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Book No. – 52 (History)
Book Name – Modern World History (Norman Lowe)
What’s Inside the Chapter? (After Subscription)
1. THE STOCK MARKET CRASH OF 1929
2. THE GREAT DEPRESSION
3. THE PRESIDENTIAL ELECTION OF 1932
3.1. Roosevelt’s New Deal campaign pledge
3.2. The impact of polio on FDR
4. THE HUNDRED DAYS AND THE FIRST NEW DEAL
4.1. The inaugural address
4.2. The collapse of the banking system
4.3. The fireside chats
4.4. Analysis To what extent was FDR personally responsible for the New Deal?
5. THE SCALE OF THE NEW DEAL
5.1. The First New Deal
5.2. Criticism of the New Deal
5.3. Critics of the New Deal
6. THE SECOND NEW DEAL
6.1. Key elements of the Second New Deal
6.2. The presidential election of 1936 and the ‘Roosevelt Recession of 1937
6.3. The recession of 1937
7. A NEW DEAL FOR WOMEN?
8. THE RURAL DEPRESSION
9. INDUSTRIAL RELATIONS DURING THE NEW DEAL ERA
10. ASSESSMENTS OF THE NEW DEAL
11. THE PRESIDENTIAL ELECTION OF 1940
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Roosevelt and the New Deal: 1929–45
Chapter – 23
Table of Contents
- President Roosevelt took over the presidency from Herbert Hoover in March 1933 when the capitalist system was on the brink of collapse.
- FDR, personally wealthy and politically untested, grew into his role remarkably.
- The New Deal was an unprecedented program of economic and social recovery, though it failed to restore prosperityor full employment, it preserved democracy.
- While the U.S. poured millions into the New Deal, Italy, Germany, and Japan followed their own path of large-scale investment for domestic recovery and massive rearmament during the Great Depression.
- By 1937, FDR and his democratic allies in Europe were focused on avoiding war due to the belligerence of dictatorships in Europe and the Far East.
- Isolationists in the U.S. were concerned about avoiding military commitment similar to World War I.
- Roosevelt promised that the U.S. would not send young men into another war, securing his victory in the 1940 presidential election.
- By 1939, Japan’s aggression against China and the outbreak of war in Europe made avoiding conflict increasingly difficult.
THE STOCK MARKET CRASH OF 1929
- The Great Depression (1929–1933) was the seminal economic event of the 20th century, affecting every country for over a decade.
- The most powerful financiers in America failed to predict the crash, expecting the same returns as in the roaring 1920s.
- Starting in mid-October 1929, share prices on the Wall Street stock market began to fall steadily, culminating in the panic of October 24th.
- Hoover reassured the financial community, but financial experts were not convinced.
- The collapse of the New York Stock Exchange in October 1929 symbolized the start of the Great Depression, which spread globally.
- By 1929, stock market speculation had reached unrealistic levels; prices soared and 1 million people speculated on the stock market.
- The boom in share prices could not be sustained, leading to the bursting of the bubble in October 1929.
- Factors behind the crash: the financial boom depended on fresh investment and borrowing money “on the margin,” which increased instability.
- When demand slowed in 1929, it became clear that many stocks were overpriced, leading to a shift from buying to selling.
- Psychological mood of the financial community played a significant role in the crash.
- Four central structural weaknesses in the American economy were identified but debated by historians:
- The success of industrial production in the mid-1920s could not be sustained, leading to an eventual fall-off in demand.
- The inequality of wealth and maldistribution of income limited purchasing power, with one-third of the nation’s income held by 5% of the population.
- The fragility of the banking system, with over 30,000 independent banks, many of which were small and vulnerable to large-scale withdrawals.
- The international economy’s weaknesses, including the Smoot–Hawley tariff (1930) and American investmentin Germany and Latin America, worsened the depression globally.
- The collapse of the Austrian Kredit-Anstalt bank in 1931 signaled the broader collapse of the European economy, which impacted the U.S. economy.
THE GREAT DEPRESSION
- The Great Depression began in the autumn of 1929 and blighted an entire decade, with unemployment reaching 13 million by 1932 and around 40 million Americans lacking a dependable income by early 1933.
- Industrial production dropped by more than half between 1929 and 1932. The average weekly wage in manufacturing fell from $24.16 in 1929 to $16.65 in 1933, and real earnings dropped by one-third.
- The automobile industry was severely impacted; Henry Ford reduced workers from 120,000 in 1929 to 37,000 in 1931.
- In November 1929, Hoover urged industrialists to continue investment programs and mayors to increase public works spending, but the “no men wanted” sign appeared across the nation as unemployment soared.
- By 1932, many people were in extreme poverty, with some resorting to charity or facing starvation, especially in areas like Lee County, Mississippi, where there was actual starvation.
- “Hoovervilles”, makeshift settlements of homeless individuals, appeared in numerous cities, and many were forced to live in primitive conditions such as caves in Central Park.
- Hoover claimed the Depression was a global issue, but over 1,300 banks failed by the end of 1930, and Hoover became increasingly unpopular, portrayed as callous and out of touch.
- By late 1931, Hoover expressed concern for the survival of the United States itself, prompting the creation of the Emergency Reconstruction Finance Corporation (RFC) in December 1931.
- The RFC was established in January 1932 with $500 million in capital and the authority to borrow $1.5 billion, providing $1.2 billion in loans in its first six months.
- Hoover believed in individualism and progressive individualism, advocating for communities to support the unemployed, but his response of voluntary charity was inadequate given the scale of the crisis.
- Despite being sympathetic, critics argue that Hoover’s approach was insufficient and ultimately led to the destruction of his reputation due to the overwhelming nature of the economic collapse.
- Hoover believed the causes of the Depression were beyond the influence of the White House, and his failure to effectively address the crisis contributed to his eventual political downfall.
THE PRESIDENTIAL ELECTION OF 1932
- The Democratic Party was confident in its candidate for the 1932 Presidential Election, believing they would win against Herbert Hoover. A popular slogan was “Anybody but Hoover.”
- Franklin D. Roosevelt (FDR) was the front runner, having been elected Governor of New York in 1928 and re-elected in 1930 by a record margin of 700,000 votes. This reflected his growing reputation as an energetic, moderate reformer.
- FDR was not yet seen as a political heavyweight and avoided strong ideological commitments that could limit him later.
- In his May 1932 commencement address at Oglethorpe University, FDR emphasized the need for bold, persistent experimentation, stating: “It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something.”
- FDR advocated a shift from an individualistic society to greater social planning, but his vague ideas led to criticism, with the New York Times accusing him of being an opportunist lacking substance.
- FDR’s appeal extended beyond the urban east. He had knowledge of farm issues and was enthusiastic about conservation, which made him popular among western Democrats. His time spent recovering at Warm Springs, Georgia helped him connect with the South, unlike his rival Al Smith.
- FDR attracted support from blue-collar workers, trade unionists, and young activists, broadening his base within the Democratic Party.
- Despite his broad support, FDR needed a two-thirds majority to secure the nomination. He was vulnerable at first, not securing a first-ballot victory.
- California’s backing and the withdrawal of John Nance Garner gave FDR the decisive support he needed.
- On the fourth ballot, FDR secured 945 votes, officially winning the Democratic nomination for president.