The Great Depression and the New Deal: 1929 - 1940

The Great Depression and the New Deal: 1929 - 1940

Données clés

Faculté	Lettres
Département	Département d’histoire générale
Professeur(s)	Aline Helg
Cours	The United States and Latin America: late 18th and 20th centuries

Lectures

• The Americas on the eve of independence
• The independence of the United States
• The U.S. Constitution and Early 19th Century Society
• The Haitian Revolution and its Impact in the Americas
• The independence of Latin American nations
• Latin America around 1850: societies, economies, policies
• The Northern and Southern United States circa 1850: immigration and slavery
• The American Civil War and Reconstruction: 1861 - 1877
• The (re)United States: 1877 - 1900
• Regimes of Order and Progress in Latin America: 1875 - 1910
• The Mexican Revolution: 1910 - 1940
• American society in the 1920s
• The Great Depression and the New Deal: 1929 - 1940
• From Big Stick Policy to Good Neighbor Policy
• Coups d'état and Latin American populisms
• The United States and World War II
• Latin America during the Second World War
• US Post-War Society: Cold War and the Society of Plenty
• The Cold War in Latin America and the Cuban Revolution
• The Civil Rights Movement in the United States

The Great Depression will force all governments to make national policies to try to control popular discontent, but also to revive the economy.

What is interesting to see is that the euphoria of the 1920s ended abruptly in October 1929 with the stock market crash that plunged the United States into the greatest economic crisis in its history: "the Great Depression" that dominated every aspect of American life until the early 1940s.

With its suddenness and brutality, and the fact that it left no stone unturned, the Great Depression left its mark on an entire generation of Americans.

The Great Depression had a profound effect on the American political system, since in the 19th century the Republican Party, embodying progress, urbanism and the anti-slavery struggle, had dominated the political life of the country since the end of the Civil War; after 1929 the Democratic Party transformed itself from being the party of the racist South and the Irish Catholics becoming the party of the left out of the madness of the 1920s becoming also the party of the immigrants, their children as well as the working and middle classes suffering from the Great Depression.

The Democratic Party becomes the majority party, the one that relies on the increased role of the federal government to get the country out of the crisis through national programs, it is a complete reversal. Starting in 1933, the Democratic Party called for greater state intervention by advocating national programs and subsidies to promote recovery away from "laissez-faire" and pseudo-republican liberalism.

Languages

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Causes of the 1929 crash

The causes of the crash are multiple; when it happens, Americans look for the cause elsewhere and don't know it will last so long. The government blames the European nations for the crash because they were unable to pay the loans they had taken out with American banks after the war of 1914 - 1918.

Since all studies have shown that European debt plays a marginal role in the crash; the causes are to be found in the United States itself because the second industrial revolution contains the seeds of its own bankruptcy.

The rapid expansion of the automobile and household appliance industry gradually leads to a saturation of the domestic market, consumption is reduced and consequently production begins to decline. American companies were producing more than the American people could buy.

Wealth continues to be too unevenly distributed, too much money goes into profits, dividends, industrial expansion and too little goes into the pockets of workers who are potential consumers.

Production grew by 43% in the 1920s while their wages increased by only 11%.

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  USA annual real GDP from 1910–60, with the years of the Great Depression (1929–1939) highlighted.

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  The unemployment rate in the US 1910–1960, with the years of the Great Depression (1929–1939) highlighted.

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  The Dow Jones Industrial, 1928–1930.

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  US industrial production (1928–39).

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  US Farm Prices, (1928–35).

• GDP depression.png

  The overall course of the Depression in the United States, as reflected in per-capita GDP (average income per person) shown in constant year 2000 dollars, plus some of the key events of the period.

One of the ways to avoid the crisis would have been either to raise wages or to lower prices to sell more; in fact, the three Republican governments do not want to intervene and the big industrialists refuse to see that they are accumulating something that will explode.

On the other hand, there is a continuous regression of the rural world that began with the end of the First World War and which is worsening with the countryside producing too much and therefore with prices that are falling and expelling its own peasant population.

The republican administrations do nothing and the countryside is being depopulated to the benefit of the cities, which are swelling the number of workers.

The crash of late October 1929

Crowds are gathering outside the New York Stock Exchange after the crash.

The boom in sales in the 1920s was based on credit purchases, to stimulate credit the government even lowered interest rates, instead of investing in industry and equipment for the long term the money freed up went into stocks creating huge speculation with a rise in the value of shares and a kind of artificial boom that further concealed the malfunctioning of the economy.

Many middle-class Americans had started to invest in the stock market, which was all the more artificially inflated. In this stock market euphoria, many investors had made projects without any prior study that turned out to be bankruptcies.

Hooverville along the Willamette River in Portland, Oregon (Arthur Rothstein).

From 22 to 29 October, the stock market curves plunged, millions of shares were put back on the market and no longer found buyers; the strongest shares lost up to 80% of their value, the entire banking system based on credit and confidence collapsed, creating bankruptcies and ruin. Hundreds of banks have to close their doors and credit companies can no longer recover their debts.

Migrant Mother, by Dorothea Lange, 1936. This photograph became one of the symbols of the Great Depression.

Between 1929 and 1932 the gross national product of the United States fell by more than 40%, industrial production fell by half and agricultural production fell by half. At the same time, the number of unemployed increased almost tenfold, from 1.5 million to 12 million.

The families of the unemployed find themselves without any income, leading to more homelessness, famine, misery and rising disease; at the same time in rural areas they are rotting on the spot because agricultural prices have fallen so low that it is no longer even worth harvesting.

Of course, blacks are the first to lose their jobs, but often also Mexicans are deported in tens of thousands who enter the labour market in Mexico; however, the arrival of workers in Mexico is almost without a hitch.

The poor have to be even more resourceful, and it is the middle class that will be the most upset, because it is the middle class that has lived the most under the illusions of the 1920s; they are forming "Hooverville", people who have lost everything are going to build huts on the outskirts of cities to survive as best they can.

Election of 1932

The Republicans are doing almost nothing about this catastrophe; Hoover continues to believe that the liberal system will be able to solve all this and that everything will be able to be arranged according to the goodwill of all, the competition and charity of the rich.

In 1932, which was an election year, it became clear that this crisis would not be solved by the Republican laissez-faire approach.

The Republicans decided to promote Hoover's re-election; the Democrats understood that Americans needed a new president with a new vision of a state that would step in to help them, and that's when Franklin Roosevelt emerged.

Roosevelt is the man of renewal, distant cousin of Theodore Roosevelt; Franklin Roosevelt was born in 1882 as the only child of a very wealthy New York family, he studied at Harvard at Columbia University and then went on to marry Eleanor Roosevelt who was very rich and cultured.

Franklin Roosevelt had always been attracted to politics. He joined the Democratic Party and was elected Senator of the State of New York.

When Wilson became president of the United States and was appointed under secretary of the Navy, he had not yet made his political turn, since he played a major role in the occupation of Haiti. He was then nominated by the Democratic Convention for the vice presidency in 1920 for the presidential nomination.

Wheelchair photo, 1941.

It is a first failure since the Republicans win the elections, but especially in 1921 Roosevelt is struck by poliomyelitis by coming out paralyzed in both legs. He decides not to give up politics, it must be seen that Roosevelt, from this struggle, will learn in particular to be more patient as well as suffering.

He decided to return to politics as a more progressive democrat, in 1928 he became governor of the State of New York at the time of the crash.

He appealed to the optimists to launch aid programmes that also created a commission for the unemployed and spoke out in favour of retirement pensions and laws in favour of workers' unions.

He made this experience the platform for his nomination as a candidate for the Democratic presidential election of 1932. He was chosen by the Democratic Convention as a candidate.

At the nomination for the presidential election he promised a "New Deal for the American people"  that is to say, a redistribution of the cards and publicly announces its intention to set up programmes similar to those in place in New York State.

One of Roosevelt's characteristics and his ability to convince others, many historians have drawn a parallel with Cardenas; his voice is deep and warm, carried not only in meetings but also on the radio; he also has contagious confidence and assurance.

The 1932 election had a high turnout, with Roosevelt winning over Hoover in a majority of states. The Democrats also won the majority of seats in the Senate and the House of Representatives, which allowed him to implement his program.

Roosevelt was able to unite the Democratic Party across the previously dominant north-south divide. Roosevelt's election ushered in the Democratic dominance of American politics until 1952 with the election of Eisenhower.

To prepare for his election, Roosevelt surrounded himself with lawyers and academics in a "presidential election  Brain Trust". The aim is to restore the purchasing power of farmers and the middle classes, basically to boost consumption.

The idea is to create an economy of scarcity, the idea is that if we produce less, if the supply is reduced the price of goods will rise, it will boost the economy and everything will start again. The producers in this perspective will make more profits, the workers will earn better wages and the machine will restart on other bases.

Achievements : 1933 - 1935

Roosevelt called for immediate assistance programs for the unemployed and greater federal government intervention in the country's economy. In a speech, he said, "The only thing to be afraid of is fear itself, before anything else that every American must regain and confidence in himself and in the American nation ". Ten days later, he launched the New Deal, his program to save the US economy.

It is not a question of changing the American economic and social system, nor is it, as in Mexico, a question of building state capitalism, but basically of restoring capitalism and launching reforms that do not affect private property.

First of all, it is a question of attacking the banks, closing all the banks in the country and reopening only those that are strong enough by subsidizing them.

Employment and Activities poster for the WPA's Federal Art Project, 1936.

It will also attack industry by creating the National Recovery Administration (NRA) to limit the production of industries in order to raise prices, allow workers to negotiate minimum wages and maximum working hours. The NRA failed and was abolished in 1935.

WPA employed 2 to 3 millions unemployed at unskilled labor.

As part of agriculture Roosevelt created the Agriculture Adjustent Administration, which is also there to curb overproduction; what the government is doing is encouraging farmers to give up some of their land by giving them subsidies for land they will not farm. AAA is successful in reducing production and raising prices, but only benefits the large farmers who own their land and still have enough money to buy the machinery and fertilizers needed to produce on less land more profitably; on the other hand, this policy further ruins small farmers, smallholders and sharecroppers. This decision accelerates the transformation of U.S. agriculture into an agribusiness in the hands of the most efficient.

President Franklin D. Roosevelt signs the TVA Act.

The other major programme is the Tennessee Valley Authority (TVA), which is designed for Tennessee, which has been particularly hard hit by the crisis, and it is a vast state-funded programme of building dams and power plants to kick-start economic development.

The Civilian Conservation Corps (CCC) program is a more original program aimed at sending young people from poor urban families to build roads, buildings in national parks and recreation centers, as they receive allowances that allow them to contribute to their family's income.

Another program is the Works Progress Administration, which is an aid program primarily directed against unemployment, it will distribute emergency aid to the unemployed and the poor, a total of $500 million is distributed to the states to be redistributed to those most in need; one American in six receives aid to avoid starvation.

In 1935, the WPA was given a budget of $5 billion to provide federal salaries and work for the unemployed, including artists, writers, etc. The WPA's budget was increased to $5 billion in 1935.

It is interesting to see that this program was interested in reproducing in the United States what had been done in Mexico even before. Another program is a program to help photographers who go into the countryside and Hooverville's to photograph a whole section of the population, giving them an exceptional school of photography.

Intensification of reforms in 1935 - 1936

All these programmes do not reduce unemployment with 30% unemployment. It is going to take a long time to reduce unemployment because these programs in the years 1933 - 1935 benefited above all the well-organized social partners, i.e. the large corporations, the large farmers and the unionized workers, but affected very little the most deprived.

President Franklin D. Roosevelt signs the National Labor Relations Act on July 5, 1935. Secretary of Labor Frances Perkins (right) looks on.

Discontent is growing through politicians who are leaving the Democratic Party, often protesting against the inequalities of American society.

Roosevelt wanted to run for re-election in 1936, so this pushed him to radicalize his program with new reforms without questioning capitalism and land ownership.

This is when Social Security was created, the most spectacular piece of the New Deal, since until then the United States had no program to help the poor, the three-part Social Security:

• pension program funded by employers and employees.
• Unemployment assistance program.
• federal assistance program for state programs for the blind, disabled, elderly and children in need.

This Social Security is not without problems, the aid given is very small, those who would need it the most, i.e. small farmers, sharecroppers, domestic servants are excluded because they do not really have a contract with their employer which does not allow them to enter the system and the trade unions.

In 1935, another major step in state intervention in US industry took place when Congress banned "in-house" unions promoting industry-wide collective bargaining between unions and employers under the National Labor Act.

Roosevelt's second presidency: 1936 - 1940

Election poster in Manchester, NH.

Roosevelt avec sa femme fait campagne ; Roosevelt est élu triomphalement sur son opposant républicain qui l’accuse de trahir les pères fondateurs et de préparer le socialisme aux États-Unis.

C’est vraiment le grand tournant du système bipartite d’États-Unis, c’est la « Coalition du New Deal » c’est-à-dire la coalition de tous ceux qui espèrent bénéficier ou qui ont bénéficié du New Deal à savoir les blancs du Sud démocrates traditionnels, les grandes villes industrielles, les travailleurs et ouvriers de toutes races, les immigrants, les syndiqués et également les fermiers appauvris ; tous vont voter pour Roosevelt qui remporte l’élection dans tous les États sauf le Maine et le Vermont.

Il sera encore élu en 1940 et en 1944 ; à la suite de ça, les républicains en 1951 font passer une loi constitutionnelle qui interdit plus de deux mandats présidentiels.

Poster de la Resettlement Administration, par Bernarda Bryson Shahn.

Pendant sa deuxième présidence Roosevelt a toujours un congrès dominé par les démocrates et va continuer son programme d’aides d’État en fondant la Farm Security Administration pour aider les petits paysans afin de leur fournir des prêts, mais il met très peu d’argent dans ce programme et seulement 2 % des petits paysans en bénéficient ; dans le Sud, 200 métayers, des blancs et des noirs sont devenus des sans-abris.

Ce programme va aider les petits paysans, mais aussi va servir à promouvoir et à donner du travail dans les grandes plantations.

En 1928 le Fair Labor Standard Act fixe des salaires minimaux et des limites au temps de travail. C’est une loi qui au départ devait protéger les travailleurs non syndiqués, mais là aussi qui va bénéficier aux travailleurs syndiqués, mais ne touchera que les travailleurs des grandes industries importantes.

History of the federal minimum wage in real and nominal dollars.

Bilan social du New Deal

Le New Deal permet un essor du syndicalisme ouvrier et son alignement sur le parti démocrate qui devient vraiment le parti de la classe ouvrière.

En 1929 les États-Unis ne comptaient qu’un seul syndicat l’American Federation of Labor conservatrice ne prenant que les travailleurs qualifiés et qui excluait souvent les noirs.

En 1935 avec la fondation de la CIO (Committee on Industrial Organization) fait augmenter le syndicalisme ; en 1929 on avait 3 millions de syndiqués, en 1939, ils sont près de 10 millions cependant les travailleurs syndiqués ne constituent que 28 % de tous les travailleurs.

Les programmes sociaux du New Deal ont aidé aussi les hommes plus que les femmes ; parmi les chômeurs, moins de femmes ont reçu d’aides fédérales que d’hommes. Parmi les chômeurs, 37 % sont des femmes, mais seulement 19 % de ceux qui reçoivent de l’aide sont des femmes.

Secretary of Labor Perkins on the cover of Time (August 14, 1933).

Pourtant grâce en partie à Eleanor Roosevelt les femmes deviennent plus actives en politique et se mobilisent beaucoup plus alors qu’elles ne peuvent voter que depuis 1920. Frances Perkins est la première femme ministre en tant que secrétaire du département du travail.

Par contre, le New Deal ne fait pas beaucoup pour les minorités raciales même si Roosevelt compte des Afro-Américains dans son entourage, il ne prend pas vraiment de position antiraciste au contraire de sa femme.

Comme beaucoup de noirs sont domestiques, concierges ou des ouvriers exclus de syndicats ils ne bénéficient que marginalement des programmes pour ouvriers ; dans le Sud, la restructuration de l’agriculture avec la AAA chasse de nombreux métayers et paysans de leurs terres.

Les Mexicains et les Américains d’origine mexicaine souffrent beaucoup de la grande dépression, car la moitié d’entre eux soit plus d’un million doivent retourner au Mexique de gré ou de force.

En 1934 c’est l’Indian Reorganization Act qui arrête le démembrement des terres communautaires des Indiens et qui reconnait la propriété foncière et l’autonomie administrative des tributs.

Le bilan final du New Deal est un bilan en demi-teinte, il a fait diminuer le chômage, mais ne l’a pas fait sortir du chômage ; on voit qu’en 1939 il y a encore 9 millions de chômeurs soit 18 % de la population active aux États-Unis.

Toutefois, il a lancé toute une série de programmes nationaux et fédéraux qui vont changer la vie politique et sociale des États-Unis et il réforme complètement la vie politique des États-Unis.

Du point de vue économique et du chômage, il faut reconnaitre que ce sera la Deuxième Guerre mondiale qui sortira les États-Unis de la crise.

• 

  USA annual real GDP from 1910 to 1960, with the years of the Great Depression (1929–1939) highlighted.

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  Unemployment rate in the US 1910–1960, with the years of the Great Depression (1929–1939) highlighted; accurate data begins in 1939.

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  Évolution du PIB de quelques pays entre 1929 et 1939.

Annexes

• 1929-1939 : Une décennie de misère (La Grande Dépression au Canada)
• Textes sur la Grande crise des années 1930 Cliotexte.
• Souvenirs et réflexions sur l'âge de l'inflation de Jacques Rueff, économiste et ancien fonctionnaire du Trésor Français.
• Le Crach de 1929 et la grande Dépression - Comment éviter une répétition de la débâcle Keynésienne
• 1932 popular vote by counties
• How close was the 1932 election? — Michael Sheppard, Massachusetts Institute of Technology
• Foreign Affairs,. (2015). The Great Depression. Retrieved 29 October 2015, from https://www.foreignaffairs.com/articles/united-states/1932-07-01/great-depression