Nicholas Vecchio
Due November 8, 2018
Essay Two, The Great Depression and FDR
The election of Franklin Delano Roosevelt and the enactment of the New Deal had helped ease the worst aspects of the great depression. The great depression had dealt a big blow to America as well as other parts of the world. Much of the 1920’s was a cutting-edge time. The biggest industry that saw growth was the auto industry. But by 1929, there was a big drop in the number of automobiles in the first months of 1929. The number of new automobiles sold had dropped 1/3 and with the auto industry not doing too well, the connecting industries suffered as a result. In the 3 years leading to 1929, expenditures on construction had dropped from 11 billion dollars down to 9 billion dollars. Despite positives of the 1920’s economy, and prior to the great depression, 50% percent of American lived at or below the basic subsistence level. Much of the economy was connected to the stock market and during the early years of the 1920’s, there was extreme growth in the stock market. There was 83% growth on the stock market which was the largest growth to that point in American history. Stock brokers were very lenient about who makes and sold stock to. Banks and insurance companies were investing their money and at the bottom-line, depositor’s money into the stock market. But when the stock market experienced jitters, it had signaled the beginning of the collapse. In October of 1929, there was a short order stock collapse which lead to the failure of 9,000 banks and 100,000 businesses. It was that day that symbolically opened the great depression. As well, international factors played a helping hand to the collapse. European countries relied on purchasing goods from Americans, but by the latter years of the 20’s, Europeans became self-sufficient. During World War 1, the British borrowed 10 billion dollars from American bankers and Britain relied on Germanies payments from the treaty of Versailles to pay Americans back. President Hoover attempted several times to help the economy and failed on several spots. Hoover hosted a gathering at the white house with people of agriculture and organized industry and greeted them by announcing “gentlemen, you have arrived 60 days too late, the recession is over”, yet in reality the depression was just beginning. In 1930, a tariff was introduced that raised fees on 75 imported agricultural staples from other countries. The federal government had been successful with tariffs to provide revenue for the government and protect American industry in the past. But in this case, with the depression spreading to other countries, those other countries turned around and raised tariff fees on American goods resulting in little to help to farmers. With the federal government’s budget running into a deficit, in early 1931, to balance the budget, hoover requested a tax hike from congress. This was a beginning sign in the people’s eyes that President Hoover was out of touch and unsympathetic. In 1932, an election year, about 15,000 veterans from World War 1 were engaged in what was known as the bonus army march. In 1924, legislation was enacted that would provide a 1000-dollar bonus to those who served in World War 1. They were supposed to receive the bonus in 1945 but since veterans were unemployed, 15,000 of them marched to the capital demanding the bonus now instead of waiting till 1945. Hoover wanted to give them a portion now then the rest later but they demanded all of it resulting instead with president hoover taking the bonus march out of the city with the current military. Further showing of his out of touch and unsympathetic side to the public.
Once FDR had taken office, he knew he had his work cut out. He had established the New Deal with the first set of programs in 1933 and the second in 1935 with a bottom line strategy of relief, recovery, and reform. The first big issue that FDR needed to address was the crisis in banking, since the market crashed, 9000 banks had failed, 1000 of them failed in the month when FDR was sworn into office. On March 6th, Roosevelt had a “bank holiday” where all banks were closed, and they had entered and emergency congress session. On March 9, the emergency banking act when into effect in which all banks would have to prove to the commerce department that they were financially stable in order to reopen. If they couldn’t prove it, then they wouldn’t open and the ones that could would be scheduled to reopen on March 13. On the eve of the 12th, FDR delivered his first fireside chat. He had done this to ensure Americans that when the banks reopened, they should feel safe to deposit money into the banks rather than withdraw it all. When they opened, the number of deposits exceeded withdrawals. FDR did something that hoover had failed in, communication by assuring Americans money was safe in the bank which was a big change from hoover. During the depression, FDR had 50 people answering mail, hoover had only 1. In June of 1933, the FDIC was established where the federal government would guarantee deposits of $2,500, prior to that, the government had not guaranteed the deposits of Americans. The FDIC still exists today as well as the Securities and Exchange Commission, which for the first time, the federal government would monitor the stock market where it was not involved prior. The SEC is also still with us today. FDR had 15 major enactments in the first 100 days of his presidency. He enacted legislation dealing with unemployment to rehabilitate business and long-term reform measures, some with agriculture and some other industries. For an unemployed American, the federal government enacted the Federal Emergency Management Authority or FEMA, the Public Works Administration and Civil Works Administration. Between the two organizations and after 2 years, had employed 2 million Americans and worked on many improvement projects. Another organization that was initiated was the Civil Conservation Core. The CCC which from 1933 to 1940, employed 2.5 million Americans, the vast majority who were young, single men who were put to work on various conservation projects. The CCC built many state and federal Parks and workers were housed in barracks on site and paid 1 dollar a day which was mailed home to families. Some of the long-term measures from 2nd new deal was the FHA or federal housing agreement. Allowing people to better afford purchasing a home which still exists today. Another was the Social Security Act. For the first time, federal government would supply income to retired Americans. Although, the original social security system that was created was not eligible for many Americans. Farmers and most female occupations were exempted but over the years, the system would become more inclusive. In 1935, the national labor relations act was created, which in turn established the national labor relations board. The act was to clean up defects from the supreme court’s decision ruling the NRA or national recovery administration as unconstitutional. The chief sponsor of act was New York senator Robert Wagner. The act also became known as The Wagner act. It granted workers the ability to unionize and have union elections. It is still with us today. With the act, for the first time there was significant growth in organized labor and when FDR was sworn into office in 1933, there was only 3 million unionized workers. By the time of Pearl Harbor in 1941, there was almost 12 million unionized workers. By the end of World War 2 there was 15 million unionized workers, in 1935 at the time the labor relations act was passed, a new labor organization was established. The Congress of Industrial Organization or CIO, it focused members by industry and the CIO was much more apt to organize semi-skilled or unskilled workers which made it a big victory in unionizing the automobile industry. Beginning in 1937, GM, Chrysler, and ford would all unionize. To conclude, the great depression was a big blow to the US economy as well as Europe but it was programs by FDR from the New Deal and our eventual involvement in World War 2 that lead The US out of the great depression.