Prosperity and Depression

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Prosperity and Depression
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The Return to Normalcy 1918-1921
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• After World War I, disillusioned Americans wanted
  to return to the traditional foreign policy of
  isolationism.
• The 1920 landslide election of Republican
  President Warren Harding and Vice president
  Calvin Coolidge represented the American desire
  to remove themselves from the pressures of world
  politics.

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Harlem Renaissance

• Prosperity and Depression

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• One of the most important cultural movements of
  the 1920s was the Harlem Renaissance.
• This movement was led by a group of
  African-American writers in the New York City
  neighborhood of Harlem.

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• These creative intellectual figures felt
  alienated from the society of the 1920s.
• In their works they called for action against
  bigotry and expressed pride in African American
  culture and identity.

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• Outstanding literary figures of the Harlem
  Renaissance include
• W.E.B Du Bois
• Langston Hughes
• Zora Neale Hurston
• Alain Locke

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• The Great Depression of the 1930s ended the
  Harlem Renaissance, cutting sales of books and
  literary magazines.

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The Jazz Age

• Prosperity and Depression

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• African American artists, musicians, and dancers
  also participated in the Harlem Renaissance.
• Black musicians in the South blended elements of
  African, European, and American music to create
  the distinctive sounds of jazz and the blues.

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• Edward K. Duke Ellington is one of the towering
  figures in jazz.
• Besse Smith, known as the Empress of the Blues,
  was one of the most popular singers in the 1920s.
• This new music, to which people danced such
  daring new steps as the Charleston, became so
  popular that the period of the 1920s is often
  called the Jazz Age.

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The Scopes Monkey Trial

• Prosperity and Depression

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• The 1925 Scopes Trial, held in Dayton, Tennessee,
  received nationwide attention because it pitted
  the scientific ideas of Darwinian evolution
  against the Protestant fundamentalist view of
  biblical creationism.

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• John Scopes, a biology teacher, had deliberately
  violated a state law forbidding anyone to teach
  the theory of evolution.
• Ultimately, Scopes was convicted and fined 100
  for his actions.

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Coolidge Prosperity, For Some

• Prosperity and Depression

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• Calvin Coolidge became President when Harding
  died in office in 1923.
• Coolidge is best known for his laissez-faire
  approach to the economy and his strong commitment
  to business interests.
• Coolidge believed that governments role was to
  serve business.

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RECESSION

• The end of WWI was followed by a recession caused
  by the shift from a wartime to a peacetime
  economy.
• Production, farm income, and exports fell.
• Unemployment rose, reaching 12 in 1921.

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RECOVERY

• In other sectors of the economy, however, a
  period of economic recovery had begun by 1923,
  when Coolidge became President.
• The years between 1923 and 1929 were seen as a
  time of booming business.
• The Gross National Product (GNP) rose 40.

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Pro-Business Policies

• Some groups, especially big corporations and the
  wealthy, benefited greatly from Coolidge
  prosperity.
• For Example
• By 1929, about 1300 corporations produced 3/4ths
  of all American manufactured goods, and 200
  companies owned half the nations wealth

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Economic Boom Bypasses Others

• Prosperity and Depression

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• Coolidge Prosperity was not beneficial for
  everyone.
• Key segments of the population failed to share in
  the general rise in living standards.
• These segments of society included

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• FARMERS-small farmers were hurt by the lowered
  demand after the war.
• NATIVE AMERICANS during the 1920s Native
  Americans had the highest unemployment rate and
  the shortest average life span.
• AFRICAN AMERICANS still earned less than white
  workers and experienced higher unemployment.

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MASS CONSUMPTION

• Prosperity and Depression

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• The 1920s were a time of mass consumption-huge
  quantities of manufactured goods were available,
  and many people had more money to spend on them.
• Examples
• Automobile Industry
• -real-estate boom
• Electrical Industry
• -stoves, refrigerators
• Radio Movies
• -popularized jazz

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Shifting Cultural Values

• Prosperity and Depression

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• During the 1920s, American society experienced a
  struggle with social change as it became an
  urban, industrial nation.
• Changes in lifestyle, values, morals, and manners
  increased tension and conflict.
• Wealth, possessions, having fun, and sexual
  freedom, ideas influenced by the psychology of
  Sigmund Freud-were the new values.

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• With a shorter work week and with more paid
  vacation, Americans had more leisure time.
• Movies such as The Ten Commandments and the first
  movie with sound, The jazz Singer, drew millions
  of people a week to theaters.
• Americans idolized Charlie Chaplin and Babe Ruth.

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• The popular image of young women of the 1920s was
  the flapper, a young pretty women with bobbed
  hair and raised hemlines.
• She drank alcohol, she smoked, she thought for
  herself, and she took advantage of womens new
  freedoms.

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Planned Obsolescence

• Prosperity and Depression

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• In addition to the creation of new products,
  manufacturers began using a marketing strategy
  called planned obsolescence.
• In order to encourage consumers to purchase more
  goods, manufacturers purposely designed products
  to become obsolete, or outdated in short period
  of time.

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Installment Purchase Plan

• Prosperity and Depression

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• In addition to advertising, industries provided
  another solution to the problem of luring
  consumers to purchase the goods produced each
  year easy credit, or a dollar down and a dollar
  forever.
• The installment purchase plan enabled people to
  buy goods over an extended period, without having
  to put down much money at the time of purchase.

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The Great Depression

• Prosperity and Depression

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The Great Crash
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• The end of the prosperity of the 1920s was marked
  by a series of plunges in the U.S. stock market
  in 1929 known as the Great Crash.
• On October 29 (Black Tuesday) alone, stock values
  fell 14 billion.
• They dropped lower and lower in the weeks that
  followed.

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• The Great Crash triggered the start of the Great
  Depression.
• It broke the national sense of optimism and
  confidence of the 1920s.
• The Great Crash dramatically exposed the fact
  that the national economy had serious weaknesses.

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Causes of the Great Depression
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• The Great Depression was caused by weaknesses in
  the economy-overproduction and under consumption,
  overexpansion of credit, and fragile corporate
  structures-combined with ineffective government
  action.
• The growing interdependence of international
  trade and banking made the effects even more
  damaging.

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Other Causes

• Weaknesses in the economy had existed before 1929
  and were expanding, such as
• Prices in worldwide agriculture dropped.
• Unemployment levels steadily grew.
• Automobile sales slowed.
• Under consumption.

• Unequal distribution of wealth, for example some
  40 of all families had an income of less than
  1,500-below the poverty line.
• The great Crash set off the collapse of the
  nations business structure.
• Some 6,000 banks failed in the 1920s.

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Hoover the Hero!

• Prosperity and Depression

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Hoovers Response To The Great Depression,
1929-1933
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• Herbert Hoover was the first President who had to
  deal with the deepening depression.
• Hoover was a good businessman, a self-made
  millionaire, and a humanitarian.

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Hoovers Economic Plan

• Allowed the organization of the Reconstruction
  Finance Corporation (1932) to lend money to
  railroads, mortgage and insurance companies, and
  banks on the verge of bankruptcy.

• Tried to restore confidence in the American
  economy with such statements as Prosperity is
  just around the corner.
• Obtained voluntary agreements from businesses not
  to lower wages or prices.

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Failure of Hoovers Program

• Despite these efforts, Hoovers refusal to
  provide direct relief to U.S. citizens damaged
  his image as the nations leader.
• In the summer of 1932, thousands of unemployed
  WWI veterans and their families set up camps in
  Washington D.C., to demand early payment of the
  bonus due to them for their war service.

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• When the bill was defeated by Congress, most of
  the Bonus Army, as they were called, refused to
  leave town.
• Hoover insisted that the veterans were influenced
  by the Communists.
• He called out the army to break up the Bonus
  Armys camps and disperse the veterans.
• This destroyed what little popularity Hoover had
  left.

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FDR and the New Deal

• Prosperity and Depression

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• In 1932, Franklin Delano Roosevelt (FDR) was
  elected the 32nd President.
• Historians rank FDR as one of the greatest
  Presidents in American history.
• He was a master politician-intelligent,
  energetic, self-confident, charming, and
  optimistic.

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• Roosevelt often held press conferences and
  effectively used the radio for fireside chats
  with the American public.
• He involved the public emotionally in his
  explanations of what he was doing to solve the
  nations economic problems.

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The New Deal in Action Relief, Recovery, Reform
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• Roosevelts program to combat the problems caused
  by the depression was called the New Deal.
• The programs of the New Deal had the following
  goals a) Relief for those people suffering, b)
  Recovery for the economy, and c) Reform measures
  to avoid future depressions.

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Relief Legislation of the New Deal

• Congress passed a wide range of relief
  legislation as part of the New Deal.
• Relief legislation consisted of

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Emergency Banking Act

• Roosevelts first act as President was to close
  the nations banks by declaring a bank holiday in
  order to stop the collapse of the national
  banking system.

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Federal Emergency Relief Act (FERA)

• Between 1933 and 1935, some 500,000 was provided
  for distribution by states and cities for direct
  relief and work projects for hungry, homeless,
  and unemployed people.

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Public Works Administration (PWA)

• Operating from 1933 until 1939, the PWA provided
  jobs through construction projects, such as
  bridges, housing, hospitals, schools, and
  aircraft carriers.

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Civilian Conservation Corps (CCC)

• Between 1933 and 1941, the CCC provided work for
  2.5 million young men ages 18 to 25 conserving
  natural resources.
• Only 8,000 young women joined the CCC.

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Works Progress Administration (WPA)

• From 1935 until 1943, the WPA provided temporary
  jobs for 25 of adult Americans.
• WPA workers built roads, bridges, airports,
  public buildings, playgrounds and golf courses.

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Tennessee Valley Administration (TVA)

• The federally funded TVA provided jobs, cheap
  electricity, and flood control to poor rural
  areas of seven states through dam construction on
  the Tennessee River and its tributaries.

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Reform Legislation of the New Deal

• Congress also passed a wide range of recovery
  legislation as part of the New Deal.
• Such legislation included

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National Industrial Recovery Act (NIRA)

• The National Recovery Administration (NRA) set
  codes of fair competition within industries to
  maintain prices, minimum wages, and maximum hours.

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Home Owners Loan Corporation (HOLC)

• This agency was created to help homeowners save
  their houses from foreclosure.
• It provided funds to pay off mortgages and
  provided new long-term mortgages at lower, fixed
  interest rates.

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Federal Housing Administration (FHA)

• The FHA was created by the National Housing Act
  to insure bank mortgages.
• These mortgages were often for 20 to 30 years and
  at down payments of only 10.

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1st and 2nd Agricultural Adjustment Act (AAA)

• The aim of the AAA was to raise farmers income
  by cutting the amount of surplus crops and
  livestock.
• The government paid farmers for reducing the
  number of acres they planted.
• This would help to maintain high demand.

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Reform Legislation of the New Deal

• Congress also passed a wide range of reform
  legislation as part of the New Deal.
• Such legislation included

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Glass-Steagall Act

• This law created the Federal Deposit Insurance
  Corporation (FDIC), which guaranteed individual
  bank deposits up to 5,000.

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Securities Exchange Act (SEC)

• This act created the Securities and Exchange
  Commission, which had the authority to regulate
  stock exchanges and investment advisers.

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Social Security Act (SSA)

• The 1935 Social Security Act was a combination of
  public assistance and insurance.
• The act set up a system of pensions for elderly,
  unemployed, and the handicapped.

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National Labor Relations Act (Wagner Act)

• The Wagner Act guaranteed laborers the right to
  form unions and to practice collective
  bargaining.
• The act also ensured that elections were
  conducted fairly.

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Fair Labor Standards Act

• This law set a minimum wage (originally 25 cents
  per hour) and a maximum work week (originally 44
  hours) for workers in industries involved in
  interstate commerce.
• It also banned child labor.

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Supreme Court Reaction to the New Deal

• In a series of decisions, the Court ruled that
  several key New Deal laws were unconstitutional.

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Supreme Court and the NRA

• The National Recovery Act (NRA) was declared
  unconstitutional in Schechter Poultry Corporation
  vs United States (1935)
• The Court ruled that the law illegally gave
  Congress power to regulate intrastate commerce
  (commerce within a single state).

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FDRs Court Packing Plan

• Prosperity and Depression

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• Supreme Court opposition to FDRs programs
  continued with the Supreme Court consistently
  vetoing New Deal legislation.
• FDR asked Congress to approve a law that would
  permit the President to increase the number of
  judges from 9 to 15 if the Supreme Court judges
  refused to retire at the age of 70.

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• The Judicial Reorganization Bill or the
  Court-Packing plan, as its opponents called it,
  was intended to make the Supreme Court approve
  the New Deal laws.
• However, it never became law because it was a
  threat to the separation of powers.