THE GREAT DEPRESSION AND THE NEW DEAL

 

 

Interpreting Primary Sources

 

I want to tell you about an experience we had in Philadelphia when our private funds were exhausted and before public funds become available....

 

One woman said she borrowed 50 cents from a friend and bought stale bread for 3 and a half cents per loaf, and that is all they had for eleven days except for one or two meals....One woman went along the docks and picked up vegetables that fell from the wagons.  Sometimes the fish vendors gave her fish at the end of the day.  On two different occasions this family was without food for a day and a half....Another family did not have food for two days.  Then the husband went out and gathered dandelions and the family lived on them.

 

--Senate Committee on Manufactures, 1932

 

 

                                    25 year old                   43 year old                   54 year old

                                    waitress                        housewife                     molder 

 

Chief need                    Money                         Money                         Money

 

Meaning of                   Joys the rich have       Chance to educate          No more relief orders

money                          rich have                       children      

                                                 

Chief fear                     Loss of job                   Poverty                        Things will never get better

 

Does government          No                               No                               Thinks U.S. owes all a job

owe you a living                        

 

Who is responsible       The bankers and           Drift away from            Capitalism's greed

for Depression              building and loan           church

                                    men

 

Would you farm if         Yes, if I knew how      No                                No

you had land?  

 

Has religion helped       When things were         Almost by itself             No

you?                             worst    

 

Do you want                 Thinks government        Will abide by the           Wants help not advice

government to plan     can plan without              plan that offers a   

the future?                    restricting          better day

 

--Columbus, Ohio, Citizen, 1934

 

 

The proposals of our opponents will endanger or destroy our system....I especially emphasize that promise to promote "employment for all surplus labor at all times."  At first I could not believe that anyone would be so cruel as to hold out a hope so absolutely impossible of realization to these 10,000,000 who are unemployed....If it were possible to give this employment to 10,000,000 people by the government, it would cost upwards of $9,000,000,000 a year....It would pull down the employment of those who are still at work by the high taxes and the demoralization of credit upon which their employment is dependent....It would mean the growth of a fearful bureaucracy which, once established, could never be dislodged.

 

--Herbert Hoover, 1932

 

 

We have two problems: first, to meet the immediate distress; second, to build up on a basis of permanent employment.  As to "immediate relief," the first principle is that this nation...owes a positive duty that no citizen shall be permitted to starve....In addition to providing emergency relief, the Federal Government should and must provide temporary work wherever that is possible.  You and I know that in the national forests, on flood prevention, and on the development of waterway projects....tens of thousands, and even hundreds of thousands of our unemployed citizens can be given at least temporary employment....Finally...we call for a coordinated system of employment exchanges, the advance planning of public works, and unemployment reserves.

 

--Franklin D. Roosevelt, 1932

 

 

It is impossible for the United States to preserve itself as a republic or as a democracy when 600 families own more of this nation's wealth--in fact, twice as much--as all the balance of the people put together....Here is the whole sum and substance of the share-our-wealth movement:

1.  Every family to be furnished by the government a homestead allowance, free of debt, of not less than one-third the average family wealth of the country....No person to have a fortune of more than l00 to 300 times the average family fortune....

2.  The yearly income of every family shall be not less than one-third of the average family income....No yearly income shall be allowed to any person larger than from l00 to 300 times the size of the average family income....

3.  To limit or regulate the hours of work to such an extent as to prevent overproduction....

4.  An old-age pension to the persons of 60....

7.  Education and training for all children to be equal in opportunity in all schools, colleges, universities, and other institutions for training in the professions and vocations of life; to be regulated on the capacity of children to learn, and not on the ability of parents to pay the costs.

 

--Huey Long

 

Questions to think about:

 

1.  What caused the Great Depression?  Was it an historical aberration or was it a predictable outcome of the kind of economic system that existed in the United States until the l930s?

 

2.  Describe the human toll of the Great Depression. 

 

3.  What did people think caused of the Depression?

 

4.  Why did President Hoover resist taking radical steps to solve the Depression?

 

5.  What solutions did Franklin Roosevelt and Huey Long offer to the Depression?

 

6.  How effective were New Deal economic policies in solving the problems of the Depression?

 

                      

INTERPRETING STATISTICS: THE AMERICAN ECONOMY DURING THE 1920S

 

 

Automobile Production             Cars on the Road

 

1919    1.9 million                                 6.7 million

1929    5.6 million                                 27 million

 

 

Telephones                               Sales of Radios

 

1900      18 per 1,000 people               1922    $ 60   million

1910      82                                          1929    $842.6 million

1920    123

1930   163

 

 

Wage Levels and the Price of a Ford Model T

 

            Average Earnings          Price of a Model T

    

 

1912   $ 592                           $600

1914      627                             490

1916      708                             360

1924   1,303                             290

 

 

Stock Prices

                                                Sep. 3, 1929                Nov. 13, 1929             1932 Low

                   

American Telephone                 304                              197 1/4                        70 1/4

General Electric                        396 1/4                        168 1/2                        34

General Motors           72 3/4                          36                                7 5/8

New York Central                    256 3/8                        160                              8 3/4

Radio                                       101                              26                                2 1/2

U.S. Steel                                 261                              150                              21 1/4

 

 

Index of Stock Prices            

                                     

1926    176                         

1927    245

1928    331

1929    210                        

1932     30                        

 

Share of Disposable Income Going to the Richest 5 %

 

1920    24 %                1925    31 %

1921    29 %                1926    31 %

1922    29 %                1927    32 %

1923    27 %                1928    34 %

1924    29 %                1929    34 %

 

 

Shifts in Investment

 

            Savings Deposits          Stocks

 

1921    -$1 billion        -$1 billion

1922    +$4 billion                    $0

1923    -$1 billion                     $0

1924    +$1 billion                    $0

1925   $0                                +$1 billion

1926    -$2 billion                     $0 

1927  +$3 billion         $0

1928  -$4 billion                       +$1 billion

1929   $0                                 +$2 billion

 

 

Borrowing to Purchase Stocks as a                   Loans by Stock Brokers

Percentage of Total Consumer Debt     

 

1900    1 percent                                                          1927  $3.5 billion

1910    2 percent                                                          1929  $7 billion

1920    3 percent

1929    5 percent

1933    2 percent

 

 

Business Investment

 

1920    $18 billion                    1925    $15 billion

1921    $ 9 billion                     1926    $16 billion

1922    $10 billion                    1927    $15 billion

1923    $15 billion                    1928    $15 billion

1924    $14 billion                    1929    $16 billion

 

 

Family Income, 1929

 

over $10,000                 2.3 percent                 $1,500-2,000               18 percent

$5,000-10,000               8 percent                    $1,000-1,500               21 percent

2,500-$5,000               19 percent                    under $1,000                21 percent

$2,000-2,500               11 percent

 

Questions to think about:

 

1.  Was the prosperity of the 1920s an illusion?  or was it real?

 

2.  Drawing upon these various statistics, construct an explanation of the causes of the Depression.

 

                     

INTERPRETING STATISTICS:  THE IMPACT OF THE DEPRESSION

 

Change in Gross National Product

 

 

1879-89           + 6 percent

1889-99           + 4 percent

1899-1909       + 4 percent

1909-19           + 2 percent

1919-29           + 3 percent

1929-39           0 percent

1939-49           + 4 percent

1949-59           + 4 percent

1959-69           + 4 percent

1969-79           + 3 percent

 

 

GNP in 1929 dollars

 

1920     60

1925     80

1929    100

1930     90

1933     70

1937    100

1938     95

1939    100

 

 

Average Unemployment Rate        

 

1879-89             8 percent

1889-99           10 percent

1899-1909         4 percent

1909-19             4 percent

1919-29             4 percent

1929-39           18 percent

1939-49             5 percent

1949-59             4 percent

1959-69             5 percent

1969-79             6 percent

 

 

Unemployment as Percentage of the Labor Force

 

1900     5 percent

1910     5.9 percent

1920     4 percent

1925     4 percent

1929     3.2 percent

 

1930     8.7 percent

1932    23.6 percent

1933    24.9 percent

1934    21.7 percent

1935    20.1 percent

1936    16.9 percent

1937    14.3 percent

1938    19 percent

1939    17.2 percent

1940    14.6 percent

 

1950     5 percent

 

 

Bank Failures

 

1929                   659

1930                1,352

1931                1,456

1932                2,294

1933                5,190

 

 

Federal Spending During the Great Depression as a Percentage of GNP

 

1929     3 percent

1930     3 percent

1931     4 percent

1932     8 percent

1933     8 percent

1934    10 percent

1935     9 percent

1936      10 percent

1937   9 percent

1938     8 percent

1939    10 percent

 

Questions to think about:

 

1.  Describe trends in unemployment, gross national product, and federal spending during the Depression.

 

2.  Did the New Deal produce a steady recovery of the economy?

 

                      

STUDY AID:  NEW DEAL LEGISLATION

 

1932    Reconstruction Finance  Corporation    Granted emergency loans to banks, life

                                                                                    insurance companies, and railroads

1933    Civilian Conservation Corps                              Employed young in reforestation, road

                                                                                    construction, and flood control projects

Agricultural Adjustment  Act                             Direct payments to farmers to reduce production

Tennessee Valley Authority                               Creates independent public corporation to construct dams and power projects

National Industrial Recovery Act                       Establishes fair-competition codes; section 7a guarantees labor's right to organize

            Public Works Administration                             Public works

 

1934    Federal Housing Administration             Insured home loans

 

1935    Works Progress Administration             Employed 8 million on public works projects

            Social Security Act                               Established unemployment compensation and

                                                                                    old age insurance

            National Labor Relations Act                            Creates National Labor Relations Board to

                                                                                    prevent unfair labor practices

 

1937    National Housing Act                                        Authorizes low rent public housing projects

 

1938    Fair Labor Standards Act                                 Established minimum wage of 40 cents an

                                                                                    hour and a 40 hour workweek

 

                      

INTERPRETING STATISTICS:  CONSEQUENCES OF THE DEPRESSION

 

 

Creation of Federal Regulatory Agencies

 

Before 1900       5                    1940-49             2

1900-09             1                    1950-59             2

1910-19             4                    1960-69             6

1920-29             2                    1970-79           20

1930-39           11

 

 

Organized Labor Membership

 

1930     3 million         1955    15 million

1935     3 million         1960    17 million  

1940     9 million         1965    18 million

1945    14 million         1970    20 million

1950    14 million         1975    20 million

 

 

Organized Labor as a Share of the Work Force

 

1930    12 percent                    1955    34 percent

1935    14 percent                    1960    30 percent

1940    25 percent                    1965    29 percent

1945    35 percent                    1970    27 percent

1950    32 percent                    1975    25 percent

 

Questions to think about:

 

1.  When did federal regulatory agencies increase most rapidly?

 

2.  When did the organized labor grow most rapidly?