A Political Revolution
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1 A Political Revolution
2 } The Great Depression ( ) was the longest and most devastating economic crisis the nation had ever faced. } The depression left an invisible scar on Americans. Millions lost their jobs and their savings. Many, unable to pay their mortgages or rent, found themselves homeless. Hungry people stood in bread lines for meager meals offered by charity organizations and churches. Many people were living lives of desperation from which they saw no escape. } Radicals urged massive social and economic change, even revolution. } Carl Degler argues that the Great Depression and New Deal constituted the third American revolution because the developments led to the death of laissez-faire and the rise of the welfare state. Degler refers to the Great Depression and New Deal as a revolution in ideas, institutions and practices, Degler asserts that the economic crisis convinced Americans that the national government should assume the role of the guarantor state.
3 } After a brief postwar depression, the economy took off in the 1920s. } Sales of new products such as automobiles, radios, and telephones mushroomed. } Farmers, who sold their goods on a fluctuating market, tended not to fare as well as others but even many of them were purchasing the goods produced by assembly lines. } Successive Republican administrations took credit for the prosperity. } As stock prices rose dramatically, a speculative mania developed. Speculators bought stocks on the assumption that they would make when they sold in a matter of months or even weeks. Rumors abounded of people earning fortunes by playing the market. By the end of the 1920s stock prices soared to unprecedented heights. President Herbert Hoover predicted that we are on the verge of a wave of never-ending prosperity. } Then on October 24, 1929 the market crashed. Black Thursday set off an avalanche of selling as holders dumped their shares at whatever prices they could get, making prices even lower. Some larger banks attempted to instill confidence in the system by having representatives appear at the stock exchange, where they ostentatiously made large purchase orders. Despite such efforts, prices continued to tumble. } Hoover tried to restore confidence by reassuring Americans that what had happened was merely a glitch and that the economy was sound. As time went on, people greeted the president s reassurances with disbelief. Street scene on Black Thursday
4 } Black Tuesday: October 29, 1929; day stock market crashed } Business as well as stockholders worried about the future. In order to protect themselves, they laid off workers, cut back on inventory, and put off previous plans to expand or to introduce new products. But their actions, however much sense they made to the individual or firm, had the collective result of making the situation worse. } Hoover s first response was to do nothing and exude confidence: Prosperity is just around the corner. But he finally figures out he must do something.
5 } Hoover endorsed more federal programs than had any of his predecessors to combat the depression, but they failed to stop the downward slide. } Agricultural Marketing Act (1929): provided low interest loans to farm cooperatives for buying and selling of surpluses to keep prices from falling further; emphasis on loans not grants; feed livestock } Federal Reserve Board: which had failed to raise rediscount rate in slow down speculation: now low-interest loans to industries for plant improvement or expansion } Hawley-Smoot Tariff (June 17, 1930), one of the highest tariffs in American history. Passed during the Hoover administration, the act contributed to a decline in world trade and aroused deep resentment among foreign nations. Meant to protect American commodities, it resulted only in a slump in foreign trade. It was sponsored by Representative Willis C. Hawley (Oregon) and Senator Reed Smoot (Utah). } Reconstruction Finance Corporation (RFC), a federal agency created by Congress on February 2, 1932, during the Great Depression to make loans to help stimulate commerce, industry, and agriculture. Backed by Hoover, the RFC made loans to banks, insurance companies, industrial corporations, and railroads.
6 } Criticized: 1) willing to lend money to bankers who had caused depression. 2) willing to provide money to feed pigs not people presumably because pigs had no character no moral fiber to be undermined. } Justification: Hamiltonian = if action necessary, must get money to wealthy who can stimulate the economy through investment: trickle down, priming the pump at the top. } Direct unemployment relief (1932): during campaign $2 billion in grants to states for emergency unemployment relief and construction of public building s. } Hoover s presidency reflects commitment to finance capitalism. } Conclusion: Too little, too late (Democrats). Too much, too soon (conservative Republicans). } Hoover s Response _ Hoover s philosophy and rhetoric _ Bonus Army _ RFC _ A chicken in every pot and a car in every garage becomes two families in every garage. } Hoover pants: trousers with patches. Hoovervilles : shacks and shanties in which homeless people lived. Hoover flags : empty pockets. Hoover blankets : newspapers used to cover people sleeping on park benches. } In the presidential election of 1932, the discredited Hoover lost by a landslide to Democrat candidate Franklin D. Roosevelt. Although Roosevelt had compiled an impressive record as governor of New York, his greatest asset in the election was that he was not Hoover. } Roosevelt assumed the presidency without any grand design for ending the depression. Unlike Hoover, FDR was willing to act boldly on a large scale.
7 } Lack of diversification of American economy } Global economic depression } High tariffs and lack of trade abroad } Overproduction on the part of industry } Poor distribution of wealth } Lack of purchasing power and underconsumption } Fragile credit structure (farmers deeply in debt, bank failures, reckless speculation, scarce credit) } International demand for American products declined } Unstable international debt structure } Drop in farm income } Low factory wages } Stock market speculation and margin buying of stocks } Stock market crash (immediate cause) } Lack of government regulation of the economy Dust Bowl
8 } FDR accepted Democratic nomination for president (1932) by promising a new deal for the American people. } The New Deal consisted of many different efforts to end the Great Depression and reform the American economy. Most of them failed, but there were enough successes to establish it as the most important episode of the twentieth century in the creation of the modern nation state.
9 } New Deal reflected progressive ideas Impatience w/ economic disorder Opposition to monopoly Government regulation of economy Poverty product of social and economic forces, not a personal moral failure Economic mobilization for WWI Policy experiments of 1920s } New Deal: eclectic, pragmatic, and experimental } The New Deal s incoherence due to pressure of competing ideologies } 3 distinct periods: New Deal (1933), second New Deal ( ), and in searched for ways to make federal bureaucracy more efficient and president more powerful in it; but by 1939 domestic climate hostile to further reform
10 } The New Deal created broad popular support for FDR and halted rapid unraveling of financial system. But it failed to end, or even significantly abate, the Great Depression. Bread line, Louisville,1937
11 } National Industrial Recovery Act (NIRA), the most important undertaking of the first Hundred Days, contained a guarantee to workers of the right to collective bargaining and helped to spur major union drives in many industries. _ National Recovery Administration (NRA) attempted to stabilize prices and wages through cooperative code authorities involving government, business, and labor (largely unsuccessful) } The Supreme Court invalidated NRA, AAA, and others mainly because of its narrow interpretation of the interstate commerce clause of the Constitution, which formed the basis of most New Deal legislation. } Mounting popular pressure to do more _ militancy of trade union movement _ American Communist Party _ Huey Long _ Father Charles E. Coughlin
12 } } } } Second New Deal responded to setbacks in Court, restiveness in Congress, and growing popular clamor for more dramatic action. Wagner Act: revived and strengthened collective bargaining. Works Progress Administration symbolically antimonopoly. Social Security Act: established system of old-age pensions, unemployment insurance, and welfare benefits; provided framework that shaped welfare system throughout twentieth century.
13 } Court-packing plan } Expansion of executive power; many feared FDR dictatorship } Severe economic recession } Premature effort to balance budget by reducing federal spending } Rhetorical campaign against monopolies } Expanded bureaucratic capacities of antitrust agencies like the Justice Department } Launched $5 billion spending program (spring 1938) to increase mass purchasing power as an antidote to recession } John Maynard Keynes } Fair Labor Standards Act (1938) established minimum wage and set limits for working hours } New Deal ended by late 1938 } No longer generated broad congressional or popular support } International crisis Cartoon of court-packing plan
14 } Did not end Great Depression or the massive unemployment that accompanied it only enormous public and private spending for WW II finally did that. } Did not transform American capitalism in any genuinely radical way. } Except in labor relations, corporate power remained nearly as free from government regulation or control in 1945 as it had been in } Did not end poverty. } Did not effect significant redistribution of wealth. } Did not address racial or sexual inequality. Dr. New Deal
15 } Ranks among most important of any presidency in American history } Created series of new state institutions that greatly and permanently expanded the role of the federal government in American life } Assistance to poor and unemployed } Protecting rights of labor unions } Stabilizing banking system } Regulating financial markets } Subsidizing agricultural production } American political and economic life became much more competitive than before: workers, farmers, consumers, and others could press for demands in ways that only corporate power could before. _ Broker state state brokering competing claims of numerous groups } The New Deal produced a new political coalition that sustained Democrats as the majority party in national politics for more than a generation. } FDR generated a set of political ideas New Deal liberalism that remained a source of inspiration and controversy for decades and that helped shape the next experiment in liberal reform, the Great Society of the 1960s.
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