy. The supply began to outweigh the demand. When people are in debt, they tend to spend less. Layoffs became extremely prevalent. The economy became overextended and overworked. Eventually, the economy collapsed. 1929 Until October of 1929, stocks were rising at a record pace. People were buying and investing in stock en masse. OCTOBER 24th, 1929 (Black Thursday) • On this day, the stocks plummeted. • But there was no panic, yet. OCTOBER 29th, 1929 (Black Tuesday) • Five days later, the stock market crashed. • People began to pull their money out of the stock market in massive and recordshattering proportions. • This was due to fears about the economy as well as those dealing with the economic future. • That day, approximately $30,000,000,000 was sliced off the economy. • Stock value depreciated almost instantly. • An immediate recession begins. 1933 1933 was the worst year in American economic history. There was a 25% unemployment rate. All industries and jobs in the United States screeched to a halt. President Herbert Hoover was the primary scapegoat for the economic crisis. Some of the terms which came to be associated with the venerable Hoover included: Hooverville – The shantytowns and ragtag dwellings of the homeless. Hoover Flag – The empty pockets of the homeless. Hoover Blanket – The newspapers the homeless were forced to use as blankets. THE GOVERNMENT RESPONSE

Initially, the government responded by pushing for rugged individualism. Rugged individualism basically involved the government ignoring the economic woes of the American citizens. “Fix the problems yourselves.” But, as this plan failed miserably, the government tried to salvage whatever they could of the tattered economy. In November of 1929, they CUT TAXES. (Only to hike them back up in 1931) • This just screws things up more. They would ENCOURAGE CHARITY. • Relief efforts such as a the Red Cross and Salvation Army are called upon. RECONSTRUCTION FINANCE • The government loaned $2,000,000,000 to businesses • It is too little, too late. AGRICULTURAL MARKETING ACT • The government sent $500,000,000 to farms in order to stimulate production. • This, too, fails. FEDERAL HOME LOAN ACT • The government attempts to help people pay off their loans and mortgages. • It doesn't help, either. HAWLEY-SMOOT ACT • The government puts good old tariffs back into effect. • The hope was that it would make imports more expensive and, ultimately, make people start buying exclusively American products in order to jump start the economy again. • ALL OF THIS IS TOO LITTLE, TOO LATE. •

1932 – THE BONUS ARMY World War I veterans from all over America trek to Washington D.C. They petition Congress to give them the $500 which was promised to each and every one of them in 1924, as per the Federal Bonus. The government's response: “NOPE, SORRY.” Some veterans went home, but others stayed and peacefully protested in Washington D.C. The government and President Hoover were unhappy about this, so they sent in the Army to crack a few skulls. The United States Army attacks its own World War I veterans. Two veterans and an infant are killed.

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MEANWHILE, OVER IN GERMANY... The Americans had loaned Germany money after World War I to help pay the$33,000,000 reparation costs which had been issued to them during the Treaty of Versailles. But the Americans stop the cash flow due to the economic crisis on their own soil. Germany is ruined. While America's 25% unemployment rate is exceedingly high, Germany is faced with a staggering 33% unemployment rate.

The desperate times in Germany give rise to desperate measures. The people of Germany turn to one ADOLF HITLER, hoping beyond hope that he can get them out of the situation. He would, but it would be far more costly than anyone could have anticipated. And, thus, Nazism is born.

MR. HOOVER'S FOREIGN POLICY •

1930 – MODIFICATIONS TO WASHINGTON AGREEMENT A modification was made to allow for an ESCALATOR CLAUSE. In other words: “If you feel threatened by another country, you can violate the Washington Agreement (which dealt with the size of a country's Navy) legally.

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1933 – TOO PRICEY TO STAY IN NICARAGUA The Americans were no longer the police to the world in 1933. We became the GOOD NEIGHBORS. We pulled out of Nicaragua. Hoover was Quaker and tried to avoid using the military if at all possible.

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1931 – JAPAN INVADED MANCHURIA Japan invaded Manchuria, a disputed region in the northern part of China. The Hoover administration decides to just sit back and keep a careful eye on Japan, unaware of the problems the United States would have with them later.

EFFECTS OF THE DEPRESSION •

GRAVE STATISTICS From 1929 thorough 1933, the economy decreased by an astounding 70%. The unemployment rate reached 25%.

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GOVERNMENT The government was no longer there. There was no longer aid. There was no longer welfare. Hoover was blamed for the Depression, but it was hardly his fault.

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FARM BOYCOTT When supply skyrockets, demand goes down, prices go down, and the seller pockets less change. Farmers began boycotting the steeply dropping demand and prices by refusing to sell their products. They attempt to lower the supply. • They burn their crops. • They kill their livestock. • They dump the milk.

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DUST BOWL During the 30's, the midwestern United States experienced one of the worst droughts on record. As a result, dust storms kicked up. Dust storms were often massive clouds of dust and wind which could roam for miles. The ground was flat, which allowed these dust storms to reach massive sizes. The winds from these storms began to erode topsoil, which was vital for the growth of crops. This gave rise to the DUST BOWL MIGRATION. People went westward to escape the dust storms.

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1932 – AN ELECTION YEAR This election pitted Herbert Hoover, running for his second term, against FRANKLIN DELANO ROOSEVELT. Hoover still pushed for his idea of rugged industrialism, which basically said that: “things will sort themselves out if we ignore them.”

F.D.R, however, pushed for something called THE NEW DEAL. • At the time of the election, however, he had no clue what The New Deal was. People sided with F.D.R, however. They liked the sound of The New Deal. •

FRANKLIN DELANO ROOSEVELT He was the second cousin of former president Theodore Roosevelt. He was crippled and unable to walk after a debilitating bout with polio as a young boy, a disease transmitted by mosquitoes. Despite this, he would be president from 1933 to 1945, the longest tenured president in United States history. Unfortunately, as a result, he would fall under the Twenty Year Curse and would die during his third term in '45.

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THE NEW DEAL In order to come up with a plan to go along with the catchy name, F.D.R consulted three professors of economics. They were Berle, Moley, and Tugwell. They proposed a $40,000,000,000 economic stimulus plan in which that money would be pumped into the economy in an effort to jump start it. The only problem was the United States didn't have that kind of money to spare. This sort of plan fell under KEYNSIAN ECONOMICS (see below). The plan ended up supporting the United States for a bit, but it was merely a crutch, and by no means solved the problem. A little event called World War II was the eventual cure.

THE NEW DEAL •

KEYNSIAN ECONOMICS This economic ideology basically involved spending a great amount of money, which would obviously create a deficit, in order to jump start an economy. It is spending money that a country doesn't have.

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1933 – TWENTIETH AMENDMENT This amendment changed the date on which the president was sworn in from March to January 20th. This allowed a new president to get into the White House faster.

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1933 – TWENTY-FIRST AMENDMENT This amendment eliminated the 18th Amendment of prohibition. It created jobs and wiped out a substantial portion of organized crime. There was no longer any need to smuggle alcohol illegally.

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THE BANK HOLIDAY F.D.R, elected in 1932, got on the radio next to a massive fireplace in the White House (FIRESIDE CHATS). The broadcast reached homes all over the United States and was one of many which Roosevelt would deliver over his record-setting twelve years or three terms in the White House. He said that every bank around the country was to be closed down for four days. During this time, the United States pumped $2,000,000,000 into them to stimulate them. Also, F.D.R prompted people to return their money to the banks. People listened, as they trusted F.D.R, and saw him as the savior of the ailing economy. The banking industry was saved.

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1934 – THE GOLD RESERVE ACT/GOLD STANDARD Before 1934, all of the paper money in the United States had gold money stashed away which backed it up and affirmed its value. But not anymore. The gold was taken away in 1934, leaving just paper money. The hope was that this would put more money in the community and into the hands of consumers. Today, money is based solely on the faith that the paper bills we have in our wallets and

purses are of any value. GOVERNMENT AID PROGRAMS RELIEF CCC – Civilian Conservation Corps. Young men were pulled from school and hired to do jobs out in nature in the Midwest. On pay day, some of their paychecks went into their pockets, and the other portion went to their parents. Their parents were encouraged to spend the money out in the community in order to stimulate the ailing economy. CWA – Civil Works Administration Thousands of people were put to work in jobs based on their individual skills and talents. They were to spend their paychecks out in the community, and more paychecks meant more taxes going back to the government. FERA – Federal Emergency Relief Act Each state was given millions of dollars to help their residents. RECOVERY PWA – Public Works Administration Created to build bridges, skyscrapers, etc. WPA – Works Progress Administration This program put millions to work to build roads, structures, and other things. **IT WAS THE LARGEST PROGRAM; ELEVEN BILLION DOLLARS ($11,000,000,000) WAS SPENT. TVA – Tennessee Valley Administration Dams were built along the Tennessee Rivers in order to generate electricity and, thus, create new communities. NRA – New Recovery Administration The Feds did not want American corporations and companies to compete with each other. They fixed prices; this, in theory, would prevent bankruptcy. **THIS WAS ONE OF TWO ACTS WHICH WOULD BE CONSIDERED UNCONSTITUTIONAL REFORM AAA – Agricultural Adjustment Act This was designed to limit farm output. It gave farmers money, which made prices skyrocket. **THIS, TOO, WAS DEEMED UNCONSTITUTIONAL BY THE SUPREME COURT

SEC – Securities and Exchange Commission They were the police of the stock market, created in order to prevent any further abuse which led to the 1929 Stock Market Crash. They regulated banking, too. HOLC – Homeowner’s Loan Corporation Money was directly given to people in order to pay off mortgages. The government assisted people in paying off mortgages. FDIC – Federal Deposit Insurance Corporation This was insurance for your bank account. At the time, the government would pay you back up to $5000 of any amount which was lost in the event of another bank disaster or related event. Today, the maximum amount the government will reimburse you is $250,000.

THE NEW DEAL PART II •

THE FEDERAL HOUSING ADMINISTRATION The Federal Housing Administration, or the F.H.A, was designed to assist those who could not put down large enough sums of money towards housing costs. They would be issued an F.H.A MORTAGE. • This was a mortgage directly from the government.

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1935 – SOCIAL SECURITY ACT FRANCIS PERKINS, the first woman in United States history to hold a seat on the Cabinet, was institutional in the enactment of this act. Basically, social security is a check you receive if you are: 65 or older Disabled, an orphan, etc. And other circumstances This was the government helping out the people after turning its back on them during the primary half of the depression.

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RESETTLEMENT AND FARM SECURITIES ADMINISTRATION The Resettlement Administration helped farmers who were displaced by the Dust Bowl relocate to more suitable locations. The Farm Securities Administration helped farmers stay in business.

**THIS WAS LIKE A SECOND PROGRESSIVE ERA, WHERE THE GOVERNMENT HAD AN ACTIVE HAND IN HELPING OUT THE PEOPLE AND MAKING PEOPLE HAPPY. •

RURAL ELECTRIFICATION ACT This act helped provide electricity to places which were previously without it.

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WAGNER ACT Gave rise to the National Labor Relations Board Basically, if you were ever discriminated against in the work place, you may ask the government for help.

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1936 – GOVERNMENT CONTRACTS ACT

Put into place maximum hours and minimum wage. Also added limitations to working age. In general, boys under sixteen were not allowed to work. The same went for girls under eighteen. •

1936 – AN ELECTION YEAR F.D.R was running against ALF LANDON, the governor of Kansas, for a potential second term in office. F.D.R won by a landslide.

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NOT EVERYBODY LIKES THE NEW DEAL The AMERICAN LIBERTY LEAGUE was a group of republicans who claimed that the government should be limited in how much money it gave out. Some even said that the government should stop handing out money altogether. CHARLES COUGHLIN, a Canadian priest who hosted a radio show in Detroit, Michigan, wanted the Feds to confiscate big companies from independent ownership. Instead, he wanted the government to run these companies. He was shouted down quite quickly on the whole idea. HUEY LONG This man, once referred to by F.D.R as the “Most Dangerous Man in America”, was a governor and senator from Louisiana. He advocated “SHARING OUR WEALTH”. • He was a modern day Robin Hood. He advocated taking money from the rich and sharing with the poor. • He promised to put a “car in every garage and a chicken in every pot.” • He was assassinated in 1935. SUPREME COURT The Supreme Court was made up of nine “old men.” • These men were all over the age of 70, and they often butted heads with Roosevelt. So, Roosevelt created the idea of COURT PACKING. • This proposal was to add one justice under the age of 70 for every justice currently sitting on the bench over the age of 70. People said: “Screw you F.D.R! You can't do that!” The proposal never came to pass. THE EFFECTS OF THE NEW DEAL

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The New Deal was more of a crutch than anything. It worked for a bit, but it ultimately failed to solve the problems of the economy. Meanwhile, over in Europe and Asia, the cure to America's depression sickness was brewing; World War II.