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Back to Classroom-tested Lesson Plans and Handouts

The Great Depression and the New Deal

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 waitress  43 year old housewife  54 year old molder 
Chief need  Money Money Money
Meaning of money  Joys the rich have Chance to educate children No more relief orders
Chief fear   Loss of job Poverty Things will never get better
Does government owe you a living? No No Thinks U.S. owes all a job
Who is responsible for Depression? The bankers and building and loan men Drift away from church Capitalism's greed
Would you farm if you had land? Yes, if I knew how No No
Has religion helped you? When things were  worst Almost by itself No
Do you want  government to plan the future? Thinks government can plan without restricting Will abide by the plan that offers a better day Wants help not advice

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

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?


The American Economy During the 1920s

Cars on the Road 

  passenger & commercial vehicles
registered in US
passenger & commercial vehicles
produced in US
1900
8,000
4,000
1905
  79,000
25,000
1910
469,000
187,000
1915
2,491,000
970,000
1920
 9,239,000
2,227,000
1922
12,274,000
2,544,000
1923
15,102,000
4,034,000
1924
17,613,000
3,603,000
1925
20,069,000
4,266,000
1926
22,200,000
4,301,000
1927
23,303,000
3,402,000
1928
24,689,000
4,358,000
1929
26,705,000
5,337,000
1930
26,750,000
3,362,000
1931
26,094,000
2,380,000
1932
24,391,000
1,332,000
1933
24,159,000
1,890,000
1934
25,262,000
2,736,000
1935
26,546,000
3,971,000
1936
28,507,000
4,461,000
1937
30,059,000
4,820,000
1938
29,814,000
2,509,000
1939
31,010,000
3,589,000
1940
32,453,000
4,472,000

See a graph of this chart
(opens in a new window; close that window to return)

Source: Historical Statistics of the United States, Colonial Times to 1970. U.S. Department of Commerce, Bureau of the Census, 1975.
Statistical Abstracts, 1901 - 1950, U.S. Census Bureau
Available online:
http://www.census.gov/prod/www/abs/statab1901-1950.htm

For more information, see:


Number of Radios 
  Households with Radio Sets Percentage of All Households Radio Sets Produced Average Receiver Cost Radio Station (AM)s Population of the US
1920           106.5 million
1921         1 108.5 million
1922 60,000 0.2% 100,000 $50 30 110.0 million
1925 2,750,000 10.1% 2,000,000 $83 571 115.8 million
1930 13,750,000 45.8% 3,789,000 $78 618 123.2 million
1935 21,246,000 67.3% 6,030,000 $55 623 127.4 million
1940 28,500,000 81.1% 11,831,000 $38 847 132.1 million

Sources:

  • Historical statistics of the United States, Colonial times to 1970. U.S. Department of Commerce, Bureau of the Census, 1975.
    Statistical Abstracts, 1901 - 1950, U.S. Census Bureau
    Available online:
    http://www.census.gov/prod/www/abs/statab1901-1950.htm
  • National Association of Broadcasters
  • Sterling, Christopher H. (2002). Stay tuned : a history of American broadcasting. Mahwah, N.J. : Lawrence Erlbaum Associates.
Sales of Radios 
1922  $60 million 
1923 $136 million
1924 $358 million
1925 $430 million
1926 $506 million
1927 $427 million
1928

$651 million

1929  $843 million

Source: Douglas, George H. The early years of radio broadcasting. Jefferson, NC: McFarland, 1987.

For more information about radio in the 1920s, see:

  • Lewis, T. (Spring, 1992).“A Godlike Presence”: The Impact of Radio on the 1920s and 1930s," in Communication In History: The Key to Understanding, Volume 6, no 4, Organziation of American Historians.
    Available online:
    http://www.oah.org/pubs/magazine/communication/lewis.html#Anchor-59572
  • Lewis, T. (1991). Empire of the air : the men who made radio. New York : E. Burlingame Books, c1991.

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

For more information about Model T prices, see:
http://www.modelt.org/tprices.html


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 %
1921 29 %
1922 29 %
1923 27 %
1924 29 %
1925 31 %
1926 31 %
1927 32 %
1928 34 %
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 Percentage of Total Consumer Debt 

Loans by Stock Brokers 
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 
1921  $ 9 billion 
1922  $10 billion 
1923  $15 billion 
1924   $14 billion 
1925  $15 billion 
1926  $16 billion 
1927  $15 billion 
1928  $15 billion 
1929  $16 billion 

Family Income, 1929 
over $10,000  2.3 percent 
$5,000-10,000  8 percent 
2,500-$5,000  19 percent 
$2,000-2,500  11 percent 
$1,500-2,000  18 percent 
$1,000-1,500  21 percent 
under $1,000  21 percent 

For more information, see:

 

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.


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 

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?

New Deal Legislation 
1932  Reconstruction Finance Corporation  Granted emergency loans to banks, life insurance companies, and railroads 
1933  Civilian Conservation Corps (CCC) Employed young in reforestation, road construction, and flood control projects 
Agricultural Adjustment Act  Direct payments to farmers to reduce production 
Tennessee Valley Authority (TVA) 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 (FHA)  Insured home loans 
1935  Works Progress Administration (WPA) 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 



Consequences of the Depression

Creation of Federal Regulatory Agencies 
Before 1900  5 
1900-09 1
1910-19 4
 1920-29 2
1930-39 11 
 1940-49 2 
1950-59  2 
1960-69  6 
1970-79  20 

Organized Labor Membership 
1930  3 million 
1935  3 million 
1940  9 million 
1945  14 million 
 1950 14 million 
 1955 15 million 
1960  17 million 
1965  18 million 
1970  20 million 

1975 

20 million 

Organized Labor as a Share of the Work Force 
1930 12 percent
1935 14 percent
1940 25 percent
1945 35 percent
1950 32 percent
1955 34 percent
1960 30 percent
1965 29 percent
1970 27 percent

1975

25 percent

1. When did federal regulatory agencies increase most rapidly?

2. When did the organized labor grow most rapidly?

 

This site was updated on 21-Apr-14.

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