PART ONE – Great Depression CAUSES: “BOOM” to “BUST”

1) A “chicken in every pot, and a car in every backyard”. So ran a Republican slogan during Herbert Hoover’s 1928 presidential campaign – the phrase that has come to symbolize the unparalleled growth and prosperity of the 1920s. The nation’s economy reached astounding production, consumption, and stock market records.
2)The total production of American industry increased by around 50% during the20s.
3)Overall production in the economy, GNP (Gross national product), during the 1920s was relatively rapid, 4.2 % a year from 1920-29. Real GNP per capita grew 2.7 % per year between 1920-29. By both 19th and 20th century standards these were relatively rapid growth, considered rapid even today.
3)By 1929, 4.8 million cars were made, accelerated the growth of roads and suburbs.
4)The rapidly expanding electric utility networks led to new consumer appliances,
lighting and heating for homes and businesses.
5)Radio, radio stations and commercial radio networks and the expansion of local and long-distance telephone communications. 1920 – 60,000 radios sold. 1929 – 10 million
6)Recreational activities such as traveling, movies and professional sports became
major businesses.
7)The U.S. moved to a dominant position in international trade and global business.
8)Many Americans enjoyed the “blessings” of “earned” success – examples included a
nice house, a good job, food aplenty and many consumer goods.
Mass production and consumption was seen as very ‘American’.

9)Uneven Prosperity: The 1920s were a prosperous decade. Yet, not all shared in it.
In many cases, the rich got richer – 24,000 families had incomes of
$100,000 or more and 34% of the nation’s bank savings.
10)By contrast, 71% of families made less than $2500 a year.
Nearly 80% had no savings. (living “paycheck to paycheck”)
11)Risky Speculation: The 1920s were characterized by a “get rich quick” mentality.
Rises in stocks and real estate (land) prices led to “high-risk” investment.
12)Investors bought stocks “on margin”, putting down 10-50% of the actual
cost of the stock. “Borrowing” the rest, one could invest with little money.
13)Investors with little money were unable to pay debts on bad investments.
14)Buying on Credit: Traditionally, Americans feared debt. Easy credit and
installment plans made consumer items irresistible for many,
getting something for little or nothing and paying for it in the “future”.
15)When the economy crashed, people were unable to pay for stuff already bought.
16)Trouble for Farmers: Farm surpluses (high supply) led to low crop prices
(low demand) Unable to make profits, many had their farm foreclosed.
17)Trouble for Industry: Overproduction led to production cuts. These led to
factory jobs being cut. Millions became unemployed.

18)Stocks are based on a “perceived” value, based on what you “think” (hope?)
someone is willing to pay for something. “Perception” did not match “reality”.
19)On Wednesday, October 23, 1928, stock “values” plummeted. Investors
panicked, hoping to sell their shares before prices dropped “permanently”.
20)A $3 billion loss in stock value happened the next day. General Electric stock shares
dropped from $400 to $283 in one day. With no buyers, stock values plummeted.
21)Trouble for Banks: The Stock Crash (which many banks had invested in) led to lost
customer investment. After losing jobs or farms, people sought
to withdraw their savings. This drained bank assets. Banks would then
“call in” loans owed to them. Many were unable to re-pay these.
22)The Federal Reserve: Worried about over speculation, the Federal Reserve (our
“national bank”) limited the money supply. Little money in circulation did not
allow the economy to “revive”.

23)Hoover maintained the economy, “… is on a sound and prosperous basis.”
Hoover was optimistic, stating, “… prosperity is just around the corner”.
24)Historically, our economy is like a roller-coaster – it goes up and down in “cycles”.
25)Hoover believed in “voluntary” controls by U.S. businesses.
“Laissez-faire” economists disliked government “interference”.
26)As things worsened, Hoover increased government spending on public works
projects. (roads, bridges, dams, etc.) Hoover Dam was built just outside
Las Vegas to provide a water and electrical power supply.
27)The Hawley-Smoot Tariff was meant to “protect” American industry.
Europeans “retaliated”, bringing an even bigger slowdown in foreign trade.
28)The Reconstruction Finance Corporation was Federal government assistance to
help businesses through bank loans. Hoover’s response was to aid businesses and
banks “at the top”. This would “trickle down” economically to the general population.
29)Hoover was criticized for with “helping the rich”.
He was against “direct” government aid to the people.
30)Hoover became hugely unpopular in many places. Many believed he was
doing little or nothing to help people in dire need. He was viewed as being
“insensitive” to the increasing people amount of people in “desperate” need.
31)Slums were derisively named “Hoovervilles” after the President.
32)There was no national welfare-system or “safety blanket” designed to help this
situation. Against drastic measures, did Hoover underestimate how
horrible the situation was???
33)Hoover did things to help “fix” the situation? However, it was not nearly enough.
34)Millions were unemployed. Banks failed. Drought and over-farming resulted in a
mid-western state “Dust Bowl”. There was a world-wide economic depression.
35)Private charity and under-funded state government welfare spending would not fix
this disaster anytime soon.

The BONUS ARMY (1932)
36)Twenty thousand military veterans from World War One came to Washington,
D.C. seeking “early” payment of a bonus promised to them in 1945.
37)The House agreed to their request. The Senate rejected their request.
38)Most marchers went home. Many stayed, living in an open area in shacks and tents.
After episodes of violence, Hoover called in the Army.
General MacArthur took it upon himself to use force to drive the marchers out.
39)The Bonus Army protest became an “ugly”, confrontational scene. Tanks, guns and
tear gas were used against former soldiers armed with bricks and stones.
40)Hoover was horrified, but “took responsibility” for MacArthur’s actions.
Memories of this would come to haunt Hoover during the next election.
Was the “Bonus March” a legitimate “protest” or potentially dangerous “revolution”?

41)Republican Party Incumbent President Hoover had been a poor orphan. He
became a self-made millionaire. As Secretary of the Treasury before
becoming President, he was an “architect” of 1920s prosperity.
42)Democratic Party candidate Franklin Delano Roosevelt was governor of
New York state. He was born rich. (a “blue blood”) He was a former
assistant Secretary of the Navy and 1920 Democratic Party Vice-President candidate.
43)The two candidates had two different “philosophies” to cure the Depression.
44)Hoover wanted to continue a “limited” government approach.
Roosevelt called for a “New Deal” – direct government response and action to this
unprecedented national emergency.
45)FDR stated, “I promise action and ACTION NOW.” Roosevelt won in a landslide.


46)At Roosevelt’s inaugural speech, to instill optimism, FDR famously
stated, “The only thing we have to FEAR is FEAR itself.”
47)Overcoming it in his own life , he had contracted polio in 1920. Unknown to
most Americans, he was unable to walk on his own.
48)Roosevelt sought to assure a frightened nation. To do this, FDR had
“fireside chats”, weekly radio broadcasts to explain and persuade people to
accept his government policies.
49)FDR’s “New Deal” led to an unprecedented expansion of government
in American life.
50)Roosevelt’s “Three R’s” to “fix” the Depression were

51)Relief for those in immediate need. A record 25% of men were unemployed.
52)Recovery towards getting the nation’s “institutions” and people
working “properly” again.
53)Reform towards changing our nation institutions to prevent future economic
disasters like the one they were going through.
54)FDR promised direct government action. In the “First 100 Days”,
Roosevelt engaged in “bold and persistent” experiment. He did not know
exactly how to fix all of the nation’s problems.
55)The Federal Emergency Relief Agency (F.E.R.A.) sent funds to local relief
agencies – food banks, charities, etc. Government jobs programs sought to help
Americans recover their “well being”.
56)FDR initiated a Bank “holiday”, temporarily closing them for one week.
His “bold action” hoped to stop people from taking their money out in a mass “panic”.
He needed to restore public confidence and “reform” the money system.
57)New government “Alphabet Agencies” provided aid. The Farm Security
Adminstration (FSA) provided loans (over $1 billion) to farmers to keep their farms.
58)The Agricultural Adjustment Act (AAA) paid farmers to produce less food (to
increase crop prices) Ironically, farmers destroyed crops when people were hungry.
59)The Civilian conservation Corps (CCC) provided 2,5 million jobs to young men in
the “country”, clearing land, planting trees and doing flood control.
60)The Civilian Works Adminstration (CWA) provided 4 million jobs in the city,
improving roads, parks, airports and other public facilities.
61)The Home Owners Loan Corporation (HOLC) granted loans to over one
million families so they would not lose the homes.
62)The Federal Deposit Insurance Corporation (FDIC) insured bank deposits
up to $5000.
63)The Security and Exchange Commission (SEC) regulated the Stock Market,
seeking to protect investors from dishonest (e.g. “insider”) trading.
64) The National Industrial Recovery Act (NIRA) passed by Congress in early 1933
sought to “stabilize” the economy through government planning and regulation.
65)The NATIONAL RECOVERY ACT (NRA) of 1933 were law codes that
fixed prices, limited worker’s hours, set minimum wages and forbade child labor.
Eventually, the NRA approved 557 basic and 189 supplementary codes,
covering about 95% of all industrial employees. Industry was virtually nationalized.
66)Most New Deal legislation resulted from a compromise of special interests:
businessmen seeking higher prices and barriers to competition, labor unionists seeking
governmental sponsorship and protection, social workers wanting to control working
conditions and forbid child labor, and those wanting massive spending on public works.
67)Under the Wagner Act, workers were given the “right” to organize and join unions.
68)Many of these federal government programs would be struck down as
unconstitutional by the Supreme Court. They were viewed as an intrusion
by the government on the people’s Constitutional freedoms.
69)The Works Projects Adminsitration (WPA) granted funds for unemployed artists,
musicians, actors and writers, paid to create art that “enhanced” American Culture.
70)The Public Works Agency (PWA) spent $8 Billion to create “public works” of
“real and lasting” value. It employed over 8 million workers.
71)Public works projects included roads, bridges, and schools – 70% of
which were built during the 1930s. Also, 35% of America’s hospitals were
built during the Great Depression.
72)The Tennessee Valley Authority (TVA) provided irrigation, flood control
and electricity in the “under-developed” South.
73)The Social Security Act would provide an “old age” pension to workers.
Workers and employers paid equally into the fund. It also provided
unemployment insurance and aid for dependent children and the
physically disabled.

74)Many viewed FDR’s federal government programs as “TOO MUCH”
government “intervention”. Businesses complained of the tax burden
and “intrusive” government regulation and control.
75)Many Americans felt the New Deal undermined traditional, successful values of
individual effort, self-reliance and minimal government “interference.”
76)A “progressive” income tax rate was installed. The more you made, the
higher the tax rate (%) one paid. People who made more than $1 million were
taxed 90% of their income.
77) The “rich” especially hated Roosevelt. They felt they had been “betrayed” by him.
(FDR was born to this/”their” class)
78)The SUPREME COURT would reject many New Deal programs as being
unconstitutional. In Shechter vs. U.S. (1935), a small chicken company
won their appeal against violating N.R.A Codes, which were found to be
unjust “regulation of interstate commerce and unacceptable delegation of
power to the executive branch of government.”
79)Striking down the NRA, Chief Justice Charles Evans Hughes wrote that
“extraordinary conditions do not create or enlarge constitutional power.”
Congress “cannot delegate legislative power to the President to exercise an
unfettered discretion to make whatever laws he thinks may be needed.”
80)Frustrated by Supreme Court rulings against the New Deal, FDR proposed adding
six (6) new justices to the court. (presumably New Deal “friendly” Justices)
This plan was rejected – FDR was viewed by some as seeking “dictatorial” powers.
81)Other critics said the New Deal was NOT ENOUGH. There were still
9 million unemployed in 1936. After four years of massive New Deal” spending,
the “Great Depression” continued.
82)FDR critic Huey Long, Louisiana Governor and Senator, proposed a
“Share the Wealth” scheme. He would tax the “rich”. Every family would be
guaranteed $4-$5000 a year.
83)Long’s plan called for a “radical redistribution of wealth”. Roosevelt viewed
him as the most dangerous man in America. Long was assassinated in 1935.
84)Doctor Frances Townsend proposed that everyone over age 60 would get a
$200 monthly pension. They would have to spend the money and
give up their jobs to younger people.
85)Another Critic was Father Coughlin . Millions listened to this Catholic Priest’s
weekly radio program. Initially a Roosevelt and New Deal backer, he would later
denounce the New Deal as “communist”, “banker” and “Jew” inspired and controlled.
86)All of these plans by FDR’s critics were too radical or unworkable for most.
87)Another economic depression hit in 1936. (a depression within “the” depression)
Industrial production went down more than 60 %. Stock market prices fell 40 %, and
then they fell another 10 %. The unemployment rate went up. By some measures it
went from around 12 % up towards 20 %. Total hours worked by hour were
20 % below their 1929 level at the end of the 1930s.

87) The New Deal was the largest peacetime expansion of federal government power in this century. It led to the abandonment of “assumptions” of
“laissez-faire” economy and government. (Would it fix itself?) It led to the
expansion of the national-federal government in previously uninvolved areas.
88)Many of the reforms of the 1930s remain in policy TODAY: agricultural acreage allotments, price supports and marketing controls, extensive regulation of private stocks and securities, federal intrusion into union-management relations, government lending and insurance activities, the minimum wage, national unemployment insurance, Social Security and welfare payments, production and sale of electrical power by the federal government, fiat money – the list goes on
89)Historians TODAY debate the effects of the New Deal. Two interpretations:
Was it necessary in a time of national and world crisis OR
did it initiate the growth of too much government, making a bad situation worse?
90)Did the New Deal PREVENT a COMPLETE COLLAPSE of the American economy and the potential for VIOLENT SOCIAL UPHEAVAL. (e.g. the Bonus March)
91)Did Roosevelt’s New Deal provide aid and hope in a time of national “disaster”?
92)Franklin Roosevelt DID NOT END the Depression OR RESTORE PROSPERITY. The depression did not end until the upcoming world war of the 1940s and its military spending. Why did the Depression last so long? Critics contend Roosevelt’s policies prolonged and deepened it. From 1929 to 1940, federal government intervention helped to make the Great Depression “great”. Failing to understand the prosperity of the 1920s, massive governmental burdens more than offset the benefits of New Deal programs.
93)Economists still debate the effects of the New Deal.
94)New Deal Critics argue that government intervention CREATED ARTIFICIAL SHORTAGES. The combined impact of both Hoover’s and Roosevelt’s interventions meant that the MARKET WAS NEVER ALLOWED to CORRECT ITSELF.
The state sector drained the private sector, controlling it in alarming detail.
95)The New Deal brought cartel-ized business, higher prices, less work and steep labor costs. The objective was to raise farm commodity prices. The millions who could hardly feed and clothe their families can be forgiven for questioning the nobility of a program designed to make food more expensive. The grand promise of an end to the suffering was never fulfilled.
96)Some argue the Wagner Act, the 1935 labor law giving workers the right to
organize and join unions, made labor more expensive and increased unemployment.
97)The New Deal was the beginning of the creation of a national welfare state.
The New Deal initiated the unprecedented growth of government.
98)Federal government spending has led to massive government DEBT.
(over $19 TRILLION today)
99)Would this lead to “dependence” on the government “LEVIATHAN” (monster),
with huge, wasteful federal government bureaucracies????
Traditional beliefs about capitalism – liberty individualism, free markets and
limited government were questioned in the 1930s and continues today, replaced by
socialist collectivist schemes that promise social security, protection from the rigors of
market competition and something for nothing, a socialist cradle-to-grave nanny state.
100)OR was it “needed” and “beneficial” intervention by the national government???
101)Was this a GOOD PUBLIC INVESTMENT? – Bridges, dams, tunnels, hospitals
and other public buildings still used today.
102)The Tennessee Valley Authority helped “develop” the South.
103)The Security and Exchange Commission (S.E.C.)and Federal Deposit Insurance
Corporation (F.D.I.C.) continues to regulate stock and bank markets today.
104)Social Security continues today as a national pension fund, though its solvency remains a major issue. Was Social Security a necessary PENSION or PONZI SCHEME?
105)Franklin Delano Roosevelt was BOTH “HATED” and “LOVED” by many and is
historically considered one of our “GREAT” (good or bad) Presidents.