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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

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?

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

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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:

• Facts and Figures of the Automobile Industry: 1920-1930
  http://www.railsandtrails.com/AutoFacts/

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:

• Historical Census Browser
  The data presented here describe the population and economy of U.S. states and counties from 1790 to 1960.
  http://fisher.lib.virginia.edu/collections/stats/histcensus/index.html

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 18-Jun-13.